Utilities See Distributed Generation Coming; Energy Efficiency Working

Once upon a time when a big power plant retired, it was replaced by one as big or bigger. But not anymore. Energy efficiency is increasingly reducing the need for more power. And when it is needed, distributed generation may be enough.

That’s how utilities increasingly view the market, according to this year’s Strategic Directions: U.S. Electric Industry report issued August 12 by Black & Veatch.

The report is based on a survey of 576 utility leaders from May 7 to May 27.

As coal and nuclear plants retire, utilities find it less necessary to replace them with the same number of megawatts because of increased levels of energy efficiency, according to the survey. Instead, utilities can turn to solar and other smaller generators.

“Our system was built around the notion of central generation, transmission, distribution. But now with renewables and more self-generation, we are going to have to integrate those into the grid,” said Dean Osvig, president and CEO of B&V Energy. “What that means for the traditional utility is that they are going to have to make their money more on a capacity basis and less so on an energy sales basis.”

Over half the respondents said they are considering new generation, according to the results.  But flat demand and a slow economy make it difficult for them to move forward.

“Many of utilities are putting off the large  investments that they need to make until they can carefully analyze these scenarios with regard to demand growth and environmental regulations,” said Ann Donnelly, director at Black & Veatch. “More than ever, electric  utilities need to carefully consider distributed generation and the role  it may play in actually fulfilling customer electricity requirements.”

In a finding that may bode well for microgrids, reliability was the number one issue of utility concern among 10 listed. Others were environmental regulation, economic regulation, cybersecurity, natural gas prices, long-term investment, aging infrastructure, physical security, natural gas fuel supply reliability and fuel policy.

The report also found that emerging technologies, such as demand response, data analytics and advanced metering, provide more opportunity than challenges for utilities.  Over 40 percent of the utilities surveyed said they have advanced data analytics programs is place,  and more than 38 percent have advanced meters. More than 27 percent are using programmable thermostats for demand response programs; 26.5 percent have direct load control for home area networks;  and almost 16 percent have in-home displays.

The full report is available for download here.