Utility Execs See Distributed Energy as the Biggest Stress on Grid Reliability, Revenues RSS Feed

Utility Execs See Distributed Energy as the Biggest Stress on Grid Reliability, Revenues

Accenture report adds to the wealth of data on utility fears of DERs as grid and business model disruptors.

The rise of distributed energy resources remains a worry for utility executives — not just in how it erodes their revenues, but in how it affects their distribution grids.

This week, Accenture released a new report that asked more than 100 utility executives in 20 countries for their thoughts on the effects of distributed energy, and what steps they’re taking to address the rapid-fire changes being wrought on the grid edge.

Just under three in five — 59 percent — said they’re expecting “small-scale/prosumer distributed generation to place greater stress on network hosting capacity” than any other part of their networks, through the rest of the decade.

These trends will only accelerate over the next decade. Accenture estimates the costs of additional network reinforcement and automation required to manage distributed resources at $20 billion in the United States and €58 billion in Europe through 2030.

At the same time, 61 percent of utility execs surveyed expect distributed energy to reduce revenues by 2030, at least under today’s regulatory structures and business models. For utilities that have to fund grid upgrades through ratepayer revenues, as most U.S. utilities in vertically integrated markets do today, that’s a troubling combination.

Since customers equipped with solar, storage, or other forms of on-site energy are using much less grid power, and thus paying much less into the common ratepayer pot that funds grid improvements, utilities are worried that they’ll be forced into raising rates on everyone else.

That, in turn, would increase the value of distributed resources as a utility bill avoidance measure, boosting deployments, and adding to the costs that the remaining ratepayers must bear — creating the so-called “utility death spiral.”

While the share of customers with distributed energy systems is relatively small today for most utilities, the rise of rooftop solar PV is already putting pressure on utilities in Hawaii, California, Arizona and other solar hotspots. Falling lithium-ion battery prices are expected to lead to a similar rise in behind-the-meter storage, and help lower prices and boost adoption of plug-in electric vehicles.

Read full article at GreenTech Media