Catalina Island is home to many attractions including theaters, casinos, and Hollywood stars. It’s also home to a self-contained utility system called a microgrid, which is a mini version of the electrical grid supplying your home or place of work. Emerson is helping with this system so that it can properly manage all the power inputs and outputs required to control this complex electrical grid. It the case of Catalina Island, such a microgrid is required since the island is isolated from the mainland electrical grid in the United States.
On the mainland, there is a movement happening that mimics Catalina lsland and it’s called distributed generation. In effect, it’s a subset of a micro grid and occurs when you install wind or solar at your house. With this renewable system, the power generation is no longer centrally located, hence the name.
With distributed gen, the agreement most utilities have is that they will buy back any electricity you don’t need through a system called net metering. In some places, the amount paid to homeowners is the retail rate for electricity, which was adopted to spur growth of renewables and reward those people that made the heavy investment to install a rooftop solar system.
Oh how times have changed and that expensive cost is no longer a hurdle as the cost of solar panels has dropped dramatically. The result is that more and more electric consumers are installing rooftop solar.
At first, net metering didn’t cause too much of an issue because there weren’t a lot of solar systems. Utilities learned how to deal with them and the supply back to the grid was relatively insignificant. Now, with the increasing number of customers “defecting” from the grid, utilities have a host of new challenges. Some are operational but one of the most significant (and growing) concern is financial.
Utilities rely on revenues from customers to reinvest in themselves, whether it’s generation, transmission, distribution or a combination of the three. With fewer paying customers, utilities are losing revenue. This is exacerbated by the fact that these former customers are using the electric grid for free…this grid is paid for by utilities and requires more and more investment because it’s getting old. As a matter of fact, this aging transmission and distribution infrastructure is the number one worry for the industry.
Virtually all utilities are dealing with lower revenues from defections and executives from power companies are seeking relief. Whether it’s Southern California Edison or a utility in the North, East, or South, all are approaching their respective Public Utility Commission (PUCs) and are trying to rewrite a payment system that was based on a pre-solar generation network. Utilities are not against renewable power, they just want to make sure the current regulated revenue system is fairly distributed.
So if you have solar panels on your roof or a micro wind turbine in your yard, you will likely be seeing some type of rate changes for your local utility. Just remember, the rules of power generation and distribution have changed and utilities are still charged with making sure the lights stay on. This revenue is needed to maintain the reliability of the grid.
So where does this eventually end? As the revenue models are figured out, more and more investment will be made into the transmission and distribution (T&D) system so that it can better handle distributed generation. In the long run, progressive utilities will likely become the primary suppliers of distributed generation systems and will be the ones helping you install your rooftop solar system.