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8/12/2019 RMI Irvine Workshop
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RMI advances market-based solutions that transform global energy use. We
engage businesses, communities, and institutions to cost-effectively shift to
efficiency and renewables, creating a clean, prosperous, and secure energy
future.
Our whole-systems expertise unlocks market-based solutions that can be
replicated and implemented now.
As an independent, non-partisan nonprofit, we convene and collaborate
with diverse partnersbusiness, government, academic, nonprofit,
philanthropic, and militaryto accelerate and scale solutions.
We boldly tackle the toughest long-term problemschallenges often
ignored by those held to short-term results.
Weve been a leader in energy efficiency and renewables for more than 30
years.
INTRODUCTION TO RMI
WHAT WE DO
WHATDIFFERENTIATES US
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RMIS SCOPE OF CURRENT ACTIVITY
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Program commitmentsare dark starbursts
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Favorable defection economics exist for a small minority of customers today, but will expand to millions of
customers by 2024 under conservative assumptions Hawaii is the most favorable geography today, with hybrid systems at or near prevailing commercial and
residential rates
Approximately 20% of customers in both Mid-Atlantic and Southwest will see favorable economics within a
decade
Parity generally happens for commercial customers before residential ones
Achieving DoE targeted levels of technology advance and/or optimizing demand before installation of the system
brings forward parity economics by 5-10 years. In our most progressive case, all customers in the Southwest and90% of customers in the Mid-Atlantic would see favorable defection economics within 10 years
Defection is suboptimal
From an economic perspective, the difference in cost between installing a 98% solution vs. a 100% solution
for a customer is dramatic, and unless we devise ways to share the benefits of these resources, there would
be an unnecessary over-investment
From a social perspective, the consequences of individual customer defection are even more tragic,
because those unable to physically install or afford these systems would pay an increasing percentage ofthe cost for maintaining the grid.
All this leads us to conclude that the traditional utility business model is broken today. Utilities are making
investments now for customers that may not exist in the future
These systems can create value for customers, utilities, and the businesses that provide them. Migrating to a
system that enables the two-way exchange of value by a wide-range of producers and consumers will unlock this
value
REPORT KEY MESSAGES
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Key Messages
Study Overview
Results
Ongoing Research
PRESENTATION OVERVIEW
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STUDY
OVERVIEW
BACKGROUND AND MOTIVATION
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SPIRALING EFFECTS THAT IMPERIL THE
TRADITIONAL UTILITY BUSINESS MODEL
one can imagine a day when battery storage technology
or micro turbines could allow customers to be electric grid
independent.
- Peter Kind, Disruptive Challenges report, 2013
Study Goal: Establish a fact-base for where andwhen solar plus battery storagehybrid power systems compete with
traditional utility service
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THESE FACTORS GIVE CUSTOMERS A NEW
SPECTRUM OF CHOICE
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WHERE WE LOOKED TO SEE IF IT COULD HAPPEN
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WE TESTED THE DISRUPTION THROUGH A VARIETY
OF SCENARIOS
Base Case
Accelerated TechnologyImprovement
Demand-SideImprovement
CombinedImprovement
PV Sunshot
Residential - $1.50/W
Commercial - $1.25/W
Efficiency Measures
Residential30% ReductionCommercial34% Reduction
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HOW WE ARRIVED AT OUR RESULTS
FinancialAssumptions
ITC Eligibility
MACRS
Financial AnalysisModel
HOMER software
CostProjections
Solar PV
Batteries
Inverter
Diesel Fuel*(*Commercial Profiles Only)
2 LoadProfiles
Residential
Commercial Hybrid SystemResults
Levelized Cost of EnergyNet Present Cost
kWh/yr
Replacement Costs ($/yr)
O&M ($/yr)
Emissions
TechnicalSpecifications
Solar PV
Batteries
Inverter
Generator*
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BY 2025 MILLIONS REACH PARITY IN OUR MOST
CONSERVATIVE COMMERCIAL SCENARIO
With projected
declines in technology
costs parity arrives in
ALL of our locations by
2050
Assuming aggressive
price reductions (e.g.
DOE Sunshot) or
introducing demand
management, these
dates move forward bynearly a decade
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WITHIN A DECADE EVEN LARGE GROUPS OF
RESIDENTIAL CUSTOMERS REACH PARITY
Despite small
systems, residential
customers will see grid
parity by 2050
With aggressive
technology price
reductions or demand
management, parity
arrives over ten years
earlier
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THE COMMERCIAL PARITY TIMELINE
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THE RESIDENTIAL PARITY TIMELINE
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EFFECTS ON CUSTOMERS AND REVENUE IN THE
SOUTHWEST BY 2024 (COMMERCIAL)
Base Case$0.19
Demand-side Improvement$0.14
Accelerated Technology Improvement$0.12
Combined Improvement$0.09
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EFFECTS ON CUSTOMERS AND REVENUE IN THE
SOUTHWEST BY 2024 (RESIDENTIAL)
Base Case$0.46
Demand-side Improvement$0.25
Accelerated Technology Improvement$0.24
Combined Improvement$0.14
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EFFECTS ON CUSTOMERS AND REVENUE IN THE
MID-ATLANTIC BY 2024 (COMMERCIAL)
Base Case
$0.24
Demand-side Improvement$0.17 Accelerated Technology Improvement
$0.16
Combined Improvement$0.12
States included in the Mid-Atlantic region for this graph: CT, MA, NJ, NY, PA, RI
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EFFECTS ON CUSTOMERS AND REVENUE IN THE
MID-ATLANTIC BY 2024 (RESIDENTIAL)
Base Case$0.92
Demand-side Improvement$0.44
Accelerated Technology Improvement$0.47
Combined Improvement$0.24
States included in the Mid-Atlantic region for this graph: CT, MA, NJ, NY, PA, RI
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ONGOING
RESEARCH
PLANS FOR COMPANION REPORT
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TRANSFORMING THE CURRENT RELATIONSHIP
WITH ELECTRIC SERVICE
Grid
as
Backup
Battery
as
Backup
Transactive
System
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Distributed resources and the grid can be complementary
GRID DEFECTION HAS REAL TRADE-OFFS
Reduced capacity needs on the grid
Contributions to ancillary services
Transmission congestion relief
Access to fast-ramping resources
Peak shaving and demandresponse capability (upgrade deferral)
Reduced environmental impact
Improved resiliency
Reliability (stable voltage and
frequency, redundancy)
Virtual storage
Start-up Power
Access to upstream markets
Risk reduction
Diversification of supply and
demand sources
GRID BENEFITS DER BENEFITS
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Rather than a threat, solar-plus-battery systemsoffer new and expanded values that we are nottaking advantage of
New or revamped business models can unlockthese values
A forthcoming companion piece to this study willinvestigate design principles that unlock thepotential value of these systems while sharing thebenefits across stakeholders
SEEING THE POTENTIAL THREAT AS AN
OPPORTUNITY
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THE REPORT IS THE PRODUCT OF A TEAM
EFFORT
OUR PROJECT PARTNERS:
Galen Barbose, Lawrence Berkeley National Laboratory
Kristin Brief, Ambri
Nicholas Chase, U.S. Energy Information Administration
Ali Crawford, Sacramento Municipal Utility District
Cummins Power Generation
Julieta Giraldez, National Renewable Energy Laboratory
Allan Grant, Corvus Energy LimitedRob Harris, PowerSecure Solar
Eric Hittinger, Rochester Institute of Technology & Aquion Energy
Grant Keefe, Distributed Sun
Dave Lucero, EaglePicher
Lee Kosla, Saft Batteries
Paul Komor, Renewable and Sustainable Energy
Institute (University of Colorado)
Christopher Kuhl, ZBB Energy Corporation
Tom Leyden, Solar Grid StorageMarc Lopata, Microgrid Solar
Jim McDowall, Saft Batteries
Pierre Moses, Make It Right Solar
Jeremy Neubauer, National Renewable Energy Laboratory
Scott Reeves, EaglePicher
Armando Solis, Hanwha Q Cells USA
Matthias Vetter, Fraunhofer Institute
Ted Wiley, Aquion Energy
OUR SUPPORTERS:
THOSE THAT OFFERED CRUCIAL INSIGHTSAND PERSPECTIVES:
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1. Near-term grid parity, and thus defection risk, exists for bothcommercial and residential customers; we are entering an era ofgreater customer empowerment
2. Grid parity for the majority of US electricity customers arrives
within the 30-year economic life of typical utility power assets
3. Parity Defection
4. Defection is sub-optimal and can lead to uneconomic andinequitable outcomes
5. The speed of disruption in the electricity sector is outpacingregulatory and business model reform; we have
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Creating a clean, prosperous,
and secure energy futureTM
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Utility Load Profile Load Size(kWh/yr)
Rate Projection(low)
Rate Projection(high)
Hawaiian ElectricCo.
HonoluluResidential
14,479 0.62%
3%
HonoluluCommercial
722,700 0.34%
Southern CaliforniaEdison
Los Angeles CountyResidential
7,914 0.10%
Los Angeles CountyCommercial
586,557 0.10%
CPS Energy San AntonioResidential
15,247 0.90%
San AntonioCommercial
670,504 0.70%
Louisville Gas &Electric
LouisvilleResidential
12,837 -0.50%
LouisvilleCommercial
604,809 -0.40%
ConEdison (NY) Westchester CountyResidential
11,927 0.30%
Westchester CountyCommercial
577,431 0.10%
RETAIL PRICE PROJECTIONS USED IN OUR
STUDY
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TRENDS IN RETAIL ELECTRIC PRICE INCREASES
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TRENDS IN RETAIL ELECTRIC PRICE INCREASES
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TESTING THE ASSUMPTIONSCENARIOS
Accelerated TechnologyImprovement
Portrays the impacts of sharply
decreased total installed PV costs
along with aggressive battery price
projections.
DOE SunShot PV goals included asour PV costs.
DOE battery target included as our
battery cost.
Factors driving to these prices:
Scaling of the large format, lithium
ion battery market
New battery chemistries
2nd use application for EVbatteries
Reductions in solar balance of
systems costs
Demand-sideImprovement
Portrays the impact of full
implementation of cost effective
energy efficiency and demand
management to shift the load profile,
especially during allowed periods of
capacity shortage.
Efficiency is the lowest cost energy
solution. Reducing the total load of
the system reduces the size of the
PV and battery assets necessary to
meet the consumers load. A smaller
system reduces the total capital cost
of the hybrid system.
Demand management capabilities
that enable consumers to shift their
load profile in response to seasonal
weather patterns, also reduce the
necessary size of the system.
Combined SystemImprovements
Portrays the lower cost technologies
considered in the accelerated
technology improvement scenario,
coupled with the efficient and flexible
load profile in the demand-side
management improvement scenario.
Combining innovation and efficiency
creates a total system improvement,
that brings hybrid systems to grid
parity much sooner than any of our
other scenarios considered alone.
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LOS ANGLES GENERATION MIX IN 2024