Can utilities fix the energy equity gap with renewables?

image credit: PXiSE
Becky Wheeler's picture
Head of Marketing PXiSE Energy Solutions

Becky is simply a story-teller. But from a corporate point-of-view, she has more than a decade of experience in start-up, nonprofit, and global publicly held company environments spending the...

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  • Jan 10, 2022

Utilities are uniquely positioned to tackle electricity costs at the point of generation by adding more distributed energy resources to their grids.

Much has been said about how low- to moderate-income (LMI) households can and should benefit from the availability of distributed energy resources (DERs). Currently, LMI households bear a higher energy burden than more affluent ones because a larger portion of their income goes toward energy costs.

The national average energy burden for low-income households is 8.6%, three times higher than for non-low-income households which is estimated at 3%. U.S. Office of Energy Efficiency & Renewable Energy

In theory, LMI homes should be able to capitalize on lower energy costs by installing DERs like solar PV and batteries. For this reason, many assistance programs are aimed at increasing DERs on LMI homes. Programs such as California’s Self-Generation Incentive Program (SGIP) and SOMAH support the installation of battery storage systems or solar PV, respectively. Focus has also been placed on research that examines the efficacy of various policies and programs aimed at increasing DER adoption among LMI households.

But U.S. electricity costs continue to rise and the equity gap is not closing fast enough to benefit those who can least afford to pay more for their energy.

While utilities have been active participants in supporting these programs and initiatives, there may be an additional role for them in closing the energy equity gap.

Utilities charge consumers based on their consumption, and it is up to the consumer to mitigate these costs through available programming, rebates or by reducing or shifting their power consumption. Wealthier consumers have greater ability to purchase energy efficient and smart appliances or to install solar PV and storage systems, and often have greater flexibility in when they consume power—all of which can help offset their energy costs. LMI households don’t always have access to these benefits.

But what if utilities took on the burden of adding solar and storage to their own energy infrastructure and then provided this power to everyone? Wouldn’t this be a more equitable means of democratizing access to safe, clean, and inexpensive power?

Some utilities have shied away from promoting solar and storage due to concerns that they will create grid instability. However, with today’s software, that is no longer a legitimate concern. Distributed energy resource management systems (DERMS) have sophisticated algorithms that can simultaneously balance resource, load, demand, and network constraints while enabling renewables — in some cases even allowing for a 100% renewable grid.

With oversight over the entire grid, a DERMS can coordinate utility-owned assets alongside customer-owned ones, and by perceiving the system as a whole, it can identify opportunities to shape, shift and balance power across the entire system rather than solely at the point of generation or demand.

This level of control frees utilities up to add any number of their own DERs while also supporting the addition of customer-owned DERs—without compromising on power safety or reliability.

By adding a DERMS to control their grid, grid operators can facilitate individual DER additions by those households that can afford it, while providing safe, reliable, renewable power from their own assets to those who can’t--resulting in an equitable pathway forward to the new energy future.

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Shah Haider's picture
Shah Haider on Jan 13, 2022

A well written paper considering practical aspects. If utilities produce electricity through renewable instead of consumers, why they will give financial benifits to the consumers, unless they are practically not-for-profit. Utilities should also go for alternate means of income generation besides electricity in global change scenario.

Jim Stack's picture
Jim Stack on Jan 15, 2022

Becky,  from what I have seen here in Sunny Arizona I don't think any programs are aimed at helping the poor or low income. Yet with many solar companies providing solar and battery systems with no upfront money they are available to any income level that own their homes. Renters poor or rich can't add solar. 

    But these zero upfront systems just give the Solar installer companies more payback. The home owners might break even or save a little. 

    The power companies are also adding false fees and other charges that make it hard for anyone to save. 

    Low income can always add more insulation , seal leaks and put in radiant barriers. They can even do it themselves. Those pay back very good with no false fees. 

Todd Carney's picture
Todd Carney on Jan 27, 2022

Becky, thank you for providing such a strong analysis of the current situation. In legislative matters lately we have seen a lot of discussion of equity gap issues in a wide variety of areas. Do you feel this is an area the federal government, or state/local governments could get involved in through either subsidizations or tax incentives?

Becky Wheeler's picture
Thank Becky for the Post!
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