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ID:
150754
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| Summary/Abstract |
High demand for photovoltaic (PV), battery, and small-scale combined heat and power (CHP) technologies are driving a virtuous cycle of technological improvements and cost reductions in off-grid electric systems that increasingly compete with the grid market. Using a case study in the Upper Peninsula of Michigan, this paper quantifies the economic viability of off-grid PV+battery+CHP adoption and evaluates potential implications for grid-based utility models. The analysis shows that already some households could save money by switching to a solar hybrid off-grid system in comparison to the effective electric rates they are currently paying. Across the region by 2020, 92% of seasonal households and ~75% of year-round households are projected to meet electricity demands with lower costs. Furthermore, ~65% of all Upper Peninsula single-family owner-occupied households will both meet grid parity and be able to afford the systems by 2020. The results imply that economic circumstances could spur a positive feedback loop whereby grid electricity prices continue to rise and increasing numbers of customers choose alternatives (sometimes referred to as a “utility death spiral”), particularly in areas with relatively high electric utility rates. Utility companies and policy makers must take the potential for grid defection seriously when evaluating energy supply strategies.
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| 2 |
ID:
168682
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| Summary/Abstract |
Based on a database of U.S. electric utility rate cases spanning nearly four decades, the returns on equity authorized by regulators have exhibited a large and growing premium over the riskless rate of return. This growing premium does not appear to be explained by traditional asset-pricing models, often in direct contrast to regulators’ stated intent. We suggest possible alternative explanations drawn from finance, public policy, public choice, and the behavioral economics literature. However, absent some normative justification for this premium, it would appear that regulators are authorizing excessive returns on equity to utility investors and that these excess returns translate into tangible profits for utility firms.
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| 3 |
ID:
127874
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| Publication |
2014.
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| Summary/Abstract |
We review long-term electric utility plans representing ~90% of generation within the Western U.S. and Canadian provinces. We address what utility planners assume about future growth of electricity demand and supply; what types of risk they consider in their long-term resource planning; and the consistency in which they report resource planning-related data. The region is anticipated to grow by 2% annually by 2020 - before Demand Side Management. About two-thirds of the utilities that provided an annual energy forecast also reported energy efficiency savings projections; in aggregate, they anticipate an average 6.4% reduction in energy and 8.6% reduction in peak demand by 2020. New natural gas-fired and renewable generation will replace retiring coal plants. Although some utilities anticipate new coal-fired plants, most are planning for steady growth in renewable generation over the next two decades. Most planned solar capacity will come online before 2020, with most wind expansion after 2020. Fuel mix is expected to remain ~55% of total generation. Planners consider a wide range of risks but focus on future demand, fuel prices, and the possibility of GHG regulations. Data collection and reporting inconsistencies within and across electric utility resource plans lead to recommendations on policies to address this issue.
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