Weekly Report – November 2, 2015

Building the 21st Century Power System
EnergyBiz Magazine Fall 2015
by Ted Craver
Chairman, president and CEO of Edison International, the parent company of Southern California Edison

Imagine for a moment that you are a homeowner or a small-business owner and you just shelled out $25,000 or more for a shiny new rooftop solar generator. Then imagine your electric utility told you that you could not hook it up to the grid right away, not until your neighborhood circuit was upgraded. And even then, it said you could only turn it on during certain hours.

I am guessing you would not be a happy customer. As CEO of one of the nation’s largest electric power companies, I do not want to be in the business of telling our customers what they can install on their own properties and how they can use it. As utilities, we don’t control what customers put behind the meter. We don’t tell them what TVs and appliances they can buy.

The same should apply to PV solar panels, home batteries and electric cars. Our job as utilities is to provide the power network that enables customers to choose which energy technologies they want to use. At Edison International and Southern California Edison, we like to call it a “plug-and-play” network, meaning that customers should be able to plug in any device and have it work seamlessly with our power system.

Building that network to provide customer choice broadly across our system requires us to modernize the power grid so it can accommodate these new technologies.The first and most obvious question is: Why do we need to modernize the system – hasn’t it served us well for more than 100 years? The U.S. electric system was designed and built to be durable and inexpensive, and it is.

But the demands and desires of our customers are changing, and changing rapidly. Responding to new technologies, customers want a modernized power system that is more secure, more reliable, and offers them more choices and control over their usage – while still remaining affordable.

These are not mere conveniences. Electricity is essential to modern life; even basic shelter, food and water would not be possible without it. In our increasingly digital, networked world, electric reliability has become more important than ever. Power outages, even brief fluctuations, can disrupt a wide variety of microprocessor-based devices, from computers running the Internet to life-support systems.

All electric utilities have essentially the same mission and that is to provide safe, reliable and affordable electricity to their customers. More recently, an important fourth element has been added, and that is to do this in an environmentally responsible and sustainable way.

Our challenge as utilities is to figure out how to provide electricity with little environmental impact without choking off growth and job creation. Distributed energy, especially rooftop solar, is not a fad, it’s here to stay. In California, which has more than one-quarter of the nation’s distributed generation, our customers are being actively recruited by companies offering to install rooftop solar systems. Some people see all this change as a disruptive threat to the utility business.

However, on balance I see it as an opportunity to make our nation’s power grid more flexible and ultimately better serve our customers. That is why we are building a more flexible, resilient and low-carbon electricity distribution grid for the 21st century and beyond. Modernizing the grid will not only preserve reliability in the face of increasingly complex distributed energy resources, it will also allow us to utilize these resources to provide grid services.

We see the role of the utility like that of a conductor who brings each component of an orchestra into harmony and maximizes the benefits from each participant to benefit the whole. The utility provides the electrical connection between customers and resources. Increasingly, those resources are at the customer’s location, and our system and our management of it needs to adapt accordingly.

A modernized system will better serve the desires of those customers who want to take more control of their energy supply, while enabling continued affordable power for those customers who prefer more traditional service.

At Edison, we’ve already begun building this 21st century power network. We recently filed a Distribution Resources Plan, or DRP, with the California Public Utilities Commission.

The plan serves as the road map for modernizing the electric distribution system. The DRP includes five key guiding principles in planning, creating and operating the power network of tomorrow: ensure safety, reliability and resilience; promote customer choice of new technologies; reduce greenhouse gases; provide affordable and equitable costs of electric service; and use competitive processes for procuring clean-energy resources.

We also have a project under way in Orange County, Calif., which we call the Preferred Resources Pilot. Preferred resources is another term for alternatives to building new gas-fired power plants.

These include energy efficiency and demand response programs, energy storage such as batteries, technological advances in the distribution grid, distributed energy such as rooftop solar, and changing incentives for customers to use energy in ways that save them money, such as time-of-use rates.

The goal of this pilot program is to meet projected electricity demand growth of 30 megawatts each year in that area from 2015 to 2017 without relying on additional fossil-fuel burning generation. If we can do that successfully with these alternative strategies, we could apply this approach elsewhere. That could be a game-changer for the future of the power grid.

Energy storage is another component of the 21st century power network. At Edison, we procured more than 260 megawatts of storage in 2014, and our Tehachapi Energy Storage Project is testing one of the largest grid-connected lithium-ion energy storage systems in the world, at 32 megawatt-hours. We are also partnering with Tesla Motors to study the usage and impact of home batteries and grid-scale batteries on the electric system.

The 21st century power network is the key to unlocking the many benefits of distributed energy resources, which include the obvious environmental advantages of using more electric vehicles and renewable energy. In addition, locating generation close to customers eliminates the line losses incurred by shipping power over long distances.

Properly deployed, distributed energy resources can help reduce peak demand, eliminating the need to supersize our systems to accommodate the highest electricity usage that we see only a few days each year.

We also will be able to control voltage more tightly, helping appliances and HVAC systems run more efficiently. Most importantly, the 21st century power network will create new opportunities to better serve our customers and communities.