There are three types of people in the world, the saying goes. Those who make things happen, those who watch things happen, and those who wonder what happened. When it comes to the Smart Grid, this observation applies to businesses and governmental entities too. States like California are making things happen through innovative policies, exemplified in two decisions just enacted in this past week that will influence the state’s three investor-owned utilities’ Smart Grid plans.
The California Public Utilities Commission (CPUC) ruled in favor of an expanded definition and standard calculation to develop the number of residential and small commercial customers who can participate in net metering. Net metering is a tariff that lets participants receive a credit on their bill for excess electricity generated by their solar equipment that is returned to the grid.
What does this mean for California’s investor-owned utilities (IOUs)? The amount of net metered solar that can be added to the grid more than doubles from 2.4 GW to 5.2 GW. That in turn increases pressure on utilities to upgrade their distribution grids for bi-directional power flows, which is one of the primary characteristics of a Smart Grid. This additional power from a clean but intermittent source of energy may spur increased utility focus and investment in solutions that help manage distributed energy resources (DER) and in DER assets like community-based energy storage.
This decision also creates market opportunities for the companies that manufacture, sell, finance, install, monitor, and support solar assets on rooftops and DER technologies. Innovations in business models and tools that reduce the costs of solar deployments will follow as new net metering participants seek the most cost-effective solutions. There are some interesting businesses that are making things happen to wring cost out of business processes to benefit consumers. The CPUC decision also has positive ramifications in terms of making things happen for local jobs, especially blue collar jobs in installation and maintenance.
The California Energy Commission (CEC) just announced a ruling that enhances energy use regulations for residential and commercial buildings. The rules go into effect in 2014 for new construction and major renovations, and are estimated to save the energy equivalent of 6 power plants or electricity for 1.7 million homes. Important residential building changes require that new homes must include insulation on hot water pipes, windows that can filter out heat, and rooftops that are “solar-ready”.
Commercial building regulations also address solar-ready roofs and heat-filtering windows, and include automated lighting controls to adjust to daylight conditions and reflective roof materials to create cool roofs. Making buildings better energy consumers through technology or better construction materials is also an important part of the Smart Grid value chain.
There are two existing state policies influencing these regulations and concomitantly, California’s Smart Grid plans. The first is the Loading Order for state energy decisions, which prioritizes cost-effective energy efficiency and renewable generation as the first actions to meet growing electricity needs. In other words, try something different than building another power plant. The other state policy sets “Zero Net Energy” (ZNE) goals for residential and commercial buildings by 2020 and 2030 respectively. At these dates, new buildings must deliver all of their annual energy needs through energy efficiency and distributed generation from renewables.
Just like the CPUC decision, the CEC action creates market opportunities, and emphasizes the importance of investment in Smart Grid-enabling technologies and practices that support DER in addition to making buildings smarter and stingier in energy use. Utilities and businesses that want to make things happen in the Smart Grid should take note. And regulators and utilities should consider enhanced education and communications outreach so that consumers can watch what happens (and become active Smart Grid participants) rather than wonder what happened.