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Beyond the Meter

Protecting your base – while keeping options open.

Fortnightly Magazine - January 2014
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If you read Fortnightly regularly, you might’ve noticed a couple of new developments here recently. 

First, last October we launched a new online publication, Fortnightly’s Power Profit

The driving factors for this publication – besides the interest of our exclusive sponsor, Invensys – became clear during conversations with industry executives and policymakers during the past year. Specifically, we’ve heard rising interest in strategies and technologies that refine operational efficiencies and position companies to perform in today’s dynamic power markets. Companies are feeling pressure on the bottom line, and they’re seeking ways to bolster their financial returns. Fortnightly’s Power Profit seeks to address those topics, primarily by engaging with industry leaders to learn about the factors that are driving strategic and operational decisions. In this issue of Fortnightly, the article “ Power Breakfast ” is drawn from a recent roundtable meeting we convened on these topics, under the auspices of Fortnightly’s Power Profit.

Figure 1 - Beyond-the-Meter Capacity: 30 by ’30

The second thing you might’ve noticed recently: In our November 2013 issue, we started publishing a new department: “ Beyond the Meter .”

The phrase “beyond the meter” dates back a few years, with different meanings depending on context. Most obviously it means the same thing as “behind the meter” – i.e., generally referring to things like distributed generation and demand response. Also, it works as customer-engagement jargon: “We’re going beyond the meter and connecting with customers through the channels they prefer.” 

More broadly, it refers to a business strategy that seeks to provide a wider range of services for customers – literally, extending service to beyond just selling metered electricity or natural gas. Our new department addresses all these themes, as they continue evolving along with new technologies, regulations, and business approaches.

Opportunities and Threats

Technology advances in recent years have set the stage for new business categories that serve customer needs beyond the meter. Demand response aggregators; rooftop solar leasing companies; and now microgrid service providers – these all compete to provide services beyond the traditional boundary line of the utility meter. Additionally, they represent competition for utilities’ billable kilowatt-hours.

Just how substantial is that competition, in terms of its share of the market? Some evidence suggests that current expectations are overblown, and its role will be prove to be relatively minor once the policy pendulum reverses course as it eventually always does. 

For example, FERC’s Order 745 – which provided full locational marginal pricing for demand-side resources – faces ongoing challenges and could be vacated by the courts, or perhaps by FERC under a new administration. Also some DR resources bid into capacity markets appear to be phantom capacity, traded as instruments of financial arbitrage instead of the firm demand curtailment they’re supposed to be ( see “ Bundled against Change ). 

Likewise subsidies for rooftop PV systems are under pressure in many states, as are volumetric pricing approaches that could allow perverse cross-subsidies. Additionally, soft costs and balance-of-plant hardware now account for

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