emerging global electricity trends...source: gtm research, 2018 cagr: 82% (2017-22) 20x total growth...
TRANSCRIPT
by
Emerging Global Electricity TrendsOpportunities and Challenges
Romkaew Broehm, Ph.D.
April 22, 2019
for
Petroleum Institute of Thailand’s Public Lecture
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Introduction
Transmission
Distribution
Generation
What is changing in the electricity industry? What are the key drivers of these
changes? How do regulators and policymakers
respond? What opportunity exists? How might industry players shape
their strategies?
What is changing in the electricity industry? What are the key drivers of these
changes? How do regulators and policymakers
respond? What opportunity exists? How might industry players shape
their strategies?Customer
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The World Needs More Electricity
In 2018, the global electricity demand rose by 4%. It was led by China’s growing demand in the industry sectors and India’s building sector.
In 2018, the global electricity demand rose by 4%. It was led by China’s growing demand in the industry sectors and India’s building sector.
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
China U.S. India Europe Japan S. Korea
2018 Electricity Demand Growth (%)
Average
Billion toe
Primary energy consumption by region(1 toe = 11.63 MWh)
Source: BP Energy Outlook 2019. Evolving Transition Scenario.
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2018 Demand Still Met By Coal
Source: EPPONote: On EGAT system only
Coal & lignite, 35,796 GWh, 17%
NG, 116,265 GWh, 57%
Fuel oil, 65 GWh, 0%
Diesel, 112 GWh, 0%
Renewables, 17,800 GWh, 9%
Hydro, 7,597 GWh, 4%
Import, 26,669GWh, 13%
2018 Thailand’s electricity generation mix
Thailand204,304 GWh
The World Still Isn’t Meeting Its Climate Goals
Three years after nearly 200 countries signed a landmark climate agreement in Paris, they are still far off‐track from preventing severe global warming in the decades ahead. This month, diplomats from around the world are gathering in Katowice, Poland, to discuss stepping up their efforts.
By BRAD PLUMER and NADJA POPOVICH, 7 Dec 2018, NY Times
World26,700 TWh
2018 world’s electricity generation mix
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What Is Changing In Electricity Industry?
Transformation
3D3DDecarbonization Decentralization
Digitization
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What Is Changing In Electricity Industry?
Transformation
1st D: Decarbonization
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Growing Coal Needs in Some Countries
World Electricity Generation by Technology
Source: World Energy Outlook, IEA. New Policies Scenario
While some countries are cutting down their coal-fueled power plants, other parts of the world still plan to rely on them, e.g.,India and Indonesia.
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Development Path of Renewables – Phase I Government Subsidies
Phase I: Government Subsidies
Renewable Portfolio Standard (RPS)
A good example is the RPS program in the U.S. Renewables got a jump start from agovernment subsidy as early as 1997 (State of MA).
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Transmission Projects for Renewables
CREZ ($7 billion, in-service in 2013),
CAISO Tehachapi Renewable
Transmission Project ($3.2 billion,
in-service in 2016),
SPP Priority ($1.6 billion, in-service
in 2016),
MISO CapX2020 ($2 billion, in-service
in 2017).Source: EEI
Actual and Planned Transmission Investment By Shareholder-Owned Utilities (2007-2016)
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Merchant Transmission To Deliver Renewables
The SOO Green Project, 2,100 MW HVDC underground transmission line, is designed to serve as a renewable energy hub by connecting two of the largest electric power markets in the U.S.: MISO and PJM.
SOO Green attempts to replicate the model used to build America’s fiber optic network by burying an underground HVDC transmission line along an existing railroad.
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From De Minimis Scale to Credible Size and Impacts—Phase II
Phase I: Government Subsidies
Phase II: Increasing Scales
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Declining Costs Push Renewables To Compete with Fossil—Phase III
Phase I: Government Subsidies
Phase II: Increasing Scales
Phase III: Compete with Fossil Power
By the early 2020s, it’s cheaper to build solar & wind than operating existing coal power plant.
By the early 2020s, it’s cheaper to build solar & wind than operating existing coal power plant.
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Disruptive to Existing Thermal Generation
Projects
SCEAlamitos Power
Center100MW(2021)
FPLBabcock Ranch74.5MW Solar
10 MW Storage
Kauai Island Utility Coop
Lawai Project 28MW Solar
100MWh Storage(2019)
APSMaricopa County
65MW Solar50MW Storage
(2021) Tucson Electric Power
100MW Solar30 MW Storage
S&C ElectricMinster Project4.2MW Solar7MW Storage
Xcel1,000MW Wind700MW Solar
275 MW Storage
Advent of Renewables + Battery Storage
Tucson’s solar+ESPPA was bis at less than 4.5 cents per kWh, below an incremental cost of natural gas-fired power plant.
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Will Batteries Out-compete CTs?
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0
100
200
300
400
500
600
700
800
900
1,000
8 10 12 14 16 18 20
4‐Hou
r Battery Cost ($/kW
)
4‐Hou
r Battery Cost ($/kW
h)
Battery Lifetime (Years)Sources: EIA AEO (2017). NREL (2015). Peaker Replacement Values from Lazard December 2016 Report (Page 14). Brattle Assumptions .
CT $1,092/kW
Adv. CT $672/kW
Zinc Peaker Replacement $648/kWh
Lithium Ion Peaker Replacement $949/kWh
Lithium Ion Peaker Replacement $417/kWh
Zinc Peaker Replacement $258/kWh
63%2005-2030
Battery Storage
Source: The Brattle Group (2018)
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But New Landscape Looks Different
Transformation
2nd D: Decentralization
Distributed Energy Resources (DERS) are generation behind-the-meters. These include, but not limited to, solar photovoltaics, small winds, fuel cells, energy efficiency, demand response, energy storage, EV, and microgrid.
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Growing Solar Rooftop
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Growing Numbers of Smart Technology Being Deployed At the “Edge” of the Grid
Distributed Storage(U.S. capacity, MW)
060
1,200
2013 2017 2022
Source: GTM Research, 2018
CAGR: 82% (2017-22)20x total growth in 5 yrs
0
250,000
1,200,000
2010 2017 2025
Electric Vehicles(U.S. annual sales)
Edison Electric Institute and IEI, 2017
CAGR: 22% (2017-25)5x total growth in 8 yrs
EV Charging Infrastructure(U.S. annual sales)
Edison Electric Institute and IEI, 2018
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Increasing Roles and Responsibilities of DSO
Vlerick Business School surveyed more
than 2300 DSOs in Europe, and found
that by 2020:
• DR will become mainstream (70% of
the survey)
• EU will have 80% rollout target for
smart meters
• 37% believes that it will be common
for customers to self-supply their own
electricity.
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DERS Introduce Customers With Choice
Transmission
Distribution
Centralized System with Supply Hierarchy Decentralized System with Two-Sided PlatformShifts to
Transmission
Distribution
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The Third Change is Digitization
Transformation
3rd D: Digitization
i
Software is eating the worldMarc Andreessen (2011)
Software is eating the worldMarc Andreessen (2011)
For the electricity sector, software is eating the grid from the edge, i.e. DERs have brought the grid into its Internet of Things (IoT). For the electricity sector, software is eating the grid from the edge, i.e. DERs have brought the grid into its Internet of Things (IoT).
▀ Various policies and programs such as TOU and DR
▀ Home Network that allows a homeowner to control home appliances, lighting, media and home security from mobile phone
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Emerging AI Grid Components To Integrate Customer Engagement and DERs
EV Charging Station
End-User Technology
Smart Appliances
Solar, Wind,
Storage, Microgrid
Infrastructure
ApplicationsCustomer Services
Next Generation of Computing-Cloud and Connectivity with 5G or LPWA*
* LPWA = Low-Power Wide Area
Transmission and
Distribution Grids
Billing& Data
Management
“With all the hype around IoT, many analysts were predicting there would be more than 20 billion connected devices by 2022.”
Gus Vos, “What is LPWA for the Internet of
Things? Part 1: The Four C’s of IoT” (2018)
Digitization + Connectivity= Internet of Things
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Customers Become “Prosumers” – Opportunities
This also creates tremendous opportunities for:
Customers to control electricity usage
Customers to engage with other customers and new service providers
Source: PowerTree
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Challenges Facing Utilities and Regulators
This creates tremendous challenge for grid operators, traditional utilities and regulators, including relating to:
Resource planning much more uncertain with customers making some of the decisions themselves, albeit without full system-impact information or concern
System balancing, service quality, cost recovery, pricing, consumer protection, competition, equitable treatment of customers, and simplicity
Much more differentiation of customer classes and rate designs needed to capture variations in customer DER use and consumption profiles
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Emerging New Business Model
Case Study: Southern California Edison (SCE) proposed to invest $2.3B through 2020 to expand the distribution utilities’ capabilities and roles to be Distribution System Operators (DSO):
• Reinforce local grids to manage distributed energy resources
• Add advanced sensors, communications, and automation to monitor the distribution system in real time to minimize disruptions and maintain reliability
DSO is a significant advancement toward how to best use and manage distributed generation
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Utility’s New Product – U.S. Green Tariffs
Source: SEPA
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NY Utilities’ Demonstration Projects
To understand business model of new energy of DERs and the development of DSP, NYPSC has allowed incumbent utilities to propose demonstration projects with 3rd parties.
Cenhub Market Place: Central Hudson partners with a tech company to build an on-line energy product to provide customers knowledge and tools for effective total energy bill management
Clean Virtual Power Plant: Coned partners with DER providers to integrate solar and storage to provide the system wide efficiency; fuel and resource diversity and system reliability and resiliency
CONnectED Homes Platform: Coned partners with tech companies to build a marketing platform targeting residential customers to manage home energy usages and their bills
Energy Marketplace: Iberdrola partners with a tech company to launch an online marketplace for customers to buy energy products and services
* http://www3.dps.ny.gov/W/PSCWeb.nsf/All/B2D9D834B0D307C685257F3F006FF1D9?OpenDocument
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A Utility Smart Grid Demonstration Project
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Could You Continue to Live in Deny?
Traditional Cable Subscribers vs. Netflix
Blockbuster files for Bankruptcy
Hulu laun
ches
“Neither RedBox nor Netflix are even on the radar screen in terms of competition”
Blockbuster CEO, Jim Keyes
“It’s a little bit like, is the Albanian army going to take over the world? I don’t think so.”
Time Warner CEO, Jeffrey L. Bewkes
“This has been an era of experimentation, and I think it’s coming to a close.”
Time Warner CEO, Jeffrey L. Bewkes
Amazon
laun
ches
Prim
e Vide
o
Charter Cable files for Bankruptcy
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Which Path Will You Choose?
Incumbent Evolution
Emergent Revolution
Legislative Innovation
RegulatoryInitiatives
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Thank you
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Presenter Information
Dr. Romkaew Broehm is an economist with over 25 years of in-depth experience in the electric power industry. She has assisted clients in the areas of market reform, market oversight, and alternative energy resources. She also has led numerous studies in network transmission simulation, strategic bidding behavior, marginal cost studies, and generation and transmission asset valuations. Dr. Broehm also authored books and articles. Her latest article is on Economic Framework for Compensating Distributed Energy Resources, Electricity Journal (October 2018).
Prior to founding RPB Energy Economics LLC, Dr. Broehm was a principal at The Brattle Group. She also holds a Lecturer position at Boston University’s Economics Department.
ROMKAEW P. BROEHMPrincipal │ [email protected]