A new Arizona renewable energy proposal from the state’s Residential Utility Consumer Office would take a fresh approach to managing the market for renewable energy and could have implications nationwide. Although the implementation of a regulatory schemes is usually complex, the idea is simple.
Until now, those interested in supplying renewable energy to the grid had no financial incentive to consider when that electricity would be provided. It was pretty much assumed that any time the sun was shining or the wind was blowing would be a fine time to send some electrons to the grid. But the grid is more complicated than that. Demand for electricity varies considerably throughout the day. There is so-called base load power to meet the majority of that demand.
After that, utilities have traditionally relied on a what many refer to as “peaker plants” — facilities that can be started and brought online quickly to meet the surge in demand that normally occurs every day between 5pm and 8 pm when people are getting home from work, turning up the air conditioner, cooking dinner, and watching television.
Getting those peaker plants up and running from a cold start costs a lot of money and produces excessive amounts of greenhouse gasses. That’s the primary reason why utility companies charge more for electricity during periods of peak demand. It costs them more for the electricity and those costs get passed along to utility customers.
The RUCO proposal would change all that by building in pricing signals that would encourage providers of renewable energy to make their electrons available during peak demand periods. They can do that by engineering their facilities to produce power when it is needed, perhaps by orienting their solar panels more to the west where they could capture more energy from the setting sun.
Battery storage will probably be the most significant part of the proposal. Having a place to keep the electricity until it is needed would greatly reduce the need for peaker plants, which would lower costs for all utility customers. A third strategy is a known as the smart grid. Using digital technology, the grid operator could actually turn down air conditioners and freezers a few degrees during periods of high demand via apps that control the Internet of Things. Electric cars plugged into home chargers could be instructed to defer charging until later at night. Even small changes could substantially decrease the load on the grid.
The proposal is entitled the Clean Peak Standard. According to co-author Lon Huber, a director with Strategen Consulting, it “is intended to accomplish two things with one policy. It adds more renewables, but it adds renewables when the system most needs capacity so it uses renewables to deal with system cost drivers and saves ratepayers money when electricity prices are highest.”
Tesla, which now has one foot firmly in the grid scale battery storage market, is in favor of the plan. “While details of the proposed Clean Peak Standard still need to be discussed, Tesla supports the concept which would enable a cleaner, more resilient, lower cost grid and promote a sustainable energy future,” a spokesperson for the company told Utility Dive.
If utilities and customers can do a better job of meeting each others needs, the tug of war between them may become far less contentious. Arizona Power Service, the state’s largest utility, has been a bitter opponent of rooftop solar, for instance, largely because residential customers make most of their electricity at time when grid demand is low, not when APS needs more power. New ideas like the Clean Power Standard could go a long way toward defusing those tensions both in Arizona and in other states.
