Fortnightly Magazine - January 2010
Realizing the benefits of a modernized system requires an integrated strategy.
The U.S. power market consistently has displayed cyclical characteristics of boom and bust over the last two decades. Today’s market environment has been directly and significantly impacted by the recent economic recession. Decreases in load growth, declining commodity prices, and lack of accessible financing have caused challenges for the industry.
The importance of getting the REC markets right.
The feds are ready to replace disjointed state policies with a coordinated national renewable energy credit market. Treating low-carbon energy consistently will promote investment in renewables.
Aligning renewable energy incentives with RPS compliance.
States’ green energy policies are being used to serve multiple agendas. Lawmakers should revisit their renewable incentive programs to better align them with policy goals. A regional approach will yield a more efficient portfolio.
Transforming DR and smart-grid policies into reality.
Regulatory policies are evolving to make demand response and smart-grid planning a reality across the country. Cooperation between federal and state lawmakers will allow local flexibility within a uniform national framework.
ETRM software is adapting to a changing energy market.
Ask Ed Bell about energy trading and risk management (ETRM) technology and he’ll likely bring up his days with Enron back in the early 1990s. Bell—now a principal at Houston-based technology consulting firm International Commerce—says there are distinct similarities between the functional trading and risk assessment requirements his team had to plan for back then and the system requirements ETRM platform vendors and their clients have to prepare for today.
The black art of pricing social costs.
At the Power-Gen International trade show in December, Questar Chairman & CEO Keith Rattie delivered a firebrand speech opposing the prospect of CO2 cap-and-trade legislation. To summarize, he said the Waxman-Markey climate bill is an “asinine” piece of legislation—which it is, as anyone who reads it quickly discovers. But more broadly, he said concerns about greenhouse gases (GHG) are based on incomplete science and politically motivated alarmism.
Xcel Energy proposes to create America’s first fully functional intelligent grid, with communications and automation systems linking the network from end to end, power plants to meters. Although Xcel still is deploying the system, it’s shown that the early payoff from smart-grid investments won’t necessarily come from automated metering, but from automation in the distribution network—the “middle mile.” As chief architect of the Smart Grid City project in Boulder, Colo., Ray Gogel served on the front lines in the industry’s technology revolution.
Balancing risks and opportunities in efficiency investments.
In June 2008, the New York Public Service Commission (PSC) established the electric energy-efficiency portfolio standards for New York’s investor-owned utilities. In its order, the PSC directed utilities to file three-year energy-efficiency plans. Later that year, the PSC issued a supplemental order approving shareholder incentives for utilities successfully implementing their portfolios. If all goes according to plan, the six affected IOUs stand to earn about $27 million annually in performance incentives over three years. The structure of the incentive mechanism approved by the PSC presents risk factors that might affect utilities’ ability to realize the full earning potentials the mechanism offers.