15 June 2018

EV's and the Future of Electric Utilities

My eastern Nebraska electric utility, Omaha Public Power District (OPPD), is stepping up to play a central role in the electric system of the future and they are dragging the larger state electric utility, Nebraska Public Power Diistrict (NPPD), along with them. The catalyst was the Sierra Club and Nebraskans for Solar relentlessly nagging and educating them; the smaller towns around Nebraska adopting community solar; and progressives being elected to the OPPD Board.

The key idea is that the energy future is not some quiche-eating, commie-pinko fag (Democratic) thing. It is inevitable, like gravity. Utilities can lead, follow or get the hell out of the way. Uilities have a major role to play, which the renewable energy crowd is waking up to and making an action priority. Nebraska's 100% public power is making it easier because we can mess with the BoD of all our utilities. Out-state they have municipal utilities.

This is so exciting! This is Big League poker and is happening right here, right now in Nebraska and not some nebulous thing out on the coast. Sometime in the last few years OPPD, NPPD and the municipal utilities reached a tipping point. Mostly it is pure economics,,with renewable advocates drumming the numbers for the next 20 years into the utility BoD's over and over again. Money and long-range risk management REALLY get a utility's attention.

Things that are happening:
  • Community solar: Fremont is leading this. They proposed building a solar farm and letting ratepayers "buy into it" instead of putting panels on their roof. It was over-subscribed in less than a week. So they went ahead with that and started planning a bigger second one. Results from the first project went just like planned and subscribers are getting their  power cheaper, with no siting issues, no installation and  no maintenance, and no financing issues. Now the second one is completely subscribed. There are about a half a dozen of these projects around the state. Every city of any size in Nebraska is now planning for one. They are shutting down their local generation plants. NPPD is scrambling to deal with it. NPPD fought  it in court over past 5 years and lost, including some key enabling legislation. OPPD is building one now for Omaha. Joan & I  plan to subscribe.
  • Wind generation: The Legislature passed some key legislation to enable private wind and fight off reactionary laws by the coal--industry. The result is fair and profitable private wind farms in an all public power state. There is a battle going on in the Sandhills between the NIMBY's and the wind entrepreneurs. OPPD is now getting 1/3 of its power from renewables, exceeding even the green mandates for California!
  • Coal: OPPD decommissioned two North Omaha generators last year and converted another one to natural gas. NPPD is fighting it but is sure to give in. Even as "stranded assets", the long term economics said "Shut 'em down!"
  • Nuclear: OPPD threw in the towel with the Fort Calhoun nuclear last year, even after spending over $100M bringing it back on line after the flood. Oops! But this shows the change in thinking at OPPD that has happened in the last five years.
  • EVs: And now we come to the big one. EV's are projected to take over in the next 5 to 10 years. The switch by consumers is expected to be sudden. Millions of gallons of gasoline with no longer be purchased in the OPPD region; billions of dollars in new kilowatts will. OPPD has to figure out how to put in infrastructure to support it, especially new heavy duty distribution infrastructure to include substations, line transformers and neighborhood wiring. OPPD has to figure out how to provide the supply from central generations, distributed renewables and purchases from the Southwest Power Pool. OPPD has to figure out how to put together a smart grid to control it all that now includes EVs, home storage systems, home smart controllers like Nest, community storage, alternative sources like industrial waste energy and smart buildings, microgrids to rationalize it all and offer improved reliability. Billions of  dollars in new revenue in the switch from gasoline, way more than the current revenue. Billions of dollars in new capital investment. Lots of jobs and new operational expense. A sh*tstorm is coming to sleepy, little ol' OPPD and NPPD. They finally ran the numbers and realized that they better get on the stick. Consumers are going to want to drive their shiny new EV home and plug it in the new charging station they installed in their garage. Many consumers will be willing to invest a Tesla PowerWall-like home battery system if OPPD will install it, maintain it and not charge them anything for it.
The replacement of the local distribution system is the most exciting part. It is a hard problem, and the electric utility industry in general and OPPD in particular are realizing they need to get all hands on deck. OPPD has got all the engineering departments and the finance department on board ramping up in a near state of panic to achieve this. Every single part of OPPD has to change, just to respond to EVs. I don't think it is lost on them that they are going to grow explosively in size.  The  future belongs to the bold. According to their public charter, they must not fail. And there are plenty of people and organizations to hold their feet to the fire. Oh, and by the way, the carbon footprint for eastern Nebraska will plummet. We will be back to levels not seen in 100 years. Yea! Save the planet! And have fun doing it. The Omaha World-Herald is already on this and will give me a front row seat. I might live long enough to see it happen.

The private utilities and the petro-chemical industries are just dinosaurs, thrashing their  tails. People will see what is happening in Nebraska and other states and wake up to fact that they are being prevented from realizing the  future, especially economically, by private franchisees of the public good. Electric utilities still have a role to play, it is just  radically different.

Btw, I own a small pile of First Solar in one of my high growth, high risk accounts. . They are past their initial phase and now are just in a steady state, printing money. the California mandate that  all new residential construction have solar doesn't hurt. You should check out the radical Tesla solar roofing tiles. Amazing. Plus maybe a Nest controller managed by the utility for demand management of your air-conditioning and EV charging. (OPPD already offers  a rebate to buy a Nest and a discount for  letting them manage the  demand. )

Wild times!

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