Empowering Utilities to Participate in the Clean-Energy Transition – Part 2

Part 2: Aligning Energy Demand with Renewable Energy Production in Oregon

This is the second blog in a three-part series. The first blog, Renewable Heating in Juneau, Alaska, is available here.

One of the central challenges in transitioning to a more distributed and decarbonized energy grid is supporting utilities to actively engage and lead by example and innovation, rather than have them remain on the sidelines or resist the transition. This is the emphasis of a large portion of the work of Rocky Mountain Institute’s Electricity program, and can be observed most directly at the institute’s annual Electricity Innovation Lab (e-Lab) Accelerator event.

Of the 13 teams that came to Accelerator 2018, four were focused on innovations in utility business models and operating strategies. These teams—comprised of utility representatives, regulators, advocates, and government officials—illustrate the varied and knotty challenges utilities face as they experiment their way forward to the energy grid of the future.

Like the Juneau Renewable Heating cohort, Portland General Electric (PGE) championed a team at e-Lab Accelerator to advance new strategies and incentive structures to integrate more renewable energy and distributed energy resources onto the grid. Specifically, the PGE Test Bed team sought to test how to efficiently shift customer energy demand in their Oregon service territory and best match those needs with the output of renewable energy sources. By using smart grid technologies like demand response and battery storage, PGE and its partners are working to make customer demand more flexible, lowering the grid’s peak demand needs, and allowing for that demand to be served by more of the renewable energy that is available during off-peak hours.

The PGE team—which in addition to Portland General Electric included representatives from the Oregon Public Utility Commission, Pacific Northwest National Laboratory, Northwest Energy Efficiency Alliance, Energy Trust of Oregon, and the Oregon cities of Milwaukie and Hillsboro—sought to coalesce around the core objectives of the Test Bed pilot program, including crafting compelling and sustainable customer engagement programs, and creating a long-term scaling plan. The team also sought to calculate how much demand-response technology could realistically be deployed to customers, and to understand how to operationally scale and integrate the deployment of demand-response technology.

As grid-enabled technologies like smart thermostats and electric vehicles become more readily available and are adopted by more customers—and as renewable energy becomes more plentiful and cost-competitive across the country—grid planning is increasingly targeting the demand side of the equation. An RMI insight brief last year, Demand Flexibility: The Key to Enabling a Low-Cost, Low-Carbon Grid, demonstrates how demand flexibility can be a lower-cost, less-polluting alternative to natural gas-fired power plants for integrating more renewable energy on the grid. RMI modeled the use of demand flexibility across a large geographic area to shift electricity consumption from times of the day with high demand but low renewable supply to times with high renewable supply, and found that the strategy can significantly reduce customer costs, curtailment of renewable energy, peak demand, and carbon emissions compared to relying on natural gas-fired generation. To realize the benefits of demand flexibility, utilities must create the proper monetary incentives and controls to allow demand-side programs to thrive and be readily adopted.

e-Lab Accelerator enabled the PGE Test Bed team to reach a common understanding and draft an integrated plan to move the project forward, and since then, the team has achieved some important milestones. In October 2018, Portland General Electric announced plans to submit a proposal to the Oregon PUC for a Test Bed pilot project to begin in three cities in 2019. Over the two-and-a-half-year span for the Test Bed, PGE plans to work with more than 20,000 of its customers to link grid-connected devices like thermostats, water heaters, batteries, electric-vehicle chargers, and other technologies to give these customers more choice over their energy use. PGE is targeting a 66 percent customer adoption rate for its demand-response strategy, which the utility contrasted with a 7 percent adoption rate nationally.

With an eye to ultimately moving its proposed pilot program to scale, PGE also needed to design methods for collecting data on customer participation and performance rates, as well as for testing user-engagement approaches. The utility believes this program is the largest effort of its kind ever attempted in the United States and is interested in generating a set of best practices from the pilot. While the effort aligns with the State of Oregon’s Renewable Portfolio Standard to meet 50 percent of its energy needs with renewable sources by 2040, the PGE Test Bed team also believes the project is an opportunity to partner with PGE customers to develop a new industry paradigm where energy services flow both from the customer to the utility and from utility to customer.

e-Lab Accelerator “was an opportunity to build team trust and understanding, and to set some concrete parameters for a very challenging project,” Fred Gordon, director of planning and evaluation at Energy Trust of Oregon and a Test Bed team member, said. “I think the Test Bed holds the potential to learn how far demand control technology can penetrate a variety of markets if supported by an intensive community marketing environment where marketing of efficiency and demand response are woven together.”

“We found our way through a complex maze and ended up in my view with a very good, meaningful, and impactful outcome, one that has resulted in an application to our state PUC that I think will change the game for demand-response programming by electric utilities,” Peter Brandom, senior project manager for the city of Hillsboro, Oregon, and another Test Bed member, said. “Needless to say, I and we are very excited about the prospects here in Hillsboro and far beyond, resulting from RMI’s program and facilitation.”

The Test Bed proposal to the Oregon PUC is the next step in the evolution of the project, which, due to its scale and complexity, is being watched closely in the electricity industry. There is room for optimism, however, in light of the team’s efforts at e-Lab Accelerator to build consensus and a clear roadmap—offering Oregonians a service that can both save them money and strengthen environmental protections in their home communities.