EVOLUTION OF CONSUMER TO

PROSUMER
EFFECTS ON THE ELECTRIC UTILITY
INDUSTRY

IISE Annual Meeting

May 21, 2018

Joshua Warmack
Vice President
Confidential 1
Introduction to EnerVision

Confidential 2
 EnerVision Background

⚫ Incorporatedin 1997 as Oglethorpe Power

Corporation subsidiary
⚫ Employees bought company in October 1998
⚫ Located in Atlanta, GA
⚫ Have served 120+ clients in 30+ states

Confidential 3
 Markets We Serve
⚫ Electric Cooperatives (Primary)
– Distribution
– G&Ts
– Statewide Organizations
– Affiliated Organizations (NRECA, CFC, etc.)
⚫ Municipal Utilities
⚫ Renewable Resource Developers
⚫ Other Select Clients
– Government Groups
– Private Entities
– Large Power Users

Confidential 4
Services / Business Lines

Management Consulting

Emerging Energy Solutions

Power Supply

Confidential 5
 Management Consulting

⚫ Strategic Planning
⚫ Business Planning
⚫ Organizational Design
⚫ Succession Planning
⚫ Board Self-Assessments
⚫ Business Diversification
⚫ Mergers & Acquisitions

Confidential 6
 Emerging Energy Solutions
Distributed Energy Resources (DERs) Wholesale & Retail Rates Services
⚫ Solar (other renewables) ⚫ Rate and Pricing Strategy

⚫ Storage ⚫ Cost of Service Studies

⚫ Microgrids ⚫ Rate Design

Demand Side Management (DSM) ⚫ Innovative Pricing Structures

⚫ Energy Efficiency / Conservation ⚫ Cost Recovery Mechanisms

⚫ Demand Response

⚫ Direct Load control

⚫ Consumer Engagement

Confidential 7
 Power Supply
Power Supply Services Renewable Energy & Energy Innovation
⚫ Traditional Generation Sources
Services
⚫ Total Energy Planning
⚫ Purchase Power Opportunities
⚫ Renewable Resources
⚫ Alternate Energy Options
⚫ Distributed Generation
⚫ New Technologies
⚫ Load Management / Demand Response
Supply Side Services
⚫ Energy Efficiency / Evaluation Tools
⚫ Planning

⚫ Contracting
Compliance Services
⚫ Integrated Resource Plans (IRP)
⚫ Contract Administration
⚫ Renewable Portfolio Standards (RPS)
⚫ Hedging & Risk Management
⚫ FERC / NERC Compliance

⚫ Emergency Restoration Planning (ERP)

Confidential 8
 The Traditional Model

Wholesale Power Supply Planning

Confidential 9
The Traditional Model is Changing
Volt/VAR

Load Management

Total Energy Planning

Confidential 10
 Changing Business Model
Today’s Consumer Centric Model

Confidential 11
The Customer Evolution –
Consumer to Prosumer

Source: US DOE

Confidential 12
 Onset of Distributed Energy Resources
Distributed Energy Resources (DERs)
– “Behind-the-meter” power generation and storage resources typically located on
an end-use customer’s premises and operated for the purpose of supplying all or
a portion of the customer’s electric load
– Such resources may also be capable of injecting power into the transmission
and/or distribution system, or into a non-utility local network in parallel with the
utility grid
• Solar photovoltaic (PV)
• Combined heat and power (CHP) or cogeneration systems
• Wind turbines
• Back-up generators
• Energy storage

Confidential 13
Change in Residential Average Monthly Usage (kWh) 2015 vs 2005

-4%

-1% -5% -8% -3%

-7%

-18% -1% -5%

-5%

Confidential Source: Energy Information Agency 14

 Changing Business Model
Today’s Utility Perspective

Utility Scale Solar

Utility Scale Battery
Operator Rooftop Solar &
In-home Battery

Thermal
Storage
Microgrids
Electric Vehicles
Voltage Reduction Demand Response

Confidential 15
 PROSUMERS
Prosumer enabled by:
⚫ Solar and battery storage (soon-ish)
– Costs have dropped sharply since 2010
⚫ Access to advanced meter data and multiple rate options
– Consumers now can access metered data
⚫ Smart Connected Devices (Internet of Things)
– Thermostats (Nest, EcoBee, Honeywell, etc.)
– Water Heaters, Lights, Refrigerators, etc.

Confidential 16
 Solar and Storage Cost Trends

⚫ Cost to install solar has dropped more than ⚫ Cost decreases of Li-ion
70% since 2010 – Transportation: ~73% (2010 to 2016)
– Stationary: ~60% (2014 to 2017)
⚫ Cost decreases range from 50% to 66% by
2030 depending on chemistry
Source: http://www.irena.org/-/media/Files/IRENA/Agency/Publication/2017/Oct/IRENA_Electricity_Storage_Costs_2017.pdf

Confidential 17
 The Customer Evolution
⚫ Prosumer is new, but growing rapidly
⚫ Regional Transmission Operators (RTOs), Distribution System
Operators (DSOs), and DER owners will need to communicate
and coordinate together to mitigate impact to reliability
– RTO to provide day-ahead DER dispatch schedules
– DSO to advise DER owners on grid integration and operational issues
– DER owners operate as promised (there when called)
⚫ Near-real time communication methods are key to success, but
represent a big task for all involved

Confidential 18
Distribution System Operator

Source: OATI

Confidential 19
 How Utilities Support/Survive/Flourish in the
Changing Environment of Prosumers
⚫ Retail Rate Options
– Expand offerings – Time of Use (TOU), Electric Vehicle
Charging, 50%/100% Renewable, etc.
– Evolve standard rate to produce revenue based on actual cost
incurrence
• Increase base/service charge to reflect true fixed system costs
• Institute TOU blocks that reflect true variable energy cost throughout the
day/year
• Split energy-only rates to include energy and demand components

Confidential 20
 Different Approaches in One State

⚫ Examples – Rates
– Co-op A – All new residential members on demand rate
– Co-op B – Increasing base charges across multiple rates on an
annual basis over 10+ years
• Many cooperatives across the U.S. have increased base charges or are
investigating doing so
– IOU – Simple Solar Rate
• 50% or 100% solar for additional 1¢/kWh

Confidential 21
 What is Being Done Now - Examples
⚫ Examples – Services
– Community Solar – SEPA reports 63 programs/43 MW run by electric
cooperatives (NRECA says there could be 2x that)
– Rooftop Solar Provider – S.C. cooperative launching program soon
• Recovering lost revenue through initial price adder on solar system
– Bring Your Own Thermostat (BYOT) – Austin Energy, Sawnee EMC,
Great River Energy, many others
– Grid Interactive Water Heaters – Great River Energy
• 110,000+ water heaters enrolled
– Battery Storage as backup – Green Mountain Power
• 2,000 Powerwalls at consumers’ homes + utility-scale Powerpacks
– Energy Efficiency/IOT Website – Simple Energy and GVEC Home

Confidential 22
 Considerations for Long Term and
Preparation for a Transactive Energy Market
Two questions help determine the robustness of a future
utility business model:
1. What services can (and should) distribution utilities
provide now and in the future?
2. How to design utility rates in order to provide customers
with desired price signals and to compensate utilities for
the services they render, including incentives to provide
both traditional and nontraditional services.

Source: Modernizing the Electric Distribution Utility to Support the Clean Energy
Confidential Economy, U.S. DOE, August 2016 23
 Big Data Analytics
⚫ Using large amounts of energy data to develop algorithms that
can ingest and analyze the information in order to:
– Send automated predictions
– Optimize the performance of grid devices
– Chart energy usage trends
⚫ Engaging with customers in highly personalized ways
– Residential rate class no longer homogenous
– Line loss locations and instantaneous voltage control
– DER and program development

Confidential 24
 Digital Grid
Remotely monitor, control and automate the network
– Connects decentralized power from renewables, microgrids and
virtual power plants, as well as energy storage, alongside
traditional bulk generation
– Harnesses the potential of connected homes and devices and the
internet of things
– Improves the reliability of current grids by making them smarter,
more able to self-detect and self-heal outages, and to reroute
power as needed

Confidential 25
 Digital Grid
⚫ US utilities are projected to invest $110 billion in digital grid
infrastructure over the next decade*
– Drivers:
• Emerging technologies
• Decentralization of power
• Political & environmental factors
– Concerns:
• Uncertainty about regulators
• Making a business case
• Cybersecurity
*Per Northeast Group, LLC.

Confidential 26
 Transportation Industry Transformation
⚫ Estimated 125 million EVs adopted by 2035*
– Could displace 1.8 million barrels/day of oil demand and add
350TWh to power demand
⚫ Drivers of EV Growth:
– Reduced operating costs
• High utilization of ridesharing fleets and more economical than ICE
vehicles
– Autonomous technology integrated better with EV engines
– Safety and design simplicity
*Source: Wood Mackenzie - https://www.woodmac.com/news/editorial/ev-market-share/

Confidential 27
 Transportation Industry Transformation
⚫ Increased EV adoption addresses biggest industry challenges:
– Potentially reverses stagnant electricity demand through increased
EV consumption
• Utilities may need to plan for distribution system upgrades in areas with
particularly high EV adoption
– Key Grid Management Tool
• Vehicle-to-grid (V2G)
– Increase Member Engagement
• Dynamic pricing
• EV charging incentive programs
• Smart charging solutions to shape load
Confidential 28
Blockchain Opportunities/Threats

Confidential 29
 Blockchain: Current Use Cases
⚫ LO3 Energy – 1st project in Brooklyn, NY
– Grid management
– Peer-to-peer trading
– Real time metering of local energy generation and usage
⚫ Power Ledger – Multiple projects across Australia
– Peer-to-peer trading platform for renewables
– 11,000 households on decentralized network
– Enables sale of surplus renewable energy generated at residential and commercial
developments
⚫ Alliander – Island of Texel in The Netherlands
– Demand response and mobility
– Smart wallets log users in and charge vehicle at times not contributing to peak to shift load
and reduce cost per unit

Confidential 30