the ider playbook for utilities are we ready? do we …...mega trends driving power industry...

/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED 1

EEI STRATEGIC ISSUES ROUNDTABLE

MADISON, WI

THE iDER PLAYBOOK FOR

UTILITIES –

ARE WE READY?

DO WE NEED TO BE?

SEPTEMBER 28, 2016

/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED 2 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED 2

AGENDA

1. Introductions and Objectives

2. Mega Trends and Tipping Points

3. The iDER Playbook

4. Facilitated Discussion – State of Readiness


THE IDER PLAYBOOK FOR UTILITIES –

ARE WE READY? DO WE NEED TO BE?

• This interactive discussion will explore what the utilities feel is needed to be “ready”

for increased adoption of DERs in their service areas across 5 dimensions:

- Customers/Programs

- Regulation/Policy

- Business Models

- Technology

- Operations

• After a brief introduction of DER trends, Navigant will guide an interactive

discussion/debate (using quick survey tools) on the level of readiness/maturity the

utility audience members feel is:

- A) currently in place in their organization;

- B) needed to be fully ready for the future.


AGENDA






MEGA TRENDS DRIVING POWER INDUSTRY TRANSFORMATION

The following megatrends1 underpin the industry transformation:

1. The power of customer choice and changing demands

2. Rising number of carbon emissions reduction policies and regulations

3. Shifting power-generating sources

4. Delivering shareholder value through mergers and acquisitions (M&A)

5. Regionalizing of energy resources

6. Merging industries, new entrants, and colliding giants

7. The emerging Energy Cloud: Replacement of old infrastructure and transition

toward an increasingly decentralized and smarter power grid architecture

The transformation includes a wide range of strategic, operational, technological,

commercial, environmental, and regulatory changes that are transforming the

traditional strategies and business models.

1 Take Control of Your Future: Megatrends in the Utilities Industry

http://www.navigant.com/insights/library/energy/2016/utility-megatrends-tipping-points/


TIPPING POINTS INDICATORS THAT THE TRANSFORMATION HAS STARTED

Power Forward: 215 Fortune 500 companies investing in GHG reductions,

sustainability, and renewable energy initiatives

DER growing 3 times faster than central station generation between 2015-2019

in the US (168 vs 57 GW)

In 2016, natural gas, solar, and wind expected to make up 93% of U.S.

generation additions

Paris Climate Agreement signed by 175 countries limiting global warming to

<2o C by 2100

AEP decommissions 11 coal plants (6,500 MW) and builds renewables (4,000 MW)

Value of utility M&A deals quadrupled in 2014-15 (compared to 2012)

CAISO saving $18.9M in first quarter of 2016 by using 113 GWH of surplus

renewable energy across participants

2018 - Tesla producing 500,000 cars per year (range > 200 miles, 30-40K)


OUR VIEW ON THE INDUSTRY TRANSFORMATION THE ENERGY CLOUD1

EMERGING: THE ENERGY CLOUD

Distributed, Two-Way Power Flows

TODAY: TRADITIONAL POWER GRID

Central, One-Way Power System

1 Navigating the Energy Transformation: Building a Competitive Advantage for Energy Cloud 2.0 (white paper)

©2016 Navigant Consulting, Inc. All rights reserved. (Source: Navigant Consulting)

http://www.navigant.com/insights/library/energy/2016/navigating-the-energy-transformation/


DER IN THE UNITED STATES WE FORECAST STRONG DER PENETRATION GROWTH OVER THE NEXT DECADE

Observations

• DER deployments

will reach ~30 GW

this year in the US,

versus new central

station generation

(19.7GW)

• On a 5-year basis

(2015-2019), DER in

the US is growing

almost 3 times faster

than central

generation (168 GW

vs. 57 GW).

(Source: Navigant Research)

Annual Installed DER Power Capacity Additions

by DER Technology, United States: 2015-2024

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

(MW

)

Distributed Generation Distributed Energy Storage Microgrids Electric Vehicle Charging Load Demand Response Energy Efficiency


STATE & FUTURE OF THE POWER INDUSTRY SURVEY BALANCED VIEWPOINTS ON DER

Which distributed energy resource

will be the most useful to utility

operations by 2025?

Which will be the most prevalent

distributed energy resource in terms

of capacity by 2025?

Source: Navigant Consulting/Public Utilities Fortnightly


STATE & FUTURE OF THE POWER INDUSTRY SURVEY BALANCED VIEWPOINTS ON DER

When will the growth of DER force a

major shift in the utility business models?

What is the most important tipping

point for utilities to aggressively pursue

owning and operating DER?

Source: Navigant Consulting/Public Utilities Fortnightly


AGENDA






UNDERSTANDING THE IMPACTS

INTELLIGENT The increasing connectivity, controllability, and automation of energy-consuming devices through the use of sensor technology, communications infrastructure, and software applications available to users (e.g., smart cities, smart homes, and IoT) as well as integration of data analytics capabilities.

DISTRIBUTED

The increased proliferation of DER (including energy efficiency, DR, distributed storage, distributed generation, and EVs) brought about by technology advancements and increased customer desire for control over energy usage.

CLEAN

The global movement to reduce GHG/carbon emissions through federal or state legislative, regulatory, or other policy efforts as well as increased social pressures and/or customer demands.

The Energy Cloud

Beyond safe, reliable and affordable

Customers

Regulation and Policy

Technology

Business Models

Operations

Impact Dimensions


ENERGY CLOUD PLAYBOOK DIMENSIONS

Dimension CLEAN DISTRIBUTED INTELLIGENT

Customers

• Rise of Community

Choice Aggregation

• Carbon free energy

• Sustainability

• Self-generation/storage

• Security/reliability

• Cost savings

• Accessibility/control

• Transactive energy

• Digital communication

Regulation and

Policy

• Clean Power Plan

(U.S.)

• 20-20-20 (EU)

• Paris Accord

• Self-generation

incentives

• Net energy metering

• Feed-in tariffs

• Grid modernization

• Standardization

• Smart meter targets

Business

Models

• Utility-scale renewables

• Green pricing

• Community

aggregation

• DER build, own, and

operate

• Energy services

• Microgrid as a service

• Network Orchestrator

• Variable rate design

• Smart grid as a service

Technology • Utility-scale renewables

• Distributed renewables

• Intelligent devices

• DER

• Volt/VAR

• Microgrids

• IT/data analytics

• Advanced metering

infrastructure

• Blockchain

Operations • Renewables integration

• Transmission upgrades

• Load balancing

• Aggregation

• Two-way power flow

• Asset management

• IT/OT convergence

• Customer engagement

• Cybersecurity


UTILITIES ECOSYSTEM IS CHANGING


STRATEGY FOR DER INTEGRATED DER MATURITY MODEL

A maturity model can help you understand your readiness for DER integration and

value capture.

Have you started benchmarking your DER efforts?


AGENDA






iDER PLAYBOOK – CUSTOMER PROGRAMS

Characteristics of Fully Mature iDER Business:

• Full fleet of DER programs, high customer engagement, high customer satisfaction

with program

• DERs make significant % (25) of retail energy and capacity

• Mutually beneficial partnerships with 3rd party programs

• Programs are visible and easy to access

• Rapid interconnection time and easy process.

1. Not Important 5. Very Important

--- Importance ---

1. Not Ready

at All

5. Very Ready

--- Readiness ---


iDER PLAYBOOK – REGULATION AND POLICY


• Strong state policies and regulations driving DER (e.g., NEM, RPS, incentives);

• Regulatory mandates govern DER –inclusion within IRP or long-term planning efforts

• Regulators providing feedback concerning value of DER and IRP / long-term

valuation process

• Company’s policy positions on DER actively communicated to stakeholders

(investors, customers, employees)


--- Importance ---

1. Not Ready

at All

5. Very Ready

--- Readiness ---


iDER PLAYBOOK – TECHNOLOGY


• IT/OT fully integrated for situational awareness of DER status

• Cyber-secure communications and system, communications without latency issues-

-near real-time awareness, appropriate control to maintain reliability

• Availability of right information to capture value from DER and forecast (analytics)


--- Importance ---

1. Not Ready

at All

5. Very Ready

--- Readiness ---


iDER PLAYBOOK – BUSINESS MODELS


• ISO/RTO/BA is currently integrating DER and allows participation

• Utility plays aggregator role in wholesale markets

• Transactive energy wholesale interface

• DER ownership and operation is allowed and encouraged and being fully

implemented

• Profitable retail business models deployed and are being adopted

• (if applicable) unregulated subsidiary is market leader in retail DER;


--- Importance ---

1. Not Ready

at All

5. Very Ready

--- Readiness ---


iDER PLAYBOOK – OPERATIONS


• Departments organized to effectively handle DER integration;

• DER buy-in and acceptance across entire organization;

• A DER-focused cross-functional team leads coordination

• Mature change management process is in place that is fast and flexible

• Proven ability to integrate new ideas and processes;

• Wide spread and defined process in place to develop and foster new ideas and

innovation


--- Importance ---

1. Not Ready

at All

5. Very Ready

--- Readiness ---

/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED 22 navigant.com

CONTACT

MIKE RUTKOWSKI

Managing Director

312.583.6880

[email protected]

ROB WILHITE

Managing Director

704. 347.7735

[email protected]

mailto:[email protected]

mailto:[email protected]

the ider playbook for utilities are we ready? do we …...mega trends driving power industry...

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