What a 100% Renewable Energy Future Means for Your Electricity Bill
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Introduction
The push for 100% renewable energy by [insert audacious date (e.g. 2040, 2050)] is THE main force acting on the energy industry today. Collectively, major corporations, utility companies, energy codes and regulations, LEED certification guidelines, and international agreements like the Paris Agreement are putting tremendous pressure on utility companies to transition to a 100% renewable energy situation in the next couple of decades to try to mitigate the impacts of climate change.
As more renewable energy is added towards the 100% goal, the energy rates for consumers and businesses are expected to take a drastic shift. If buildings do not adapt how they are operated, the energy costs of owners could rise substantially and the ‘normal’ ways of saving energy will be less impactful.
This article specifically focuses on how solar energy is transforming the direction of the energy market and what changes to expect.
The Impact of Solar
Solar photovoltaic (PV) generation is one of the biggest renewable energy categories along with one of the most impactful drivers of changes in the 100% goal process. This, along with the simultaneous efforts of decommissioning older power plants, present an immense, albeit necessary, challenge for electric companies to manage the variable output of power from solar and other renewable sources while maintaining reliability to business and people when they need it.
Simply put, solar only generates electricity when the sun is out, but as soon as the sun starts going down, more and more power is needed from other sources. Viewed graphically in the figure below, this creates a condition that’s known as the “duck curve”, with the low demand in the middle of the day being the “belly of the duck”. The challenging aspect for power plants is managing these major swings in demands.
The way electric companies typically handle the increasing peak demand in the afternoons is through fast acting ‘peaker plants’. These are smaller in output than typical power plants and start and ramp-up much faster. These peaker plants are typically fueled by natural gas which creates lots of greenhouse gas emissions when they operate. These plants are also a heavy financial burden on electric companies because they only generate a few hours a day but need the people and resources to operate and maintain them for this readiness, therefore the power they produce is typically very expensive when accounting for all these costs.
Outcomes
The effects of the changes to a 100% renewable energy environment is creating the following outcomes:
1. Higher Peak Pricing and Demand Charges
Utility companies focus has shifted towards managing large supply and demand swings between renewable generation and the system load demand. This means that energy used during weekday afternoons and evenings and/or peak demand charges will increase to match up for the high cost of electricity in the evenings. For example in Arizona, it’s not uncommon for buildings getting electricity from Arizona Public Service (APS), the state’s largest electric utility, to have 50% of a business’ electricity bill come from the peak demand charge.
2. Energy used in the middle of the day energy is ‘greener’ than other times
During the times when there is more solar energy on the grid, the electricity produced required less greenhouse gas (GHG) emissions. Once solar starts to decrease output in the evening and a higher percentage of peaker plants is needed, power becomes dirtier. An example of this is shown in the figure below using data from California ISO.
3. Energy efficiency projects need to be evaluated differently
When electric companies relied on coal and gas to create power, energy rates were less variable, and it didn’t matter when the energy savings occurred. Now, with the changes in pricing, the energy efficiency projects that will provide the best returns will be those that save energy when electricity is more expensive. Utility rebate programs are and will continue to push this with more money offered for demand shifting and reduction.
4. ‘Grid Harmonization’ will be a necessary part of the renewable energy goals
To use the renewable energy on the grid, buildings and home will need to ‘harmonize’ or closer align usage patterns with electric grid resources. This can be accomplished through a variety of different solutions, including enhanced building controls to ‘shift’ energy use, thermal and electric storage technology, and different forms of local generation.
What about your project?
Would you like help adapting to these changes within your building or services?
Contact G2 Energy Solutions or AES Defined today to find out how you can get ahead of the curve!
About Travis Sarver & AES Defined
Travis Sarver is the founder of AES Defined, an Arizona based energy solutions and engineering consulting firm that specializes in the optimization of energy systems and operations to minimize the total cost of energy. AES specializes in utility data management and billing analysis and provides strategic utility management services to school districts and businesses in Arizona. AES is also an industry expert in demand-side peak demand management, renewable generation, battery energy storage, and microgrid systems. Learn more at www.aesdefined.com
About Craig Green
Craig Green is the managing principal at G2 Energy Solutions, an energy engineering consulting firm based in Phoenix, Arizona. Over the last decade, Craig has performed the energy modeling as well as other energy requirements on dozens of LEED certified projects.
For questions on the article or to discuss working with G2 Energy Solutions, please contact Craig at 480-637-7900 or craig.green@g2energysolutions.com.
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