Electric utilities in North America are “bullish” about the growth of renewable energy, particularly rooftop solar, and other forms of distributed energy over the next ten years, according to a survey by Utility Dive.
Respondents expressed the most confidence in the growth of utility-scale solar, distributed energy resources, wind energy, and natural gas generation over the next 10 years. They expect coal power to decline significantly, while nuclear generation will stagnate or retire, depending on the region.
Among concerns generally, the study found physical and cyber grid security, distributed energy policy, rate design reform, aging grid infrastructure, and reliable integration of renewable and distributed energy resources to be the top five issues of immediate importance to utilities in 2017.
In other findings,
• Uncertainty over future energy policies and market conditions is considered by utilities to be the most significant challenge associated with the changing power mix, followed by minimizing customer costs and reliable integration of new generation technologies.
• Few utility executives indicated a desire to preserve traditional cost-of-service utility regulation as is; instead, the industry overwhelmingly indicated they would like at least some performance-based regulation.
• Utility executives largely want the federal government to pursue a policy of de-carbonization, with a carbon tax emerging as the most popular policy mechanism.
• Fixed cost recovery is the utility industry’s greatest concern with state regulatory models, followed by justifying emerging investments and managing distributed resources.
• Time-of-use rates and fixed charge increases are the industry’s most popular rate design solutions to recover fixed costs and compensate for the growth of distributed energy resources.
• Utilities overwhelmingly believe they should be allowed to own and rate-base distributed energy resources, despite rules against the practice in most markets.
• Utility executives would primarily like to compensate rooftop solar and other distributed resources at the avoided cost of generation, expressing little support for emerging options like location-based rates.
The 2017 State of the Electric Utility Survey is available at www.utilitydive.com/library/.