November 30, 2020 •Franklin Energy
Transitioning away from fossil fuels as an energy source has been a hot topic recently. While the discussion may be center stage today, the concept of pushing a major energy transition is nothing new.
In 1979, the first World Climate Conference framed climate change as a global political issue, with emissions from fossil fuels charged as the primary contributor. Since then, numerous countries across the globe including Japan, China, Australia, the United Kingdom and the European Union have introduced renewable energy policies and programs intended to offset the damage, with a commitment to becoming carbon neutral by as early as 2050. The United States’ attempt at promoting and influencing climate action through the reduction of carbon emissions dates back to the Reagan era, with the expanded use of renewable energy resources to meet the challenge of both energy security and climate change picking up speed with the Obama administration in 2009.
With such a vast history, it may be surprising to learn the road to a clean energy future is riddled with misconceptions. The perception of energy consumers nationwide varies from an overwhelming fear that slowly phasing out fossil fuels will paralyze the nation and prevent entire communities from traveling, cooking, heating our homes and fighting our wars, to customer demand for distributed energy resources (DER) and micro-grids featuring smart home control systems.
This is what the transition away from fossil fuels to renewable energy sources really means for the nation, and what utilities can do to prepare for the changing environment:
Fossil Fuel Phase Out Won’t Happen Overnight
While some narratives may have people believing the plan is to phase out fossil fuels entirely within a couple years, the reality is a decades-long process, with multiple hurdles to the finish line. According to the Environmental and Energy Study Institute, despite growing attention to clean energy, fossil fuels still account for 80 percent of global energy consumption and roughly 75 percent of greenhouse gas emissions. The good news is there are a lot of technologies available like solar panels, wind turbines and electric vehicles that have the potential to significantly reduce our nation’s reliance on fossil fuels. However, technical hurdles still remain in cutting emissions all the way to zero.
Even with a concentrated approach focused on introducing additional technologies to take the place of fossil fuels, while at the same time shifting the nation to an adoption of alternative energy resources, a complete phase-out is unlikely to occur before 2060.
For utilities, this is the opportunity to build on the customer experience and shift outdated systems to automated digital resources such as customer engagement platforms and integrated marketplaces that benefit both the customer and the utility. Utilities have the chance now to position themselves as a trusted advisor, providing educational opportunities for those customers anxious about the impending shift. They can also go a step further by offering solar, EV and other alternative energy programs for customers that have already embraced the change.
Energy Efficiency Benefits the Nation Now More than Ever
Energy efficiency and widespread engagement in energy usage reduction programs are the key to transitioning away from fossil fuels as an energy source. As a population, if we were to reduce energy consumption nationwide while at the same time dramatically improving energy performance, we could reduce energy loads enough that alternative energy sources can realistically satisfy those needs, making the transition easier.
A combination of demand response programs and price signals will be required to effectively manage loads and inform customers of the benefits and consequences of consuming energy at different times of the day. Demand-side management programs often turn to price signaling, encouraging consumers to use less energy with higher prices. These programs engage customers while avoiding the costs and pollution of peaker plants, which are commonly used today to provide power during energy spikes and ensure reliable energy supply but are only widespread within the commercial and industrial sectors.
Price signaling has proven to make an impact in the commercial and industrial space, by providing large use customers with financial incentives for dialing back energy usage. The next step is taking this powerful behavior changing approach and applying it to the greater residential market. Effective price signaling within the residential market requires clear communication about when rates vary and included incentives that take advantage of lower-cost energy sources like surplus wind power at night.
Exciting Energy Changes are on the Horizon
Utilities have the potential to shape the industry, leading the way to a better, cleaner future. Utilities are moving away from just selling electricity to managing networks and electricity flows.
Recognizing the inevitable shift to clean energy, Holy Cross Energy (HCE), a cooperative utility in Colorado, has embraced the change and partnered with Habitat for Humanity and Community Office for Resource Efficiency (CORE) to build the Basalt Vista Housing Project, a net-zero, all-electric, affordable housing community. Each home within Basalt Vista is linked together as a microgrid, and their energy systems work together to balance the energy load across the neighborhood. Rooftop solar produces energy, plugged-in EVs store electricity as needed, and large battery packs supply power. But the most unique aspect of Basalt Vista’s microgrid is that it autonomously allocates power through experimental software that continuously optimizes electricity distribution across the microgrid, and the flow of energy to and from the larger regional grid. When one home produces more energy than it needs, it can autonomously make the decision to redistribute to its neighbors or store it for later.
Holy Cross Energy is using the housing development as a learning lab, to prove how adjusting energy levels provided by solar photovoltaics and batteries can both save money for customers and benefit the grid. And while transitioning from a small community network of self-optimizing energy resources that unbundles the centralized utility and distributes it across the grid is a far cry from automating distributed energy resources at scale, the Basalt Vista Housing Project shows promise for a clean energy future.
The push toward a major energy transition is one that will ultimately benefit the economy, consumers, and utilities alike. With proper planning and management, utilities can more deeply engage with their customers to educate and influence customer adoption. They can support and distributed energy resources through data analysis and grid optimization programs to reduce grid infrastructure costs and improve system resiliency and flexibility. If you are ready to explore how your utility can plan for—and maximize—the potential of a clean energy future, Franklin Energy can help. Contact us today to learn more.
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