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load, according to Brattle, adding, By

comparison, large C&I customers show a peak load

that is only marginally above off-peak loads. In

view of these difficulties, Brattle says, . . . it would

likely take several years before a sufficient level of

demand response could be achieved.

Clearly, Brattle reports main authors, includinglead author Sam Newell, have a soft spot for

markets. Looking at the five options considered,

they state, Energy-only with market-based reserve

margin is theoretically the most efficient option

because it allows customers to choose the level of

supply based on prices and their value of avoiding

curtailment, without having to pay for costly

reserves they may not want. The report, in parts,

reads like classic economic textbooks on market

design.We believe that energy-only, perhaps with rare

backup procurement of short-term resources as

needed to support a very minimal reserve margin,

might be the most aligned with the Commissions

demonstrated philosophy to let markets work, the

report stated, cautioning about the need to

manage public expectations about reliability

implications and the potential for periodic high

spot prices.

The bottom line? Energy-only will deliver lessreliability than the current (ERCOT) target until

more price-responsive demand is developed.

Concerned about the hot summer months parts

of Texas have experienced triple-digit temperatures

in Fahrenheit already the regulators decided to

do the easiest and safest thing by raising the

wholesale market cap to $4,500/MWh from the

current $3,000, already the highest in the U.S. Even

higher caps, as high as $9,000/MWh, cannot be

ruled out if the new cap encourages moreinvestment in peaking capacity.

In making the announcement in late June, Donna

Nelson, the chairwoman of the Texas Public Utility

Commission, said, We cannot ignore the situation

and move blindly forward, hoping we will have

enough electricity. The decision is not expected to

have a noticeable or immediate impact on retail

consumers, since most competitive retailers buy

energy under long-term contract from generators.

Only customers who buy directly from the

wholesale market on real-time prices would be

affected by the offer cap price rise. These

customers are typically sophisticated and one

would assume know what they are buying.

The decision, however, is not likely to help with

this years peak demand, expected in July orAugust, and perhaps not even for the next couple

of years, as it takes at least a few years for new

generation to be financed, permitted, and built.

Energy-intensive industrial users, who opposed the

rise of the wholesale cap, reckon the decision would

add to energy costs. The higher cap, had it been in

place last year, would have added an estimated $4.7

billion to the states annual electricity bill.

The next two months will be critical, especially if

it turns out to be very hot.&

http://dx.doi.org/10.1016/j.tej.2012.07.007

Electric Vehicles: A Blessing,

but Only Up to a Point

Electric vehicles (EVs), as everyone knows, can

be a blessing in reasonable numbers. They can be

charged overnight when plentiful baseloadgeneration is available at low costs or better yet,

when wind is blowing hard with little demand on

the network at night and during early morning

hours. In the latter case, a fleet of EVs can run on

carbon-free and essentially free renewable energy.

In many regions, too much wind is available

during off-peak hours at negligible or even

negative cost. Taking the scenario one step further,

some of the EVs can potentially sell some of their

excess energy back to the grid during theafternoon peak hours when prices are high, the so-

called vehicle-to-grid (V2G) technology.

But too many EVs charging at the same time

and at the wrong time is an entirely different

story, as was discussed during a forum organized

by the Pennsylvania Public Utility Commission

(PPUC) in early June 2012 to examine the effect of

EVs and alternative fuel vehicles on utility

infrastructure.

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Among the speakers at the forum was Terry

Boston, CEO of the PJM Interconnection, the biggest

organized market operator in the U.S. His message

was a stereotypical good news-bad news story.

He said the PJM grid, with a few extra bells and

whistles, could conceivable recharge as many as 25

million EVs if the charging is properly synchronizedbetween midnight and 7 a.m. But if all of those

(drivers) came home at 5 p.m. and plugged in

(their EVs), we would have a voltage collapse.

How many EVs would it take to break the PJM

system? Boston said if a million EVs had attempted

to tap into the PJM network on a hot day similar to

July 21, 2011, . . . when the grid labored under

record loads, a massive blackout would have

occurred.

PPUC chairman Robert F. Powelson, rhetorically

asked, Should we be worried? . . . Who pays for

it? Thats a question as you make upgrades to thedistribution system. EVs have not arrived in large

enough numbers to collapse the network, but one

has to prepare for the days when they do.&

http://dx.doi.org/10.1016/j.tej.2012.07.008

A few years ago, both the 33 percent new

renewable goal and 12 GW of solar PVs would

have been regarded as visionary but not in any

way realistic. California has already passed the 20

percent new renewable target and there is

optimism that the 33 percent target can also bemet by 2020 as required.

But what about the solar rooftop PVs or more

broadly speaking, any type of distributed

generation (DG), also called on-site generation or

customer-side generation all referring to anything

that produces electricity or some other form of

energy such as hot water on the customer side of

the meter? How likely are the types of numbers

thrown around with regularity by the likes of Gov.

Brown?The short answer is that a lot more is possible,

and the ultimate number critically depends on:

The prevailing grid-supplied retail electricity

rates which are broadly rising;

The cost of on-site generation which is broadly

dropping; and

The prevailing net metering regulations which,

as well explain, have had some unintended

consequences.

In high-cost places like Germany or California,

the juice provided by the grid is already expensive

and likely to become even more costly over time.

In the case of Germany, the countrys decision to

shut down its perfectly safe operating fleet of

nuclear reactors prematurely by 2022 and partiallyreplace them with more renewable generation is

likely to lead to higher prices and your guess is

as good as ours as to exactly how much higher.

The story is much the same in California, not

because its nuclear plants are being phased out,

but because of the growing renewable component,

grid modernization, the effect of the climate bill,

and other factors all contributing to rising

electricity prices. Making matters worse as

extensively noted in the past in this space are therising tiered pricing that makes grid-supplied

electricity progressively more expensive as

consumers use larger volumes.

Already, many find it cost-effective to invest in

DG as well as energy efficiency improvements to

avoid the excessively high top residential tiers. By

all indications, the top tiers in California will

become more expensive, perhaps as high as 50

cents/kWh for heavy users by 2020, if not sooner.

Net Metering: Growing, Worrisome Trend

Continued from page 1

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