Dive Brief:
- In an interview with GreenBiz, former FERC Chair Jon Wellinghoff predicts that the "whole model of the utility as a vertically integrated entity [...] will break down completely." "The efficiencies are really in the competitive and distributed model," he said. "Distributed in the sense of having separate parts and also the distributed options that consumers will have, including the ability to put solar on their house and also incorporate storage of some kind."
- Utilities must break out of the traditional model to maximize the services they can bring to consumers, Wellinghoff said, noting that "consumer loads are resources that are almost totally untapped."
- With technology such as smart meters, demand response and energy storage already viable or on the horizon, the ability to communicate with and control customer usage will become a "huge resource" for the utility "providing all types of grid services including energy, capacity and ancillary services that can be complimentary to traditional supply-side resources," Wellinghoff said.
Dive Insight:
After leaving FERC, Wellinghoff has worked with numerous large solar installation firms who are focusing on partnering with municipalities themselves -- something that utilities need to be aware of.
This lack of knowledge on the utilities' part reflects the fact that utility executives "are fairly blind" to the pace at which these technologies are gaining a foothold in the country, Wellinghoff said. "The only time they become aware of it is when they go out and do their load forecast and they keep seeing that the rate of load growth is decreasing and they keep saying to themselves, 'Okay, is this a trend that’s going to change?'" he said. "No, it’s not a trend that’s going to change."
Pointing to the recent legal battles over rooftop solar, such as the recent fee for rooftop solar customers in Arizona, Wellinghoff said that several states have already proven his predictions true, despite resistance. In Arizona, utilities did win a fee surcharge for solar customers on the basis that those customers should pay to help maintain and operate the grid. But it was set at an average $5 per month, while utilities asked for $50 or more.
In Hawaii and California, alternative energy generation has already become cost-competitive with the grid. "Hawaii’s going through a lot of stops and starts over how much solar you put on the distribution system" he said, adding that "the market solution in Hawaii is to put solar on your house. This is the cheapest thing to do. So people are not going to let policy and regulation get in the way of a market solution."
