european utility week - us business utility models
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US Utility Business ModelsEuropean Utility Week
Paul De Martini10.17.13
pdemar@caltech.edu
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Source: ACEEESource: EIA
2011 US State Renewable Policy 2010 US State EE Policy
Policy is Spurring DER Adoption
Combined with accelerating improvements in DER technology price & performance are creating opportunities for electric system efficiencies
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Over 80% of US population under the equivalent of EU’s 20/20/20 Plan
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DER will reach 30% of Installed US Capacity by 2020
Effectively all incremental growth in capacity will come from customers
30%
Backup Generation: 225 GWCHP: 122 GWDemand Response: 90 GWSolar PV: 50 GWOther DG: 25 GWDist. Storage: 3 GW
Potential DER Total: 515 GW
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Changing Operational Needs
Wind & Solar PV and Customer DER changing operating conditions – role for flexible DER?
14 GW Ramp
in ~3 hours
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Virtual Power Plant: 2007-2020
Advanced Automation: Multi-direction and variability of DER power flows drive circuit design changes, new grid components and control systems
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Transactive: 2020+
Creation of local balancing & distributed markets to integrate customer DER
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US Telecom Lesson: BAU is not a good strategy
Market growth in mobile, ecommerce and related services
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US Electric Industry Competitive Landscape
Electric Landscape - 1998
NUGs
Marketers
REPs
Utilities
ESCOs
Electric Landscape - 2013
Integrated
ESPs
Non-Energy
SPs
ESCOs
ADT
Source: Newport Consulting
CSPs
Solar PV
REPs
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Significant potential risk to loss of share of customer energy budget plus no participation in enhanced reliability and home energy automation
Grid Energy 4%
T&D 15%
Solar PV 23%
Back-up Generation 46%
EE Spending 7%
Home Automation 5%
Customer Monthly Energy Budget Today - $200.00
T&D 55%
Grid Energy 36%
EE Spending 9%
Customer Monthly Energy Budget Yesterday - $75.00
Example US Customer Energy Budget Allocation
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Utility Economics Are Changing
Economies of Scope
Network Economics
Economies of Scale
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Utility Business Strategies
Customer relationship is very valuable –strong position with customer is essential to compete for customers’ total energy and related spend
Distribution is becoming the hub in a future hybrid electric network – distribution grid is a natural position for enabling and participating in incremental value related to physical bi-directional energy flows
Sustainable competitive advantages are key to future success
“The new clean energy business is not separate and distinct from conventional grid-based power system. The best companies will build the new and clean on the foundation of the old and reliable.” David Crane, 2012 Deutsche Bank Conference
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Differentiated Energy Solutions
DER Market Facilitator
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