The Future of Decentralized Electricity Distribution Networks

The Future of Decentralized Electricity Distribution Networks assesses the evolution of the services delivered by the distribution network as demands placed on it proliferates from distributed, self-generating, power storing and power sharing ‘consumers’ – which Sioshansi terms ‘prosumagers’. The work outlines the processes by which passive and homogeneous electricity consumers become prosumers and prosumagers, the nature of their service needs, and dependence on the services delivered by the distribution network diverges. Contributors assess how consumers are discovering and exercising options to migrate away from total reliance on upstream generators to produce electricity and on the delivery network for its transmission.

As they do so, the "utilities" – be they distributors or retailers – must rethink the traditional utility business model. How will they find sufficient revenues to cover their fixed and variable costs as volumetric consumption declines when some consumers become prosumers – or go a step further and become prosumagers? This work argues that new service, business models and new methods for collecting sufficient revenues to maintain the network are mandatory for the survival of modern utilities.

Cover image
Title page
Table of Contents
Copyright
Author biographies
Foreword
Preface
Part I. How technological innovations are changing customers’ service needs
Chapter 1. What motivates consumers to become prosumers or prosumagers?∗
1. Introduction
2. Who are the solar customers?
3. What motivates consumers to become prosumers and prosumagers: Three personal experiences
4. Variables that determine the economics of becoming a prosumer
5. Conclusions
Chapter 2. Commercial rooftop solar in Australia: State of play, innovations, and prospects
1. Introduction
2. Background
3. Innovations in commercial arrangements affecting rooftop solar uptake in the commercial sector
4. Conclusions
Chapter 3. The sunshine state: Cause and effects of mass rooftop solar PV take-up rates in Queensland
1. Introduction
2. Brief background to Australia’s National Electricity Market
3. Review of literature
4. Queensland starting conditions: Sharply rising retail tariffs
5. Overlapping rooftop solar PV subsidies
6. Falling costs of rooftop solar PV
7. Queensland household take-up rates
8. Impacts on participating (solar) household
9. Impacts on non-participating (i.e., non-solar) households
10. Impacts on the power system
11. Policy implications—Impact on utilities
12. Conclusions
Chapter 4. Are networks keeping up with what customers need?
1. Introduction
2. What do future customers want from the distribution network?
3. How are network owners/operators responding to the changing needs of their customers
4. What are regulators doing to align the utility incentives with the required network investments
5. Conclusions
Part II. Old rules, new realities, unsustainable outcome
Chapter 5. Productive net metering reform: Where do the foundations of regulation, technological change, and good economics meet?∗
1. Introduction
2. The foundation of utility regulation and its relevance to NEM
3. How net energy metering works
4. Recent movement to reduce NEM compensation
5. Value of solar (VOS)
6. Utility fixed charges
7. Computing an efficient and equitable rate design
8. Concerns raised by critics of existing NEM schemes
9. Dealing with high-cost jurisdictions: Net billing versus net metering
10. Customer and environmental impacts of smart rates
11. Conclusions
Chapter 6. Leveraging the rise of the prosumer to promote electrification
1. Introduction
2. The crisis and the opportunity
3. Why are the rates so high in California?
4. The economic forces at work that create prosumer opportunities
5. What are the correct cost constructs to be applied?
6. Viable solutions that rebalance the shareholder-customer relationship
7. Conclusions
Chapter 7. California at the crossroads: How not to fumble the energy transformation
1. Introduction
2. How we got here
3. The promise of distributed energy
4. The trouble with California
5. The damage done
6. Distributed energy services, energy equity, and cost allocation
7. Conclusions
Chapter 8. The design and structure of retail electricity markets in Europe
1. Introduction
2. The European experience with electricity choice
3. From choice to customer engagement …
4. … and from engagement to participation
5. The consumer meets the DSO
6. Conclusions
Part III. Regulation, policy, pricing
Chapter 9. Some telecom pricing lessons for advanced electricity networks
1. Introduction
2. Telephone pricing history and reform
3. A Primer on economics of pricing network services
4. Pricing electricity network access in California
5. Conclusions
Chapter 10. A new value proposition for electric distribution networks
1. Introduction
2. Drivers and trajectories of change
3. Electricity system architecture for the 21st century
4. Designing the open-access distribution system operator
5. Getting from here to there
6. Conclusions
Chapter 11. Why efficient network pricing and energy markets really matter
1. Introduction
2. Effects of distributed energy resources on energy and grid costs
3. Effects of DERs on system resilience and robustness
4. The impact of scale on PV system costs
5. Reform to realize the benefits of DERs: The Spanish case
6. Conclusions
Chapter 12. Facilitating power system transformation at the distribution network level
1. Introduction
2. Policy objectives—what are we trying to achieve?
3. First steps: Monitoring, reporting, and forecasting network congestion and increasing visibility of distribution-connected resources
4. Getting the prices right
5. Investment and TSO-DSO coordination
6. Risk management and transition issues
7. Conclusions
Chapter 13. In search of a tariff fit for the grid's edge revolution: Reflections from Brazil
1. Introduction
2. Impacts of distributed energy resource deployment
3. Designing a tariff structure for distributed energy resources
4. Factors that tariff structure cannot resolve
5. Conclusions
Chapter 14. Performance-based regulation to drive utility transformation and encourage DER market growth
1. Introduction
2. What is PBR, and where did it come from?
3. Why current cost of service regulation disfavors DERs
4. How PBR can be used to encourage DER markets
5. Considerations for utilities, regulators, and other stakeholders when using PBR to advance DER markets
6. How DERs and PBR can advance energy justice
7. Conclusions
Chapter 15. Rethinking, repackaging and repricing the grid and retail electricity
1. Introduction
2. The electric utility sector is in transition
3. Challenges to incumbent utilities
4. Regulatory challenges
5. Transitioning to marginal-cost pricing
6. The road ahead, unbundling grid services
Part IV. Case studies, emerging innovative services, new business models
Chapter 16. How an innovative co-op is planning to thrive amidst the market disruptions: The case of Holy Cross Energy
1. Introduction
2. What is Holy Cross Energy (HCE)
3. Leading the transition to a clean energy future
4. A business model under threat
5. Rethinking how we pay for electricity
6. Conclusions
Chapter 17. Turning passive customers into active participants: MCE's innovative DER program
1. Introduction
2. Why customer choice aggregation?
3. The CCA business model
4. The resource adequacy conundrum
5. Leveraging customer resources to reduce RA costs
6. Learning how to run—taking DERs to the next level
7. Potential challenges to further development, implementation and scaling
8. Conclusions
Chapter 18. How multiple trading relationships could upend the historical single supplier business model
1. Introduction
2. What is MTR and what it isn't?
3. What can be achieved by MTR and why it is (or could be?) superior to the single supplier model?
4. How and why can MTR make a difference?
5. Conclusions
Chapter 19. Innovative products and services to meet the needs of present and future customers
1. Introduction
2. What are the value drivers of distributed energy resources
3. Unlocking the value streams and driving consumer participation
4. Distributed energy resources driving product and service innovation
5. Conclusions
Chapter 20. The future of grid-interactive efficient buildings and local transactive energy markets
1. Introduction
2. Beneficial electrification and decarbonization-opportunity, challenges, and costs
3. Grid-interactive efficient buildings and grid architecture
4. Integration of grid-interactive efficient buildings at scale
5. Conclusions
Epilogue
Index

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The Future of Decentralized Electricity Distribution Networks

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Fereidoon Sioshansi