Mark Bramfitt - Utilities & IT

Customer-Side Energy Storage: The Demise of Utilities?!

I had a good exasperated chuckle at this breathless account of customer-side energy storage that appeared in the Atlantic last week as part of a broader series on "The Great Energy Shift".

The report starts with the ominous warning that "trouble lies ahead" for utilities because customers are going to start installing battery storage systems that help them avoid peak pricing rates.

This is a bit of a facile observation given that utilities are increasingly changing their rate structures to reflect the true costs of providing service, particularly at peak times, that they provide incentives for load management, are experimenting with utility-side energy storage systems, and are in some cases set to provide incentives for customers to do the same.

In what way does this constitute "trouble"?

I appreciate that a hotel operator may have difficulty implementing load management strategies. I mean, turning off air conditioning in the summer in a San Francisco hotel isn't doable, not because guests who pay $300 a night won't tolerate it, but because there just isn't that much air conditioning load when it's only 62 degrees outside!

And installing an energy storage system is not "pulling the plug on the utility", it is load management, pure and simple.  And, demand rates have not risen thirty percent in California over the past three years - customers are now seeing peak usage charges for fifty or so hours out of the year.

It makes sense for the utility and/or their customers to manage that peak load. It drives the capacity ratings of the distribution system up, and really kills on the generation side, where marginal costs can spike to well over a dollar a kWh during peak periods.

I'll credit author Todd Woody with at least providing some context around energy storage, including noting that California utilities have been authorised to install 1350 MW of storage by 2020 (the costs of which will be reflected in customer rates, by the way), and that sixty percent of the costs of the system installed at the Intercontinental were covered by incentives (which will also be paid out of rates).

And yes, the system is financed by the maker of the system (Stem), though that is hardly novel, as there isn't a PV array that isn't financed today. (Stem also indicates that they sell utility-side storage systems.)

But I have to say, given all of the regulatory impetus behing real-time utility pricing, orders to install utility-side storage, and subsidies for customer-side storage, I just don't see that the "traditional utility business model, which for over 100 years ago has served its purpose well, has come to an end."

If anything, the utility business model, enabled by the regulatory process, makes the energy storage market viable.

Thoughts on Smart Meter "Failures"

More buzz today about smart meter "failures", this time out of Texas. (Link to New York Times report, but hat tip to The Dallas Morning News.)

Following the pattern of Pacific Gas and Electric Company's problems in Bakersfield, Oncor now has a state senator nipping at their heels asking for an independent audit to verify the accuracy of meters being installed in their service area.

I happen to have a good friend in the utility industry who is responsible for automated meter technology and systems (though only on the natural gas side, not the electric meters), so I've gotten a birds-eye view of the challenges that have occurred for large-scale deployments. 

We've had great discussions about the problems of "newly high reads" after meters are changed out, and can point to several possible failure modes that would explain higher reads (and bills!) beyond the usual utility reasons of rate increases and weather conditions.

Smart Grid Thoughts from Landis+Gyr and eMeter

Late, but here is the promised post regarding the smart grid panel at the PacificCrest Emerging Technology Forum last week.

The panelists were Cree Edwards, Founder and CEO of eMeter in San Mateo, and Brent Pearson, VP of business development at Landis+Gyr, the international metering company headquartered in Switzerland.

eMeter focuses on providing "back office" software integration products for utilities, based on the need for taking huge volumes of data from automated metering systems and turning out accurate bills. Cree's comments were particularly focused on the status of utility IT operations, and the impediment imposed by current utility regulation in the US.

Landis+Gyr of course makes meters, and now the systems that make up automated metering systems. Brent had a chance to describe projects completed in Europe (Italy and Spain installed automated metering systems mainly to address rampant energy theft), but also had comments about the utility regulatory environment in the US.

Colleague Recommendation

I caught up with a former colleague at Pacific Gas and Electric Company, and now a fellow colleague in the consulting world, Jonathon Livingston, this morning for coffee and conversation.

Jonathon is an acknowledged leader in the utility industry in the emerging technology space, and is carving out a vibrant practice advising both start ups and established companies about how to strategically engage with utilities in the energy efficiency, demand response, and smart grid areas. Very much like my developing practice, though I am staying focused on the intersection between utilities and the information technology industry.

In any event, if you are looking for someone who can really bring some high-powered strategic thinking to your enterprise, I can't recommend Jonathon more highly. Reach out to him at Livingston Energy Innovations.

PacificCrest ET Summit

Had the great pleasure of attending and appearing as a panelist at PacificCrest's Emerging Technology Forum yesterday in San Francisco. If you've never attended a venture capital/emerging business conference, there is no comparison to any other type of conference in terms of energy and ambiance.

I'll probably have three separate posts about what I learned and observed at the event: a report on Verdiem, the energy efficiency panel I participated in, and some great commentary from two companies about engagement with utilities on automated metering and smart grid projects.

I've been to a half-dozen events like this one, and the ambiance is always the same: a mixture of unbridled enthusiasm (our company is going to change the world) with an undercurrent of paranoia (please invest in my start up before our burn rate overtakes our current funding). That is balanced with the most open atmosphere you will ever experience in terms of networking, as everyone wants to share their perspectives and insights.

For example, I sat with a very charming chap from China who was here on his first visit to the US, and he shared incredible information about the status of the wind generation industry there. Evidently China met their wind energy target for 2020 last year, but 20% of the generation is lost due to the lack of transmission capacity from the farms to the cities. Their target is to own the wind turbine manufacturing business, and the US is in their crosshairs.

Those of you who know me will appreciate this observation: attendees were absolutely the best-dressed group I have ever seen at a conference. I would say three-quarters of the men were in suits (though most without ties), with the rest in sport coats. Only one pair of jeans and a smattering of fleece vests!

 

Consulting Available!

Perhaps my most important post to date is simply to note that I have added a new page listing the areas of expertise and types of consulting services I am offering to clients.

I've divided the document into four sections, focussing on services for utilities, for the IT industry, for data center operators, and for the start-up and venture capital communities.

Essentially, if you're a potential client, we can pull from this document to develop a consulting scope of work that meets your needs.

I am available to work on a project-by-project basis, or on retainer, and look forward to speaking with you if I can offer the services and insight you're looking for.

Cheers!