NW Energy Coalition NW Clean Affordable Energy Conference

NW Energy Coalition NW Clean & Affordable Energy Conference Some Thoughts on Our Energy Future(s) ~In Pictures~ Comments of Ron Binz Public Policy Consulting November 8, 2013 Seattle, WA

Public Policy Consulting www. rbinz. com

Pressures on the Utility Model • • New environmental regulations Investment requirements Flat load growth Shifting fuel economics Upward pressure on rates Distributed energy resources Falling cost of alternative resources

Percent of 2032 Peak Demand WECC (2032): Potential Bypass Threats from Distributed Generation are Large Source: E 3 (2013). • WECC-wide Behind-the-Meter DG: 19 GW of solar PV + 7 GW of CHP • Distributed PV based on “interconnection potential” (no back-flow through feeders), with adjustments to reflect relative economics among states • CHP additions represent a fixed percentage (~40%) of technical potential in each state

NREL’s estimate of continued cost reductions for wind energy

Arizona Colorado Washington Oregon New Jersey Germany

Renewable Electricity Futures Study (REF) Exploration of High-Penetration Renewable Electricity Futures Available at NREL. gov

Baseline Case

REF ITI Case

How does the assumption of an HREF affect the business model? Much higher levels of variable generation at the bulk power scale (affects utility organization, operations) Greater penetration of distributed energy resources at the (affects utility revenues, services) distribution scale Greater need for flexibility in the grid components, operations, and architecture (affects utility investment, operations) Much higher levels of energy efficiency (sufficient to eliminate load growth) (affects utility role, services)

• Thesis: Utilities must develop a set of new business models • Thesis: Today’s regulation may not be up to the task – Rarely rewards utilities for desired behavior – Lack of incentives for • • firm efficiency clean energy investment energy efficiency innovation – Rate structures need revision – Focus on commodity sales – Balky, judicial process

• Authors – – Ron Binz Richard Sedano Denise Furey Dan Mullen Available at www. ceres. org

The Final Word 111(d)

Thank You Ron Binz Public Policy Consulting rbinz@rbinz. com