To BE or not to BE?
This blog is the first of a series that will highlight upcoming QUESTtalks speakers and focus on the application of specific energy types in a smart energy future. Stay tuned for the role of natural gas and the role of thermal!
I have worked in the energy efficiency industry for nearly two decades. In that time I’ve designed and delivered Demand Side Management (DSM) programs that have reached millions of participants and saved TWh’s of energy. I’ve found the work to be meaningful, impactful, rewarding….and, until recently, increasingly boring.
I say this not because energy efficiency is easy – it is incredibly hard to overcome the market barriers preventing consumers and businesses from adopting efficient technologies and processes. I say ‘boring’ because we have not seen any major changes to DSM in the past 30 years. Yes, new energy efficiency technologies have emerged (the LED program managers of today will never understand the plight of their CFL-slogging ancestors), advances in data analytics are enabling more sophisticated marketing and behavioural programs are no longer considered fringe. But, in general, most DSM portfolios are still dominated by rebates geared to convince customers to exchange Equipment A for more-efficient Equipment B.
However, as disruption continues to impact the broader energy sector, traditional DSM is also evolving. For many years, energy efficiency programs were utilities’ first (and often only) step ‘behind the meter’ into customers homes. This is no longer the case as we see continued proliferation and diversification of behind-the-meter Distributed Energy Resources (DERs) such as renewables, combined heat and power, demand response, and storage. I am personally excited about these changes and the prospect of combining DERs into a truly integrated approach to DSM (or iDSM).
What is Beneficial Electrification?
In the last couple of years, I’ve also noticed an accelerating interest within the DSM community in Beneficial Electrification, or BE. Also sometimes referred to as Strategic Electrification, BE is not your grandfather’s fuel-switching program. While definitions for BE vary, they all have the same common thread of assessing three potential benefit streams:
Customer benefits such as reduced energy bills, or lower total cost of ownership;
Utility (ratepayer) benefits such as increasing energy throughput within the same fixed asset base (creating downward pressure on rate) and supporting grid management (e.g. renewables integration); and
Environmental benefits, such as reduced point source emissions and lower GHGs emissions
Some definitions suggest that all three parties must benefit, while others suggest that benefits need only accrue to at least one party provided the other two are not significantly worse off.
Electric Vehicles are an often-cited example of potential BE. Switching from internal combustion engines to electric vehicles can save customers money (based on total cost of vehicle ownership) and reduces GHG emissions (yes, even in jurisdictions with fossil fuelled electricity generation, see here). For utilities to benefit from EVs, however, it is critical that they are charged at the right time and place. Managed properly, EVs can help build load during off peak hours (increasing revenue, without additional infrastructure) and can also provide demand response and storage services. Increased EV adoption without supporting charge management strategies, however, could lead to system constraints and the need for additional investments in utility infrastructure. This example reinforces a very important concept: electrification is not always beneficial.
Who are some of the early adopters in the BE movement? Here are a couple of US utilities that keep popping up on my news feed and conference agendas. Arizona Public Service, who is challenged with a significant renewables-induced duck curve on system load shape, has discontinued all energy efficiency rebates on commercial lighting and is piloting a reverse demand response program that dispatches load building activities during periods of surplus supply. Tennesse Valley Authority, which is facing declining load growth, offers BE incentives on a wide range of measures including: electric forklifts, compressed air and agricultural equipment. In the past few years, our firm has seen growing demand from our Canadian utility and government clients for our EVA Model, designed to forecast the impact of a variety of programs, rates, investments and policies on EV adoption (and associated load impacts). Yet, there does not yet seem to be a movement towards broader incorporation of BE within utilities’ existing DSM portfolios.
So what might this mean for Ontario?
As BE continues to gain momentum south of the border, it is interesting to consider what this trend might mean for Ontario. Some of the questions on my mind are:
What are the specific beneficial electrification opportunities that make sense in Ontario, given its specific context (supply mix, energy prices etc)?
What are the key barriers to beneficial electrification in Ontario? Economic? Regulatory? Other?
How do we break the myth that BE programs undermine energy efficiency efforts, and that the programs cannot coexist?
What role should utilities play in BE in Ontario? What role should others play?
Join the discussion!
If you are interested in discussing these (and other!) questions on the topic of Beneficial Electrification, please join me at QUEST’s upcoming event, QUESTtalks: Policy – Keeping Pace in a Market-Driven Environment in Toronto on Tuesday, June 11th.
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