February 26, 2015 - From the January/February, 2015 issue

VX2015: California & National Energy Leaders Discuss DG’s Impact on Grid Management

The VerdeXchange 2015 opening plenary “The Future is Now—The Green Economy Going to Scale” considered the remaining work to be done by government and business as “sustainability” becomes mainstream. TPR provides edited excerpts of the discussion here, featuring California State Senator Robert Hertzberg; US Congressman Earl Blumenauer; President and CEO of California ISO Steve Berberich; and EPCOR Utilities Board Member & Former Mayor of Long Beach Bob Foster.


Steve Berberich

“The future is a decentralized, distributed world. Well down the road, almost all of our homes and businesses will be self-contained.” —Bob Foster

Bob Foster: If you look at how green technologies and carbon markets are integrated and absorbed by the private sector, that holds great promise for all of us. It wasn’t always so. 

Years ago, government was leading the way—and still is, to a large extent—on building standards and renewable portfolios. A lot of time, a change in the psyche of the private sector, and the dramatic reduction of the cost of renewable energy has made a lot of things possible. 

I see two trends here. 

First, there is an immutable trend in almost every segment of the economy, from the industrial revolution to today: going from central to decentralized systems. The future is a decentralized, distributed world. Well down the road, almost all of our homes and businesses will be self-contained. There are a lot of reasons to believe that. I think this trend is unstoppable.

The other trend is about the private sector, through a tremendous amount of innovation, leading the way. Government needs to embrace the policies that will make great ideas a reality. 

A number of you in the room have products or services that are dependent on dynamic pricing, for example. Even now, we are without much in the way of dynamic pricing—where you can aggregate customers and get dispatchable demand response. You can do an awful lot on the system that is possible now but needs government to work hand-in-hand with the private sector. It is possible to aggregate customers on an app on a phone and have dispatchable demand response. To make that a reality, it’s necessary to have pricing that incents people to do that. 

In the next several years, the challenge is for government, in some cases, to get out of the way—and to get away from the notion it’s had since the ’50s and ’60s of protecting consumers. Government needs to embrace the technologies and policies that will make green technology an everyday fact of life.

The duck chart means that we’ve been so successful with renewables that now peak load—which used to occur around 12, 1, or 2 o’clock in the afternoon—is now completely the opposite during many times of year. You have too many resources and will actually get into a curtailment situation. 

One of the solutions is to have a greater penetration of electric vehicles and charge them during that period to take advantage of the over supply. You’re never going to get people to charge simultaneously, but to get a significant number, you have to provide a financial incentive. We lack that today. 

Another solution is to expand the ISO area, or at least get regional cooperation so that we can share California renewables with other states, reducing their use of coal, for example. 

I’m more confident than I’ve ever been that we’re going to go to a much cleaner, much more secure world. I see the major force for that coming from the private sector. 

Bob Hertzberg: Do you see that transition happening with the big electrical utilities?

Bob Foster: Maybe. It’s going to be a challenge for the large utilities. If I’m right, and the future is decentralization with distributed resources, that’s almost antithetical to what those institutions are. So there has to be a part of those companies that starts now to market against themselves. 

That’s very hard to do. 

Fast forward 30 years, and if I’m right, then through a combination of efficiency, renewables, storage, PV to grid, and maybe small fuel cells, you are basically self-sufficient in your home or small business. But if your dishwasher or air conditioner breaks down, you still need someone to care for that. That is a great role for the current utilities. I just don’t see them moving in that direction. 

Steve Berberich: California is an incredible place, and we all ought to be excited about the changes and opportunities. 

In California last year, several times we had 30 percent renewables serving our load on the grid. That’s truly an astounding fact of growth. We’ve had 10,000 megawatts of solar, wind, and other resources in the system on a regular basis everyday. The change is dramatic. But the change also is occurring through the consumer. I’ll call them the “prosumer,” because they’re not just consumers anymore—they’re also producers, and we have to engage them that way. 

8,000 rooftops a month are being added to the system. Between that growth and the other growth, we have to ask, “How does California continue on the world stage to show how to do this reliably and economically?”

We can’t have a massive increase in cost or massive amounts of over generation. We have to connect the dots. 

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From an over-generation perspective, the world has changed. If I were giving a speech four years ago, I would ask you not to use your air conditioning or pool pumps in the middle of the day. Here, I am telling you, “Use your pool pumps and air conditioning in the middle of the day! (But not in July.)” 

We have to educate people about what the grid will look like and how the system will work. By 2024, we forecast over-generation in the order of about 14,000 megawatts on a spring day, when we have a load of about 28,000 megawatts. So, fully 50 percent of the amount of power produced would have to be discarded. We have so many electrons that aren’t going to any use at all. What are we going to do with them? We can save them for later, create fuel, or generate power for cars. That’s the conversation that has to occur in California. It’s going to take all of us to solve this issue. 

Bob Hertzberg: Can you explain the duck chart for those who aren’t familiar with it?

Steve Berberich: The duck chart shows the ever-increasing belly of the duck. It’s a net load curve—the amount of generation you need to have, absent renewables, to be able to operate the system at night (because solar doesn’t work at night), and to be able to support the system around renewables. 

The duck shows the risk of over-generation, which we’ve already seen. In 2014, we had four times more over-generation than we’ve ever had before. In two instances, we had over 2,000 megawatts of over-generation. 

The grid has to be balanced—you can’t have too little and you can’t have too much. If you like your electronics at home, we have to maintain the grid at 60 Hertz, no matter what. Otherwise, if we have too much, you’ll lose all of your electronics. 

The second thing the duck chart shows is this massive ramp. Solar comes off on a spring day around 5 o’clock. The load’s not dropping off, so we have to have generation to come up to that. In addition, you come home and turn on your lights, dishwasher, and laundry around that time. Those things create massive load growth—the neck of the duck. 

Right now, the highest ramp we have is about 6,000 megawatts, over a three-hour period. Diablo Canyon, our largest nuclear power plant in California, is 2,250 megawatts, to give you an idea of how much power we’re talking about. The ramp is straight up. By 2020, that ramp will be 13,500 megawatts. How are we going to do that ramp? Storage will play a role, but it’s an indication that we have to connect these dots. 

Earl Blumenauer: Despite the economic upset and turmoil in 2008, we’ve seen a revolution just in solar alone: 86 percent growth in jobs, 20 times faster than the economy overall. More jobs than in the entire petroleum industry. 

Watching what’s happened with unit costs of wind installations going down dramatically, you’re making the future now. 

I’m here with one little message, and that’s to not give up on the federal government. That may be an attractive proposition at times, and you may feel you have no choice. But the federal partnership has made a big difference. 

Through the Recovery Act, for instance, there were some unprecedented investments in green infrastructure—even the much-maligned Solyndra. All of them are showing a very positive result in terms of the investment. 

The federal government is the area of opportunity. One of my goals on the Ways and Means Committee is to extend the production tax credit. I’ve got a little piece of legislation that got a fair amount of support last time, but because my Republican colleagues were going to revamp the tax code, nobody wanted to jump in on this. 

What I would like to do, working with you, is harmonize the treatment of solar and wind—extending wind and giving solar the year of installation treatment, and have that move lock-step. 

We need to work together to make sure people understand that this is not going to be a permanent entitlement. Being able to explain when we’re not going to need it anymore, as costs of production continue to decline and the rest of the economy catches up, will make it easier for us to make other tax adjustments.

My number one goal is to have a carbon tax. That’s going to make all of your challenges much easier, more transparent, and more efficient. At the same time, that’s going to provide the revenues we’ll need to actually reform the corporate tax—which is hopelessly broken. There may be a little left over, dealing with infrastructure. I’m convinced that within the next 10 years, we’re going to get that. 

In the meantime, we need your help to make sure people understand why its important to have a stable future with a production tax credit—to put wind, solar, and geothermal on a common basis. 

Then, we need to make sure the federal government does not get in the way of innovation taking place at the state level. I can’t say enough about the leadership in California. You are showing that the economics work and that there is money to be made. Ultimately it gives businesses, even those not involved in this space, certainty. Think of what has happened in terms of energy costs during the history of VerdeXchange. The work you’re doing can help provide some important stability.

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