Rate freezes, arrangements where utilities are prohibited from filing rate cases, have been commonly used nationwide since the 1990s. Today, rate freezes or rate case moratoriums are in place across multiple jurisdictions impacting 70 utility companies. While these arrangements have overwhelmingly originated from past rate cases and are intended to benefit consumers; arguably adverse consequences can also be inherent with such arrangements.
On May 7, 2014, the U.S. Department of Energy (DOE) awarded Dominion Virginia Power up to $47 million over four years to deploy innovative, grid-connected offshore wind turbines. The demonstration project, located 26 miles off the coast of Virginia Beach, will install two 6-MW direct-drive wind turbines by 2017.
The German government announced sweeping reforms of the country’s renewable energy policy on April 8, 2014. The draft law maintains aggressive targets; however, renewable energy will now be subject to annual caps and competitive bidding beginning in 2017. The change comes as German consumers are experiencing significant increases in the cost of power resulting from renewable energy incentives.
Demand response infrastructure is poised to get a significant boost in California. Starting in June 2014, California’s building code will require every new or retrofit thermostat, HVAC system, networked lighting controller, and building automation system to be capable of two-way, automated communication.
In recent years, several high profile accidents (including Pacific Gas and Electric Co.’s 2010 California pipeline explosion and the recent Harlem explosion) have drawn national attention, putting pressure on regulators and operators to ensure public safety and on stakeholders to approach infrastructure safety more proactively. This is driving significant capital expenditures in infrastructure investment, which are expected to remain strong in 2014.
As the penetration of distributed PV has increased, concern over cross-subsidization has grown as fewer customers are available to pay for fixed infrastructure costs (e.g., transmission and distribution costs). In 2013, Minnesota passed legislation allowing investor-owned utilities to offer a Value of Solar (VOS) tariff as an alternative to net metering which compensates excess PV-generated electricity at full retail rates. On March 12, 2014, the Minnesota Public Utilities Commission voted 3-2 to approve the specific methodology for calculating the value of distributed solar generation.
On March 5, 2014, GTM Research and the Solar Energy Industries Association (SEIA) released U.S. Solar Market Insight Report: 2013 Year in Review. The report is one of the most comprehensive solar reports, tracking and analyzing customer and utility-sited solar systems. The report finds the United States installed 4,751 MW of solar PV in 2013 – up 41% over 2012. There are now 12.1 GW of PV and 918 MW of concentrating solar operating in the United States.
On February 13, 2014, a ribbon-cutting ceremony celebrated the commercial operation of the 392 MW Ivanpah Solar Electric Generating System. Located in the Mojave Desert on the California-Nevada border, the project is the largest solar thermal power project in the world and represents nearly 30% of the solar thermal energy capacity in the United States.
On February 25, 2014, the Rocky Mountain Institute (RMI) and partners released a new report outlining the potential for appreciable customer defection from the electric grid in major markets by 2025. The report concludes the combination of solar PV and battery storage becomes cost competitive with retail electricity rates within the 30-year economic life of typical utility investments. Key drivers include the declining cost of distributed electricity generation and storage. Underlying these price declines is the growth of solar PV and the mass production of batteries for electrics vehicles.
On February 12, 2014, the Edison Electric Institute (EEI) and the Natural Resource Defense Council (NRDC), an environmental advocacy organization, released a joint statement to state regulators outlining shared principles focused on the evolution of utility business models.
The Southeastern Pennsylvania Transportation Authority (SEPTA), which operates mass transit in the Philadelphia region, announced construction of a second system to recover and store braking train energy as electricity. Similar to a pilot system installed in 2012, this system will transfer electricity to batteries and bid this electricity into PJM Interconnection’s electricity frequency market.
On January 15, 2014, Macquarie Equities Research compared the hype around the demise of the centralized electric grid analogous to the exaggeration found in Sharknado, a movie depicting hurricane-propelled sharks terrorizing Los Angeles. Over the long term, the analysts argue renewables will have a meaningfully bigger impact on competitive power markets than on regulated T&D businesses.
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