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A Revolutionary Roadmap for California’s Distributed Energy Future
A Revolutionary Road map for California’s Distributed Energy Future
Utilities join solar and grid companies to propose new operational and revenue models to meet low-carbon and renewable goals.
by Jeff St. John
August 11, 2015
California is already changing its utility and energy regulations to incorporate rooftop solar, behind-the-meter energy storage, plug-in electric vehicles and other grid-edge resources, arguably faster than any other state. But a group of utilities and energy industry members have ideas for even more radical transformations ahead.
On Tuesday, the Advanced Energy Economy Institute released a report that calls for California regulators to consider entirely new ways for its major utilities to invest in and operate a distributed energy resource-rich grid, and how to get paid for it.
The report, Toward a 21st Century Electricity System in California, lays out a laundry list of concepts that could help utilities shed their institutional need for investing in traditional generation and grid infrastructure, and encourage them to embrace customer-owned and third-party-controlled distributed energy resources (DERs) as an alternative.
The ideas aren’t that novel in and of themselves. What’s more noteworthy is the list of participants in the working group that created the document. That list includes California utilities Pacific Gas & Electric and Southern California Edison, as well as DER providers like Solar City, Stem, Sun Power, Enphase, EnerNOC, ChargePoint and SunEdison, which have at times sparred with the state’s utilities over how to balance utility and third-party interests when it comes to distributed energy.
Some of the ideas fit into changes already underway in the state, including the California Public Utility Commission’s creation of distribution resource plans (DRPs)that incorporate DER options into utility grid-planning and investment regimes. There’s also the ongoing revision of the state’s net metering rules, work on new energy-efficiency and demand-response schemes, and of course, the inclusion of energy storage in grid planning and operations.
But “the general feeling among our companies and the utilities was that no one was tying all of the pieces together into a cohesive strategy,” Steve Chadima, director of California initiatives at Advanced Energy Economy, said in an email — which explains why many of the proposals go well beyond the dockets at the CPUC.
From utility as platform provider, to independent grid-edge overseer
Take the ideas for restructuring the state’s big three investor-owned utilities into entirely new operational entities. The first, and less extreme, proposal calls for turning utilities into distributed system platform (DSP) operators. This model, similar to the one being proposed in New York’s Reforming the Energy Vision (REV) proceeding, would put utilities in the role of brokering wholesale and retail grid energy, capacity and reliability transactions from any number of independent owners and aggregates.
“In order for this model to work effectively, the regulatory framework and the utility incentives would need to be structured in such a way as to make the DSP indifferent to whether it pursued a traditional ‘wires’ solution versus a distributed resources solution for meeting distribution grid reliability needs,” the paper notes. California’s DRP plans are pushing utilities partway toward this vision. But the DSP model would require ‘organizational firewalls,’ i.e., functional separation of the planning and the asset owner roles within the distribution utility,” as a further condition.
A more radical proposal is to create an independent distributed system operator (IDSO), or an overarching entity that would take over many of the roles of managing the distribution network, much as the California Independent System Operator (CAISO) now manages the transmission grid. This IDSO would be in charge of “performing an integrated planning process, animating a market environment, and establishing the platform for DER integration,” as well as picking the “wires” or DER investment alternatives for utilities.
Renovating financial structures for utilities and third-party DER providers
As for how to measure the monetary value of these alternatives, AEE’s paper suggests two alternatives. The first, a regional grid optimization (RGO) model, would put utilities in the role of determining where DERs are best suited for maintaining grid reliability at lowest cost, and how to create markets for procuring their services.
The second, a distribution marginal pricing (DMP) model, would push the distribution grid further toward the way that transmission grids are operated today. It would create pricing nodes within the low-voltage grid that reflect the full range of what they need to keep the grid up and running, and then allow DER owners and operators to bid their services in as alternatives to wires investments.
Finally, to allow utilities to escape a financial model that rewards them for investing in infrastructure and capital costs, and denies them returns on investments in third-party resources, AEE’s paper suggests three alternative revenue models.
The first, dubbed total expenditure accounting (TOTEX), would add “slow” operating expenses, such as long-term contracts with third parties for grid services, to the existing list of capital costs for which utilities can earn regulated rates of return. That’s how the U.K.’s utilities are being allowed to operate under that country’s new RIIO (revenue = incentives + innovation + outputs) model. The second, and similar, approach would establish separate rates of return for these long-term contracts.
The third option is performance-based compensation, which would allow utilities to earn greater returns on investments if they can show that they’ve done a better and more cost-effective job in managing them. We’ve seen some limited application of this concept for specific utility smart-grid investments, but it hasn’t been applied to encompass everything a utility does.
There’s a lot to chew on in this report for California regulators. “To the degree that our work prods the CPUC to consider a proceeding that addresses the big picture or fill out the range of proceedings with areas not currently covered is of course up to them,” Chadima said. “Early reactions lead us to believe that they appreciate the thought that went into this report and will consider the ideas accordingly.”
The Internet of Things Is Far Bigger Than Anyone Realizes
The Internet of Things Is Far Bigger Than Anyone Realizes
WHEN PEOPLE TALK about “the next big thing,” they’re never thinking big enough. It’s not a lack of imagination; it’s a lack of observation. I’ve maintained that the future is always within sight, and you don’t need to imagine what’s already there.
Case in point: The buzz surrounding the Internet of Things.
What’s the buzz? The Internet of Things revolves around increased machine-to-machine communication; it’s built on cloud computing and networks of data-gathering sensors; it’s mobile, virtual, and instantaneous connection; and they say it’s going to make everything in our lives from streetlights to seaports “smart.”
But here’s what I mean when I say people don’t think big enough. So much of the chatter has been focused on machine-to-machine communication (M2M): devices talking to like devices. But a machine is an instrument, it’s a tool, it’s something that’s physically doing something. When we talk about making machines “smart,” we’re not referring strictly to M2M. We’re talking about sensors.
A sensor is not a machine. It doesn’t do anything in the same sense that a machine does. It measures, it evaluates; in short, it gathers data. The Internet of Things really comes together with the connection of sensors and machines. That is to say, the real value that the Internet of Things creates is at the intersection of gathering data and leveraging it. All the information gathered by all the sensors in the world isn’t worth very much if there isn’t an infrastructure in place to analyze it in real time.
Cloud-based applications are the key to using leveraged data. The Internet of Things doesn’t function without cloud-based applications to interpret and transmit the data coming from all these sensors. The cloud is what enables the apps to go to work for you anytime, anywhere.
Let’s look at one example. In 2007, a bridge collapsed in Minnesota, killing many people, because of steel plates that were inadequate to handle the bridge’s load. When we rebuild bridges, we can use smart cement: cement equipped with sensors to monitor stresses, cracks, and warpages. This is cement that alerts us to fix problems before they cause a catastrophe. And these technologies aren’t limited to the bridge’s structure.
If there’s ice on the bridge, the same sensors in the concrete will detect it and communicate the information via the wireless internet to your car. Once your car knows there’s a hazard ahead, it will instruct the driver to slow down, and if the driver doesn’t, then the car will slow down for him. This is just one of the ways that sensor-to-machine and machine-to-machine communication can take place. Sensors on the bridge connect to machines in the car: we turn information into action.
You might start to see the implications here. What can you achieve when a smart car and a smart city grid start talking to each other? We’re going to have traffic flow optimization, because instead of just having stoplights on fixed timers, we’ll have smart stoplights that can respond to changes in traffic flow. Traffic and street conditions will be communicated to drivers, rerouting them around areas that are congested, snowed-in, or tied up in construction.
So now we have sensors monitoring and tracking all sorts of data; we have cloud-based apps translating that data into useful intelligence and transmitting it to machines on the ground, enabling mobile, real-time responses. And thus bridges become smart bridges, and cars smart cars. And soon, we have smart cities, and….
Okay. What are the advantages here? What are the savings? What industries can this be applied to?
Here’s what I mean when I say people never think big enough. This isn’t just about money savings. It’s not about bridges, and it’s not about cities. This is a huge and fundamental shift. When we start making things intelligent, it’s going to be a major engine for creating new products and new services.
Of all the technology trends that are taking place right now, perhaps the biggest one is the Internet of Things; it’s the one that’s going to give us the most disruption as well as the most opportunity over the next five years. In my next post in this two-part series, we’ll explore just how big this is going to be.
Daniel Burrus is considered one of the world’s leading technology forecasters and innovation experts, and is the founder and CEO of Burrus Research. He is the author of six books including the New York Times best seller “Flash Foresight.”
Next Generation Construction by Gigacrete
Green sustainable materials and does not require skilled labor. Community involvement necessary for job creation. See www.gigacrete.com.
Reliable Steel to Build Phototronic Living Homes Using Sustainable Materials by GigaCrete
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Reliable Steel Builders has reached a licensing agreement with Phototron Holdings, Inc. to build Phototronic Living Homes—next-generation homes that utilize GigaCrete eco-friendly building materials and Phototron hydroponic equipment for sustainability in construction and healthy living.
The Phototronic Living Home boasts an indoor greenhouse and a comfortable two bedroom living area.
Reliable Steel’s culture of innovation in construction and GigaCrete’s environmentally-friendly building materials are the right choice for Phototron’s expansion into greenhouse living.
LOS ANGELES, CA (PRWEB) APRIL 19, 2012
Phototron Holdings, Inc. (OTCBB: PHOT) (OTCQB: PHOT) today announced a license deal with Reliable Steel Builders—builder of a wide range of innovative structures, from roller coasters to skyscrapers, including The MGM, City Center and the Venetian in Las Vegas—that allows Reliable to use the Phototron name and Phototron hydroponic equipment in the construction of the futuristic Phototronic Living Home. Constructed using sustainable building materials from GigaCrete, this all-in-one structure allows individuals and families to comfortably live and grow inside.
“Reliable Steel’s culture of innovation in construction and GigaCrete’s environmentally-friendly building materials are the right choice for Phototron’s expansion into greenhouse living,” said Phototron Vice Chairman Craig Ellins. “Both companies believe that eventually everyone will grow food inside their homes. With the industrial food machine the way it is now, there has never been a better time to move to our sustainable living homes.”
Innovative in every way, the lower floor of the Phototronic Living Home is a full-blown indoor greenhouse where homeowners can grow their own natural fruits, vegetables and herbs. The upstairs portion of the home contains a very comfortable condo-like two bedroom living area.
Phototron Holdings, a leading technology supplier to the hydroponic growing industry, and the designer, manufacturer and retailer of innovative Phototron indoor hydroponic grow systems will supply the hydroponic equipment and Stealth Grow LED lighting in the structure’s grow room.
“With over 20 years in the hydroponic industry, Phototron was the logical choice for us,” said Tim Puetz, CEO of Reliable Steel. “We believe that the next generation home is both a comfortable place to live and a place to produce high-quality food for the homeowner. Phototron had the perfect plan, and GigaCrete’s natural, sustainable building materials are ideal for this type of structure.”
Constructed of nontoxic GigaCrete building products—which meet or exceed all building code standards—the Phototronic Living Home can be erected and operational in just a few weeks. GigaCrete building materials are water-proof, mold and mildew-proof, and carry an R-30 insulation rating for easy and economical temperature control.
To learn more about Phototronic Living Homes, please go to phototronicliving.com.
About Reliable Steel, Inc.
Under the leadership of its president Timothy Puetz, Reliable Steel is a Las Vegas building contractor that specializes in projects ranging in size from small tenant improvements to large building erections. The company employs a well-seasoned team of welders, fabricators, detailers and project managers and maintains strong relationships with top sub-contractors to build structures of any size, from roller coasters to skyscrapers. For more information, please go to reliablesteel.net.
About GigaCrete
Founded in 2005, GigaCrete is a green building materials company that, through extensive research and development, offers products that truly push the envelope of structural performance and sustainability. An emerging market leader in the quest for durable, high performance construction materials, GigaCrete’s product line is rapidly becoming the choice of progressive builders, architects and contractors. The product research and development innovation center is located at GigaCrete’s manufacturing facility in Nevada. For more information, go to GigaCrete.com.
About Phototron Holdings, Inc.
Phototron Holdings, Inc. (OTCBB: PHOT) (OTCQB: PHOT) is a progressive company with core holdings in innovative technology-based products and services for home gardening specialty markets including Stealth Grow LED brand LED grow lights and the Phototron single plant systems and accessories. For more information, go to stealthgrow.com and phototron.com.
For comprehensive investor relations material, please follow the appropriate link:
- Investor Presentation (trilogy-capital.com/content/phot/phot_deck.pdf)
- Investor Portal (trilogy-capital.com/autoir/phot_autoir.html)
- Investor Fact Sheet (trilogy-capital.com/content/phot/phot_ifs.pdf)
Forward-Looking Statements
Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently unreliable and actual results may differ materially. Examples of forward looking statements in this release include statements regarding the potential growth and advantages arising from the Merger, and anticipated operating results.
Factors which could cause actual results to differ materially from these forward-looking statements include such factors as the parties’ ability to close the transaction, the parties’ ability to accomplish their respective business initiatives, Phototron’s ability to achieve and expand significant levels of revenues, or recognize net income, from the sale of its products and services, as well as the introduction of competing products, and other information that may be detailed from time to time in Phototron’s filings with the United States Securities and Exchange Commission. Phototron undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Cellular is Old Technology
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Solar Can Offset Our Dependance
Along with Natural Gas and Electric Transportation. Electricity is growing at over 5% per year faster than Gasoline.
http://fortune.com/2015/09/26/future-of-solar-energy/
Fossil fuels are here to stay, but solar energy will play a bigger role in our energy mix than many think.
I’ve worked on oil platform design. I’ve worked with oil companies on four continents (North and South America, Europe, and Asia). I live in Houston. And I spend about three-quarters of my time working on oil and gas issues. In short, I’m an oil guy.
But I am also bullish on solar.
There is no contradiction here. The point of energy is to move people around the world, to keep us warm (and cool), and to power an industrial economy that has created more wealth in the last 150 years, by far, than in any other time.
There are lots of ways to provide energy. Which technology makes sense at any given time is a matter of geography, economics, and policies. And what I am seeing is that solar is building potential on all three dimensions, for three reasons.
- It is getting cheaper and better. In a sense, that is almost the same thing. Any technology that is too expensive to use is simply irrelevant. As the economics of solar have improved (see chart for US figures), deployment has picked up—a lot. In 2004, the world had about 2.6 GW of solar photovoltaic (PV) capacity; now it is more than 200 GW. In 2014, a record 40 GW of solar photovoltaics (PV) was installed around the world. That is enough to power nearly 6 million American homes. In 2014, global investment in solar rose 29 percent, to $149.6 billion. And costs are still falling. By 2020, Bloomberg estimates, the world will have 600GW of solar PV, and 1,900GW by 2030.
US Department of Energy Lawrence Berkeley National Laboratory
- Public support is steady: In most places, most of the time, solar is still more expensive than conventional alternatives. It has, then, required support, in the form of subsidies and other regulations, to push itself into the market. That has not only happened; it is continuing. As of 2014, at least 144 countries had renewable energy targets and 138 had various forms of support policies. There is a lot of debate about what policies, if any, make sense (and yes, I recognize that the fossil-fuel industry gets support, too). For example, you could certainly make a case that developed countries should bump up investment on renewable energy R &D rather than subsidizing mostly rich consumers to put solar panels on their homes.
In principle, solar cannot perpetually depend on the government’s helping hand; it needs to make its case in the market, which it is beginning to do. In states where the price of power is high, such as Hawaii, solar is already at “grid parity” with conventional sources, which need to be imported. (One in eight homes in Hawaii has rooftop solar.) But there is little doubt that at the moment that helping hand is, in fact, helping.
- Sun-rich countries are getting serious. This matters because solar obviously has the most low-cost potential in places that get a lot of sun. And many of those places, both rich (Saudi Arabia, Dubai) and poor (South Africa, Kenya) are taking notice. Last year, oil-rich Dubai signed a deal with ACWA, a Saudi holding company for a 100 MW solar plant at a record-low price of 5.98 cents a kilowatt hour. And Saudi Arabia itself has big plans. Saudi Aramco, the state-owned enterprise that is the world’s biggest oil company, is building 10 domestic solar plants; all told, the Kingdom is talking about building 41 gigawatts of solar PV by 2032, or enough to meet about 20 percent of its power needs.
The most interesting developments may be coming from countries that are short of power of all kinds, with all the limitations that implies in terms of economic development and human health. In 2014, the World Health Organization estimated that indoor air pollution, caused mostly by unsafe cooking practices using wood, dung, or charcoal, kills 4.3 million people a year.
So it makes sense that as costs come down, a number of developing countries are seeing solar as a realistic option. India has an ambitious agenda, known as the National Solar Mission, which seeks to install 100 GW of solar by 2022. South Africa’s Renewable Energy Independent Power Producer Procurement Program (REIPPPP) has proved effective at generating private-sector investment—$14 billion since 2011. And because South Africa is the economic engine of the region, its success could spawn imitators. Kenya, where only 30 percent of the populationis connected to the grid, is home to a very different model. Homeowners pay up front a fraction of the price for a solar lamp and pay a daily fee of about 45 cents for a year, using their cell phones. After that, the customer owns the device, which is cheaper and safer than kerosene, and of course cleaner. (These lamps now come with a solar-powered radio and mobile phone charger.) Launched in 2013, this is still a relatively small experiment, with about 200,000 users, but it is growing fast. In terms of making the economics of solar work for the poor, it is well worth watching.
So that’s the case that solar has a sunny future, and I believe it is sound. What I do not believe is that the end of fossil fuels is nigh. As the US Energy Information Administration noted in July, for every year since 1900, some combination of fossil fuels (petroleum, gas, coal) has made up at least 80 percent of the country’s fuel mix. Moreover, the EIA analysts conclude, “the predominance of these three energy sources is likely to continue into the future.” The International Energy Agency also sees them continuing to play a crucial role, although a lesser one (from 68 percent of power generation in 2012 to 55 percent in 2040).
There is room for both; in fact, there is a need for both.
Scott Nyquist is a global leader in McKinsey’s oil & gas practice and also its Sustainability & Resource Productivity Network. He writes a column for LinkedIn on energy and environmental issues.