In the wake of more virulent storms, Ohio’s grid needs to be more resilient against the impact of climate change in order to avoid rolling blackouts that cause physical and economic harm to customers. Providing customers with tools to assist the grid when the peak demand exceeds the resources available is a smart, lower cost way to address the problem.
Ohio has been actively deploying smart meters over the last fifteen years, however, there has been a failure to optimize the low-cost benefits that these meters can provide. The new modern grid being developed across the nation is one of two-way communication in which customers can install self-generation to alleviate constraints on the grid and/or respond to high energy demand events by lowering their usage. These customer supply and demand options are often less costly than upgrading or adding new transmission or distribution lines, however, utilities should be required to develop least-cost planning that compares all the options and submit the plans to the Public Utilities Commission of Ohio (PUCO) for approval in a public, adjudicated proceeding.
Examples of customer programs include:
Customer Supply Side Solution
Remove Barriers to Distributed Generation (DG) – DG are customer installed units that generate electricity. They can be small, residential owned solar rooftops, but more often refer to industrial scale units like large-scaled combined heat and power units. Improving the interconnection standards and the compensation rates for energy sold to the utility will help the economics of these units and allow businesses to save money while contributing to a more reliable grid.
Net-Metering for Small Residential DG like Solar Rooftops – Current Ohio net-metering policies compensate the customer for the excess energy sold to the grid based on a generation price which is undervalued as a result of a PUCO ruling that excluded the capacity portion of the generation rate. PV customers count on receiving full and fair compensation for the energy they sell to the grid in order to help offset their investment costs in the solar panels. The adoption of a bi-directional, time of use rate (described below) would require net-metered customers to pay and be compensated for energy bought from and sold to the utility respectively based on the cost of energy at the time of the transaction.
Customer Demand Side Solutions
The Development of Demand Response Programs - Smart thermostats in a home or business can be used to automatically make small modifications to temperature settings during peak periods without sacrificing customer comfort. Cycling down air-conditioning across the service territory for short intervals during critical periods, could help avert forced service shutdowns. Under these programs, customers are compensated by the utility for allowing them to cycle down their usage in modest amounts. This is less costly for the utility than going to the market to purchase additional power when prices are very high. These programs will typically set forth the number of hours in a year that a utility can curtail load as well as the duration of each curtailment and will usually include a provision for the customer to override the curtailment if necessary.
Time of TOU) Rates – TOU rates correlate the price paid by a customer with the cost to the utility of providing energy at a given time, so that customers pay less during off-peak times and more during high peak times. A well-designed program with good customer education can yield benefits for the utility system and its participating customers. For example, studies by Oklahoma Gas and Electric and Sacramento Municipal Utility District showed that customers, including low-income, saved money on these rates, in some cases, more than $100 per year.
Peak Time Rebate Programs (PTR) – In this program, customers are asked to voluntarily reduce consumption and those that choose to participate, receive compensation. There is no penalty for non-participation.
Industrial Curtailment Programs – These programs offer year-round rate reductions in exchange for the utility having the ability to curtail load during peak periods. The frequency and duration of the load curtailments are set forth in a contract between the utility and the customer.
Many more tested programs exist across the nation that can reduce demand, increase reliability and save customers money and avoid future shutoffs and the damage it causes customers.
In summary, there are a lot of tried and true policies and strategies as described above that Ohio could and should employ. These strategies will reduce costs, increase the reliability and resiliency of the grid and result in cleaner air with its intendant health benefits.