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The Rise of Distributed Generation . . .

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  • Violeta Archer
    Folks, Here s an update on the current state of affairs with distributed power generation. Happy reading, Violeta Archer President
    Message 1 of 3 , Mar 6, 2014
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      Folks,

      Here's an update on the current state of affairs with distributed power generation.

      Happy reading,

      Violeta Archer
      President


      +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

      The Rise of Distributed Generation Threatens Utilities


      In the late 1980s, the band R.E.M. achieved pop music fame by claiming, it's the end of the world as we know it. Utilities should heed their warning. Distributed generation (DG) could be the end of utilities as we know them today. Or, as we at Morningstar like to say, DG could destroy utilities' economic moats.

    • Garth & Kim Travis
      Greetings, Living with a power company that is dead against any kind of net metering, is making a fair number of us look to go off grid. The coop power
      Message 2 of 3 , Mar 6, 2014
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        Greetings,

        Living with a power company that is dead against any kind of net
        metering, is making a fair number of us look to go off grid. The coop
        power companies are well described in this line: "But as we look out to
        the next decade, utilities that refuse to adapt could find themselves
        singing their swan song."

        I would prefer to use the grid as my battery, I firmly believe it is
        much better for the environment than having a battery bank that needs
        replacing every decade or so. But, dealing with a power company that
        will not do anything to help the environment is annoying. Now they are
        talking about putting a sur charge on those of us that don't use enough
        power. They are locked in the 20th century and need to sing a swan song.

        Bright Blessings,
        Kim Travis
        www.TheRoseColoredForest.com
        Bedias, Texas

        On 3/6/2014 1:47 PM, Violeta Archer wrote:
        > Folks,
        >
        >
        > Here's an update on the current state of affairs with distributed power
        > generation.
        >
        > Happy reading,
        >
        > Violeta Archer
        > President
        >
        >
      • Philip Timmons
        Thing that is rough for the utils is that Solar cherry picks the premium prime time power. At least rough for the Commercial Generation side. In the
        Message 3 of 3 , Mar 6, 2014
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          Thing that is rough for the utils is that Solar "cherry picks" the premium prime time power. At least rough for the Commercial Generation side. In the present open market PUC Texas areas, however, that is profitable to the Grid Operators and Retail Providers.

          Power is more valuable during the day, and that premius has traditionally paid to keep the lights on all night, when power goes worthless on the market level. Less folks buying during the day makes it hard to cover the night-time bills, as far as generation goes.

          Wind -- especially West Texas -- is so mis-matched to the actual use patterns, it has a negative value at times -- the Wind Operators have to PAY the grid to take the power.

          But overall the only real long term hope is to shift some of the transportation load off of Internal Combustion Engines and towards Electric Motors -- but the industry already knows that as well. And no, that does not require ANY batteries or other storage.

          But from the article below -- yeah, local voltages CAN shift up and down some due to DG, but all DG are required to auto-disconnect when local grid voltages get too high or too low. The part of the AC frequency varying . . . that is just silly. All Grid Tied Generation is rock-steady 60 Hz. Many even use any variance as a method of detecting loss of Grid Power and auto disconnect if the frequency even shifts slightly.

          Overall, kind of a Look At Me, Drama Piece.




          --------------------------------------------
          On Thu, 3/6/14, Violeta Archer <violetatx9@...> wrote:

          Subject: [hreg] The Rise of Distributed Generation . . .
          To: "hreg@yahoogroups.com" <hreg@yahoogroups.com>
          Date: Thursday, March 6, 2014, 1:47 PM
















           









          Folks,
          Here's an update on the current state of
          affairs with distributed power generation.
          Happy reading,
          Violeta ArcherPresident

          +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
          The Rise of
          Distributed Generation Threatens Utilities
          In the late
          1980s, the band R.E.M. achieved pop music fame by claiming,
          it's the end of the world as we know it. Utilities
          should heed their warning. Distributed generation (DG) could
          be the end of utilities as we know them today. Or, as we at
          Morningstar like to say, DG could destroy utilities'
          economic moats.Warren Buffett first coined the term economic
          moat to conceptualize a firm's competitive advantage or
          lack thereof. We now assign ratings as wide, narrow, or none
          to the more than 1,500 companies we cover worldwide. Firms
          with the widest economic moats demonstrate strong
          competitive advantages that produce sustainable,
          above-average returns for investors. Firms with no economic
          moats have a limited ability to control the returns they
          earn for investors. Utilities tend to fall in between those
          two extremes. We typically assign them narrow economic moat
          ratings. In most cases, utilities' centralized networks
          and regulation prohibit competition, but their capped rates
          limit investors' returns. In the long run, we expect
          most utilities will earn returns in line with what investors
          should expect from firms with similar risk profiles.But DG is breaching utilities' economic
          moats. The electric utilities industry group Edison Electric
          Institute (EEI) recently identified DG as the largest
          disruptive threat to utilities' business models and
          financial health. We agree. Utilities' centralized
          network monopolies break down when customers become
          self-sufficient competitors. The cost-of-service regulatory
          model that allows utilities to earn at least their cost of
          capital in the long run also breaks down when fewer and
          fewer customers pay for maintaining the centralized network.
          For power producers, centralized baseload generation loses
          its value as DG saps network demand.DG leads to the so-called death spiral. As more
          customers adopt DG, utilities' costs to maintain and
          operate the grid are spread across a smaller demand base,
          raising customer rates and increasing customers'
          economic incentive to cut the cord. Ultimately,
          utilities' earnings and cash flows will shrink, making
          interest and dividend payments less certain. This death
          spiral ends when investors — equity and credit — are
          left holding a purse of dormant power plants and copper
          wires.Timing is a key part of the rating system. Public
          policy and regulation are key factors that affect how long a
          utility can maintain its economic moat. Net metering, tax
          benefits, and technological innovation support DG adoption
          and could dramatically shorten utilities' competitive
          advantage periods. Utilities in areas with DG-friendly net
          metering rules could find their economic moat closing more
          rapidly than utilities in areas with less-accommodating net
          metering policies. Many European utilities have suffered
          from shrinking competitive advantages as renewable energy
          feed-in tariffs, emissions caps, and anti-nuclear sentiment
          explicitly or implicitly subsidized DG. U.S. tax policy is a
          key variable in the coming years. So what should utilities do? Amid the doom and
          gloom, we think there are opportunities for utilities to
          protect or even widen their economic moats:Extract value from the centralized
          grid. Utilities' centralized grids remain
          a key part of the DG value proposition. DG users must be
          connected to a centralized grid to collect net-metering
          revenues, a critical offset to DG installation and
          maintenance expenses. DG users also need connections to
          centralized grids for backup power if they don't have
          energy storage. A typical solar DG user relies on the grid
          for energy during most hours of the day, with a relatively
          small period of time when it is a net seller.Utilities can also extract value from their
          centralized networks by helping integrate DG.
          Infrastructure-support revenue, which utilities could
          collect from DG users, would help mitigate lost revenue from
          falling demand. German utility RWE is pursuing a similar
          strategy after renewable energy and DG growth decimated its
          legacy power generation earnings. It now aims to help
          customers manage and integrate renewable energy rather than
          invest in centralized generation. Improve regulation. In the
          near term, the best way for a utility to protect its moat
          against DG is to work with regulators to create constructive
          rate structures and educate regulators about the threat DG
          poses. Regulators in Arizona, California, and Colorado have
          shown willingness to address DG, specifically net metering
          deficiencies. Those policies could serve as templates for
          other states as DG spreads. Vertically integrate. Some
          utilities have embraced DG through investments in rooftop
          solar, DG financing, and self-generation technology.
          Utilities can offer competitively priced clean-energy
          options that prevent customers from seeking these services
          elsewhere. Utilities' strong balance sheets and existing
          customer relationships should give them an advantage against
          smaller newcomers. The technical challenges of incorporating DG will
          likely slow the erosion of utilities' economic moats in
          the near term. Converting the electricity grid from one-way
          flows to two-way flows to support net-metering will be
          expensive and time-consuming. Without careful management,
          power flowing onto the grid will cause fluctuations in
          voltage and frequency, creating reliability problems and
          safety concerns. But as we look out to the next decade,
          utilities that refuse to adapt could find themselves singing
          their swan song.Source: http://www.renewableenergyworld.com/rea/news/article/2014/03/the-rise-of-distributed-generation-threatens-utilities
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