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“Grid integration” is utility-speak for adding photovoltaic (PV) and wind power sources to the traditional fossil-fueled electrical power system. There are very real challenges to adding high levels of PV and wind power to traditional utility grids. These issues are now getting a lot of attention, not only from some of the more progressive utilities themselves, but also from university researchers, National Renewable Energy Lab (NREL) staff and the US military.
Many traditional ultra-risk-adverse utilities still cling to the belief that even a modest percentage of wind and PV power integration is too expensive, intermittent and unreliable to bank on. At the same time, the US military has committed to a major investment in Renewable Energy (RE) precisely because it wants cost-effective, reliable and completely self-sufficient power sources that are immune to fuel supply disruptions and potential utility grid failures. Fascinating, isn’t it?
A state-regulated electrical utility usually fits the definition of “big business.” It has deep pockets, powerful political clout and access to teams of seasoned lawyers, sympathetic expert witnesses and cooperative financial wizards. The utility’s costs related to rate cases, regulatory hearings and even pollution lawsuits are normally completely covered by customer rate increases. The issues involved are complicated, highly technical and often involve mind-numbing accounting methods using proprietary financial information. And utilities have access to powerful national utility lobbying and advocacy resources. Consumer advocates, nonprofit organizations and even state utility regulators are at a huge disadvantage in these contests.
“Benchmarking” is the process of comparing a business’s policies, practices, performance and even strategy to industry “best practices.” It’s a well-recognized business-school-approved method for encouraging “continuous improvement.” Turns out that benchmarking is also a potent weapon for energy policy advocacy and citizen empowerment. While it’s difficult to counter an entrenched utility’s PR machine, sophisticated misrepresentation of information and hidden financial flim-flam, it’s relatively easy to point out crystal-clear examples of what other similar utilities are successfully doing in nearby states. Let’s take a look at some of these examples and contrast them with PNM’s current positions.
Adapting to Renewable Sources: Wind and PV power sources have very different characteristics than standard fossil-fueled generators. Utilities that expect RE sources to “conform” to traditional utility rules complain a lot. Utilities that adjust their operating procedures to be more compatible with their RE sources are far more successful at “integrating” RE. Not that many years ago, the Colorado division of Xcel Energy was highly resistant to integrating RE. A combination of political pressure and common sense changed Xcel’s point-of-view. Xcel has now joined a growing number of “progressive” utilities in its attitude toward renewables. PNM still complains a lot.
Distributed Generation: Many researchers and several utilities have documented significant advantages to distributed generation, including a reduction in transmission line loss, reduced maintenance costs for transformers and other components and improved power system “robustness.” Traditional utilities like PNM are all about centralized power generation and distribution—a business model that may well be challenged in the not too distant future.
Time of Use Rates: Utilities use relatively low-cost nuclear and coal-fired “base-load” generation to satisfy average daily power demands, and relatively high-cost natural gas-fired “peaking” generators to meet afternoon peak demands. Many utilities adjust their rates hourly to compensate for this difference. This means that PV and daytime wind power sources should be credited with much higher “earning power.” But not in PNM’s territory.
Energy Storage: The lack of utility-scale energy storage is often cited as a major barrier to the adoption of wind and solar power. Yet there are a growing number of utilities in the US and around the world that are already successfully managing grid integration levels that far exceed what we have here in NM—without utility-scale storage. NREL published a 2010 study, which found that in the western US, a wind/solar penetration of 24 percent was practical without requiring storage, assuming that utilities were willing to make certain operational changes. PNM is touting their involvement in the “stimulus”-funded “Prosperity Energy Storage Project.” Fair enough, but PNM’s recent PR campaign seems to be using the Prosperity Project to bolster its argument that RE isn’t practical without utility-scale storage. That’s clearly not true, and there are plenty of examples to prove it.
RE Penetration: SMUD, the Sacramento city-owned electric utility, which is actually larger than PNM, achieved 24 percent RE penetration in 2011, and they are heading for 30 percent. Xcel Energy in Colorado is on track to meet the state’s 30 percent RE mandate. Utah utilities are adding wind power as fast as they can, without any state mandate at all. North Dakota, Wyoming and Minnesota already get at least 10 percent of their power from renewables, mostly wind. Iowa and conservative South Dakota already have the highest wind-power penetration in the country, at 20 percent, without either utility-scale storage or state mandates. After missing the 2011 target date, PNM has promised to reach 10 percent RE in 2013, but only because the NM Public Regulatory Commission (PRC) is forcing it to.
Peak Shaving: Researchers and a few “engaged” utilities have confirmed that PV systems can do a good job of reducing expensive summertime afternoon peak loads, even without utility-scale storage. In the summer they orient their PV panels about 45 degrees west of due south to match the peak PV output to the afternoon peak demand. Utilities on the coast have reported that a 70/30 mix of PV and wind works well for peak shaving. The wind turbines fill the early evening demand by harnessing the dependable late-day sea-to-land breezes. PNM is claiming that it needs sophisticated utility-scale energy storage solutions to “time shift” the output of its fixed, due-south-pointing PV installations.
Intermittency: PV systems temporarily turn down or even off when cloud shadows roll by. That’s just a fact, and one that certain utilities like PNM love to emphasize. But researchers working with interested utilities have confirmed that PV systems that are more than a few miles apart don’t turn off at exactly the same time. The more PV systems and the more geographical diversity, the smoother the average PV grid-tied result. This is essentially a “free” voltage-smoothing benefit, and it is quite significant. The same is true for wind turbines. PNM’s recent public presentations ignore this benefit. In addition, many utilities are starting to pay very close attention to site-specific weather forecasts and weather satellite data. The result is that they can anticipate cloud cover and wind events and thus greatly reduce their use of expensive and polluting standby generators. Xcel Energy in Colorado used to keep its backup generators operating all the time. It doesn’t do that anymore. PNM still does—which unnecessarily drives up its RE-associated costs.
Cost Caps: Many states, including Colorado and NM, have imposed “cost caps” to limit the amount that utilities must spend to meet state-imposed RE mandates. Colorado’s cost cap is very similar to NM’s. That hasn’t been a problem for Xcel Energy, which continues to add renewables by choice. In NM, the cost cap has been used creatively by PNM to try to avoid adding additional renewables. PNM doesn’t admit to ANY benefit from RE sources other than fossil-fuel cost displacement.
Interconnect Rate Riders: A few years ago, several major SW utilities attempted to impose extra charges on customers who “grid-tied” their PV systems to the utility system, arguing that these PV systems were actually costing the utility money. In the two most prominent cases, independent third-party studies concluded that these grid-tied distributed PV systems were, in fact, saving the utility money, so the rate riders were not approved. PNM has promised it will demand a grid-tie PV rate rider in 2013.
Energy Efficiency: Many utilities talk the talk, but then adopt only modest initiatives such as efficient lighting and appliance rebates. In general, electrical cooperatives have been much more supportive of energy-efficiency programs. In ultra-conservative Oklahoma, Oklahoma Gas & Electric is leading the nation in energy-efficiency initiatives, having concluded that it can earn serious profits by helping its customers save money. PNM continues to struggle to meet NM’s modest energy-efficiency mandates. PNM’s “energy efficiency committee” has no trouble coming up with good ideas. PNM executives veto most of them.
Electric Vehicles: EV sales this year are lower than some had forecast, but make no mistake, EV is a big deal. And the combination of plug-in hybrids and full electric vehicles with PV charging stations is starting to take off for sound economic reasons: the payback for EV owners can be impressive. GM is partnering with SunLogics; Tesla is partnering with Solar City; Nissan and Ford are partnering with SunPower; BMW is partnering with Active-E. NRG, a Texas utility, is leasing residential EV charging systems bundled with special time-of-use rates. The buzz is that “forward looking electric utilities are active in promoting electric vehicles.” PNM executives are apparently looking in the opposite direction.
PNM deserves some credit for not being a member of the dwindling “no-way” utility club. At one time it might even have been fairly described as “not opposed” to RE, but these latest utility benchmark “best practices” prove that current PNM management is stuck in “de Nile.” In fact, some of these best practice examples completely undercut PNM’s current strategy as well as several of its recent formal proposals to the NM PRC. This just shows how ordinary folks can use a few “best practice” examples to expose utility-scale “untruthiness.” Are you feeling empowered yet?
Gary Vaughn is a licensed professional engineer, a renewable energy advocate and vice president of the New Mexico Solar Energy Association. www.nmsea.org
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