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“The utility business model is evolving as more consumers choose to install resources like solar PV, EVs, and now energy storage. We can choose to evolve with them or try to hold a firm grip on our status quo.”
Chris Bilby, Research Engineer at Holy Cross Energy
In preparation for a panel discussion at Distributech 2022, our team sat down with leaders from community-focused utilities to discuss the no-regrets investments their utilities are making to prepare for a changing energy future.
We’re grateful to our panelists for offering their time and expertise. The live discussion in Dallas delved into the topics below as well as a series of questions from the live audience. The presentation slides are available. To receive the recording (when it becomes available), sign-up with the form below.
Now let’s hear what our panelists had to say. Responses have been edited for brevity and clarity.
The role of the distribution utility is evolving in line with the goals and vision shared by utilities like Holy Cross Energy, Kit Carson Electric Co-op, and Vermont Electric Co-op. These organizations are focused on expanding the role that local resources play in managing the grid to help lower costs, bolster reliability, and decarbonize.
And while the utility of the future may look different across different communities, in every potential version grid operators expand responsibilities in three ways:
These expanded responsibilities are at the heart of the transition to the Distribution System Operator (DSO) model. Building those capabilities is an opportunity that forward-looking utilities are taking advantage of today.
The utility business model is evolving as more consumers choose to install behind the meter distributed energy resources like solar PV, EVs, and now energy storage. We can choose to evolve with them or try to hold a firm grip on our status quo and slowly have a diminishment of sales while still needing to have reserve capacity.
If we choose to proactively evolve, instead of reactively challenging the evolution, then teaming up with our members becomes a win-win-win. It’s good for the utility, good for the prosumer, and good for the environment. Plus if it’s done right with active system management, everyone gains more reliability and resilience.
The availability of distributed energy resources changes how we deal with aging distribution infrastructure. Instead of upgrading a line to deal with load growth, can we deploy batteries?
And if we work with our members to utilize their resources to support the grid, are we then able to use those batteries or flexible loads to benefit the entire membership rather than just one member? These changes are opening to new opportunities for us to support our members through models like resiliency-as-a-service too.
The business model isn’t always about dollars and cents. Our model is tied to what members want. What do they want to pay for? And do they pay for it to benefit themselves or do they pay for it in a way that benefits everyone?
Take resilience. We’re in the middle of the largest forest fire in the country right now. We’re being asked to shut down feeders. If I had storage around the system in addition to my fiber communications and real-time visibility, we could keep critical systems going. That means water pumping, command center powered, etc. We can protect property and lives if we have real-time capabilities.
The technology is there, it’s about making the investments that align with the needs of our members – and doing so in a way that benefits the entire membership.
We’re breaking down silos within VEC, synchronizing the data tools across our team. Making sure we use the data we already have to work collaboratively within the utility is a short-term goal.
We’re also focused on resiliency. We want to use DERs for more than just peak shaving. We believe we can actually improve reliability – not just maintain reliability amongst a bunch of changes.
To achieve these, we’ve made tangible investments. One example is our investment in Northview Weather (now part of Disaster Tech) focused on forecasting for outage restoration. We’re able to use a weather model that is specific to our area, which is prone to wind events, snow, and ice storms. It’s helped us manage our system reliably.
At Holy Cross Energy, we’re developing more programs. Through our collaboration with NREL and the Basalt Vista affordable housing partnership, we’re evaluating two approaches to integrating DERs for grid support.
The first is direct control by the utility. We call it “distribution flexibility”, where the member voluntarily hands over control of the DER and receives on-bill compensation. We are essentially purchasing capacity behind-the-meter. We also couple this approach with a 0% interest on-bill payment rider, reducing the upfront cost of DERs
The second is voluntary response, either through an email/ text message or a price signal to a home management system. For both direct control and voluntary response, we trial equipment, controls, and billing at our headquarters before launching programs to the members.
Other investments have included a grid orchestration platform, advanced monitoring, more smart equipment, new programs and more staff.
At KCEC, I’d highlight two important investments. The first is communication infrastructure. We invested in communications 20 years ago. Now fiber optics is the backbone to our work with our members. Having connectivity across our system drives inclusivity; everyone is able to participate in our programs.
The second is distribution-connected solar. With our local KCEC-owned arrays, everyone benefits from those systems. We want to take a similar approach to demand-side management, energy storage, etc. – finding ways for those resource types to benefit all members too.
Across the utilities we’re working with, we’re seeing investments in real-time awareness of grid conditions and orchestration of local resources pay dividends quickly.
They help team members make informed decisions, lower costs, and improve familiarity with real-time management approaches that will be increasingly important to grid operations.
It all starts with what our members want. What makes us strong is member engagement. Sometimes utilities reverse this: they think about what the power supplier and banker want first. You need to start with the member/customer.
Take the first step. It’s tempting to say “our data isn’t good enough” or “we don’t have enough DERs yet.” But it’s better to act now and make progress than to wait and try to deal with data and orchestration challenges as they’re causing major changes to your system. Plus, you can do a lot more with your existing data than you might think.
You need to be OK with failure. This space is filled with technologies – it can feel overwhelming. In the end you’ll find some winners. But you need to be OK with some level of risk. Engage with it thoughtfully.
I agree with Luis; we started by listening to our members. Our members were asking about EVs, so we launched our Distribution Flexibility Charge at Home program. After the Lake Christine Fire, our community wanted to become more resilient, so we launched our Power+ program. Because both programs are based on economic dispatch, both programs are a win-win for everyone, including members who don’t own EVs or don’t have the room to site batteries at their homes or businesses. That’s important.
To watch the live panel discussion (on these topics and more), fill out the form below. We’ll send you the slides now and the video recording when it becomes available.
And if you’d like to learn more about any of the topics above, contact us below to set up a call.
