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Utility Business Models in a Low Load Growth/High DG Future

Utility Business Models in a Low Load Growth/High DG Future. Andy Satchwell Lawrence Berkeley National Laboratory California Municipal Utilities Association Annual Conference April 2, 2014. Chicken Little Redux ?.

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Utility Business Models in a Low Load Growth/High DG Future

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  1. Utility Business Models in a Low Load Growth/High DG Future Andy Satchwell Lawrence Berkeley National Laboratory California Municipal Utilities Association Annual Conference April 2, 2014

  2. Chicken Little Redux? “…economic fundamentals and public policies in place are likely to encourage significant future disruption to the utility business model.” Edison Electric Institute – January 2013 “It’s a [business] model that hasn’t changed much since Thomas Edison invented the light bulb. And it’s doomed to obsolescence.” Bloomberg BusinessWeek – August 2013 “Alarmed by what they say has become an existential threat to their business,utility companies are moving to roll back government incentives aimed at promoting solar energy and other renewable sources of power. At stake, the companies say, is nothing less than the future of the American electricity industry.” New York Times – July 2013

  3. Cumulative grid investments and decreasing utility sales put upward pressure on rates Substantial increases in PV capacity… Declining load growth… Source: EIA 2012 Annual Energy Outlook; Faruqui (2013) • Increasing utility investments… • TWhnew green energy from state RPS by 2030: ~$120B • Total generation decarbonization: ~$1T • New transmission to integrate renewables and maintain reliability: ~$250B • Replace aging distribution system with smart grid: $600B

  4. Continuum of Utility Business Models: Current Approaches Achievement Services Motivation Value Assets Commodity Traditional IOU Ratemaking Variant Meters- & Wires-Only T&D Owner/Operator

  5. Continuum of Utility Business Models: Performance Based Regulation Achievement Services Motivation Value Assets Commodity Traditional IOU Ratemaking Variant Performance Based Regulation Meters- & Wires-Only T&D Owner/Operator

  6. Continuum of Utility Business Models: Combining Existing Models Achievement Services Motivation Value Assets Commodity Traditional IOU Ratemaking Variant Performance Based Regulation Smart Integrator Meters- & Wires-Only T&D Owner/Operator

  7. Continuum of Utility Business Models: Fundamental Paradigm Shift Achievement Services Motivation Value Assets Commodity Traditional IOU Ratemaking Variant Energy Service Utility Performance Based Regulation Meters- & Wires-Only T&D Owner/Operator

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