This article is excerpted from Big Pivots volume 81. Download the entire issue here.
“We have a mid-20th century way of doing things as we hurtle through the 21st century.”
That’s how Mike Kruger, president of Colorado Solar and Storage, describes the situation that has spawned a bill almost certain to be introduced into the Colorado General Assembly in coming days that might dramatically rearrange how Xcel Energy goes about its distribution system planning.
The bill has a fancy, forward-looking title: Powering Up Colorado.
“Right now Xcel’s system is not pleasing anybody,” says Kruger. “I think internally they are struggling as well.”
As we expand the use of electricity, we need upgrades in how we distribute electricity at the neighborhood levels. Those costly upgrades can include upgraded transformers and other equipment. Costs can run from $6,000 to $10,000. This can discourage lower income residents from electrifying.
Efficiency is also an issue. Instead of one- off upgrades, COSSA wants to see more efficient methodologies used for broad, neighborhood-scale upgrades that will be needed as we expand the use of electricity almost everywhere.
That will take money, but the money now being spent is being done so in neither an equitable nor efficient way, says Kruger.
PUC commissioners have also talked about the need to get a handle on distribution system planning.
Going back to the 1950s, ours was a world premised on large amounts of fossil fuels. Electricity flowed only one direction, from central power plants to consumers.
Now, electricity can flow both ways, including from solar rooftops. Car and truck batteries can be used to power homes. Some homes have Tesla batteries. We’re moving to electrify both transportation and buildings.
There’s much talk about virtual power plants. A virtual power plant, as defined by the Rocky Mountain Institute, is comprised of hundreds or thousands of households and businesses that offer the latent potential of their thermostats, electric vehicles (EVs), appliances, batteries, and solar arrays to support the grid. These devices can be flexibly charged, discharged, or managed to meet grid needs. When these devices are aggregated and coordinated, they can provide many of the same energy services (capacity, energy, ancillary services) as a traditional power plant.
Using the old model, the general task in figuring out how to pay for expansion of electrical wires in neighborhoods was that those creating the need for upgrades should have to pay for the upgrade.
It made sense, didn’t it?
But here’s the rub. The person who upgrades now and needs the upgrade can be forced to pay the full cost. That can kill the economics of a new solar roof. The solar industry and allies see need for a fundamental rethink.
To illustrate the problem, Kruger cites a Golden neighborhood, where homes were built in the 1970s and early 1980s. Few felt the need for air conditioning. Almost nobody had a computer. “The biggest load was incandescent lights.”
Now we have roof-top solar — and after the third or fourth roof installation, a new transformer is needed.
Another example Kruger cites comes from the Montbello neighborhood of northeast Denver. Abutting the former airport named Stapleton, it was lower income, and residents there certainly had less need for higher performance neighborhood transformers.
“Lower-income individuals don’t have $6,000 to $10,000 floating around for distribution upgrades. That is part of the system we’re addressing. We don’t want to leave our low-income individuals behind in Colorado’s energy transition.”
A third example comes from downtown Denver. The city is driving building owners to electrify and replace natural gas. Building owners have been pushing back because of the high cost of electrical upgrades, in some cases running to the millions of dollars.
But returning to the residential neighborhoods, the cost of upgraded transformer capacity can discourage residents who want to buy electric vehicles, add solar, or electrify their homes. “Those neighborhoods can see two or three installs (of solar panels) and that’s it.”
That creates an inequity, says Kruger. Somebody in an affluent neighborhood, say Cherry Creek, can more easily afford the cost of paying for a new transformer than somebody of lesser income. Will they be stuck using natural gas — which is likely to become more expensive as systems have fewer natural gas customers — because of the cost of the electrical upgrade?
A year ago, he says, solar installers were complaining about the inability of Xcel to get systems connected in a timely matter. “Part of the issue was directly related to the grid.
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The answer, he says, is more thoughtful distribution system planning, and this bill — it’s being carried by at least two of the most savvy legislators as regards energy bills, Sen. Chris Hansen and Senate President Steve Fenberg — would force Xcel to revamp how it goes about distribution planning.
The bill likely would also apply to Black Hills Energy, but Kruger says the situation with Xcel triggered the still- being-shaped legislation. “We don’t have the same problems with other utilities. We have not seen the same problem of somebody trying to electrify their building and being told it will be two years before they can do it. A year ago it was a six-month wait for a very simple interconnect.”
Working with COSSA in drafting the bill have been the Colorado Energy Office, the Natural Resources Defense Council, the International Brotherhood of Electrical Workers and others. He said he believes proponents have the support of Xcel because it takes into account their concerns.
Allen Best publishes the e-journal Big Pivots, which chronicles the energy transition in Colorado and beyond.