Beneficial Electrification Electrification in the Public Interest David

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Beneficial Electrification: Electrification in the Public Interest David Farnsworth Regulatory Assistance Project August 1,

Beneficial Electrification: Electrification in the Public Interest David Farnsworth Regulatory Assistance Project August 1, 2018 Richmond, VA

Beneficial Electrification (BE) 1. Energy Trends: What is Changing? 2. What Makes Electrification Beneficial?

Beneficial Electrification (BE) 1. Energy Trends: What is Changing? 2. What Makes Electrification Beneficial? 3. Some BE Principles Regulatory Assistance Project (RAP)® 2

Regulatory Assistance Project (RAP)® 3

Regulatory Assistance Project (RAP)® 3

Fuel Choice – 1989 • Wind and solar were not viable economic resources. •

Fuel Choice – 1989 • Wind and solar were not viable economic resources. • The best heat pumps had a coefficient of about 2. • Heat pump water heaters were not commonly available. • The best natural gas generating plants had about 42% conversion efficiency Regulatory Assistance Project (RAP)® 4

Fuel Choice Today • Wind and solar are coming in at two and three

Fuel Choice Today • Wind and solar are coming in at two and three cents per k. Wh. • Modern heat pumps and heat pump water heaters have COPs of 3 or better in mild climates, and improving results in cold climates. • New gas generation is as much as 62% efficient converting gas to electricity when the wind is not blowing and the sun is not shining. • Modern technology enables load control. Regulatory Assistance Project (RAP)® 5

What Makes Electrification Beneficial?

What Makes Electrification Beneficial?

Is All Electrification Created Equal? • Brattle: “Utility sales could nearly double by 2050”!

Is All Electrification Created Equal? • Brattle: “Utility sales could nearly double by 2050”! • Is it all about load growth? Regulatory Assistance Project (RAP)® 7

What Makes Electrification Beneficial? Three Criteria: Achieve At Least One Without Adversely Impacting The

What Makes Electrification Beneficial? Three Criteria: Achieve At Least One Without Adversely Impacting The Others 1. Saves Customers Money Long-Term; New Services Regulatory Assistance Project (RAP)® 2. Reduces Environmental Impacts 3. Enables Better Grid Management 8

Some Principles for Operationalizing BE

Some Principles for Operationalizing BE

1. Put Efficiency First Regulatory Assistance Project (RAP)® 10

1. Put Efficiency First Regulatory Assistance Project (RAP)® 10

Efficiency Across Fuel Types Source: JJ MCoy, ”Building “good load” to reduce carbon emissions”,

Efficiency Across Fuel Types Source: JJ MCoy, ”Building “good load” to reduce carbon emissions”, 2016. http: //nwenergy. org/wpcontent/uploads/2016/01/Transpo-Electrification-TE-Workpaper-1 -25 -2016 -FINAL. pdf. zip Regulatory Assistance Project (RAP)® 11

2. Recognize the Value of Flexible Load for Grid Operations Regulatory Assistance Project (RAP)®

2. Recognize the Value of Flexible Load for Grid Operations Regulatory Assistance Project (RAP)® 12

Water Heater Loads Are Easy to Spot Regulatory Assistance Project (RAP)® 13

Water Heater Loads Are Easy to Spot Regulatory Assistance Project (RAP)® 13

Value of Flexibility for Integrating Renewable Energy Avoid Home Charging during these hours Workplace

Value of Flexibility for Integrating Renewable Energy Avoid Home Charging during these hours Workplace Charging Source: California ISO Regulatory Assistance Project (RAP)® 33

3. Understand the Emissions Effects of Changes in Load Regulatory Assistance Project (RAP)® 15

3. Understand the Emissions Effects of Changes in Load Regulatory Assistance Project (RAP)® 15

The Grid Is Getting Cleaner Regulatory Assistance Project (RAP)® 16

The Grid Is Getting Cleaner Regulatory Assistance Project (RAP)® 16

As The Grid Gets Cleaner, Electric Options Become More Beneficial Electric Resistance Water Heat

As The Grid Gets Cleaner, Electric Options Become More Beneficial Electric Resistance Water Heat Pump Water Heater Time (years) Regulatory Assistance Project (RAP)® 17

6. Design Rates to Encourage Beneficial Electrification Regulatory Assistance Project (RAP)® 18

6. Design Rates to Encourage Beneficial Electrification Regulatory Assistance Project (RAP)® 18

Rate Design Rate design should make the choices that the customer makes to minimize

Rate Design Rate design should make the choices that the customer makes to minimize an individual bill consistent with the choices the utility would make to minimize its system costs. Regulatory Assistance Project (RAP)® 19

TOU Rates Can Focus On The System Peak Period Source: Sacramento Municipal Utility District

TOU Rates Can Focus On The System Peak Period Source: Sacramento Municipal Utility District https: //www. smud. org/en/Rate-Information/Time-of-Day-Rates/Time-of-Day-5 -8 pm-Rate Regulatory Assistance Project (RAP)® 20

Price Can Influence When EVs Are Charged Adapted from: M. J. Bradley, 2017 Regulatory

Price Can Influence When EVs Are Charged Adapted from: M. J. Bradley, 2017 Regulatory Assistance Project (RAP)® 21 21

If It’s Not Beneficial Then Don’t Do It For electrification to be beneficial, it

If It’s Not Beneficial Then Don’t Do It For electrification to be beneficial, it must satisfy at least one of the three following conditions, without adversely affecting the other two: 1. 2. 3. Saves consumers money over the long run; Enables better grid management; and Reduces negative environmental impacts. Regulatory Assistance Project (RAP)® 22

Things Can Change Quickly 5 th Avenue, NYC, Easter 1900 See any automobiles? Regulatory

Things Can Change Quickly 5 th Avenue, NYC, Easter 1900 See any automobiles? Regulatory Assistance Project (RAP)® Source: Tony Seba 23

Things Can Change Quickly Park Avenue, NYC, Easter 1913 See any horses? Regulatory Assistance

Things Can Change Quickly Park Avenue, NYC, Easter 1913 See any horses? Regulatory Assistance Project (RAP)® Source: Tony Seba 24

Summary • Given the innovations occurring in today’s electric sector, there are many opportunities

Summary • Given the innovations occurring in today’s electric sector, there are many opportunities for electrification. • Beneficial Electrification sets out a framework and principles to help decision-makers ensure that electrification is beneficial to consumers, the environment and the grid. Regulatory Assistance Project (RAP)® 25

Resources from RAP ä Beneficial Electrification: Ensuring Electrification in the Public Interest ä Utilities

Resources from RAP ä Beneficial Electrification: Ensuring Electrification in the Public Interest ä Utilities Can Get a “LEG” Up with Beneficial Electrification—But Regulators Also Have to be Ready ä Beneficial Electrification: A Growth Opportunity ä Beneficial Electrification: A Key to Better Grid Management ä Brewing up the Regulation of the Future Regulatory Assistance Project (RAP)® 26

About RAP The Regulatory Assistance Project (RAP)® is an independent, non-partisan, non-governmental organization dedicated

About RAP The Regulatory Assistance Project (RAP)® is an independent, non-partisan, non-governmental organization dedicated to accelerating the transition to a clean, reliable, and efficient energy future. Learn more about our work at raponline. org David Farnsworth Senior Associate