Solar Energy USA had the privilege of engaging in a solar power question & answer session with Tim Echols, one of the five Georgia Public Service Commissioners responsible for regulating large monopolistic entities in Georgia. This article showcases some important points about power generation and power delivery as they relate to Georgia residents.
Alternative Energy on the Georgia State Grid
Contributed by | Solar Energy USA
Tim, for those who aren’t familiar with power delivery, what is the role of the Public Service Commission?
The Commission, created in 1879, has traditionally regulated monopolies. Entities such as Georgia Power, Atlanta Gas Light and numerous small telephone companies have their return on equity set by the PSC. Numerous other areas of regulation occur as well including oversight, accountability and compliance.
Generating power is a huge and expensive task. Ga Power has done a great job servicing their customers and guaranteeing power is available as well as maintaining the infrastructure, they also have to create revenue and funding to support their programs and demonstrate they can keep up with demand. Since these tasks are so enormous, they often have to work around a 20 year plan that demonstrates the viability of their solutions. Is that harder to do today since technology is growing so fast and changes are happening too quickly to attract investment capital for the power companies? And, does this make them uncomfortable?
This 20 year plan, created because of 1991 legislation in the General Assembly, requires the Commission to approve a 20 Integrated Resource Plan for Georgia Power every three years. We are reactive in this process by design. The Company prepares the plan, followed by extensive hearings, a staff recommendation, and then finally a vote of the five commissioners. In my short time as a commissioner, one thing is sure—Georgia Power is well aware of just about everything happening in the energy sector. Like most of us, Georgia Power has done things a certain way and developed some expertise in the process. Change represents risk to them, and risk adversely affects their company and ultimately their customers.
You’ve been a champion of encouraging the use of alternative fueled vehicles in Georgia like those that run on natural gas or electricity. Please give us a brief breakdown of your experiences driving AFVs in Georgia.
I drove a 1999 CNG-only Honda Civic for about 2 years. During that time I learned a lot about alternative-fueled vehicles. As a result of my experience, I started a traveling roadshow that just completed its third annual tour of the state. I currently drive a 2008 Chevy Impala that is a flex-fuel car, and I try to put E85 in this vehicle whenever possible. I see CNG growing in market-share for transit and business and the electric car market growing with commuters and energy conscious consumers. Georgia Power and Atlanta Gas Light have both made positive policy changes encouraging the expanded use of these vehicles.
Are you familiar with the 2013 Edison Electric Institute report that states, “Due to the variable nature of renewable DER, there is a perception that customers will always need to remain on the grid. While we would expect customers to remain on the grid until a fully viable and economic distributed non-variable resource is available, one can imagine a day when battery storage technology or micro turbines could allow customers to be electric grid independent. To put this into perspective, who would have believed 10 years ago that traditional wire line telephone customers could economically cut the cord?”
I think this is going to vary country to country, and state to state. For example, in Germany the country created a feed-in tariff that essentially guarantees anyone who develops a renewable energy project a subsidized price per kWh. It started at 47 Euro cents and is now about 14 Euro cents. That policy decision has created an enormous network of mostly wind and solar with 50 percent of the projects on the land of citizens. In fact, I am writing this response from Germany on an energy trip here with the German government. With the amount of money the Germans are being paid, they are incentivized to connect to the grid. I don’t favor a subsidy for our state, and the current Integrated Resource Plan has no renewables in it. If that holds and we do not amend the plan, it may very well be that Georgia projects are more profitable “off the grid” and consumed on site–though I can’t imagine many who would not want to connect for back-up purposes. Once we have the battery technology, which the Germans are working hard to develop, we will most likely have a wave of people who experiment with going off the grid. I would guess that would be 10 to 20 years out in the future though. If that works, it will be a game-changer.
How do you see central distribution of energy progressing and evolving?
I don’t really see our system in Georgia as broken. I look at Germany’s high energy costs, about 29 Euro cents per kWh, and tell myself I don’t want to go there. They are running manufacturing out of their country in much the same way California is. Our citizens have grown accustomed to cheap and reliable energy, and I’d like to continue on that course. Let’s slowly integrate more renewables into our system up to a certain point. Once you hit about 25 percent, which is about where Germany is now, you begin to experience problems. All that said, we are going to need to keep a diverse fuel mix in our state with nuclear, natural gas, some coal, and renewables. The recent wind project Georgia Power acquired demonstrates that “deals” are out there, and when we can acquire renewables that actually cause rates to go down—everyone wins.
Duke Energy CEO Jim Rogers said, “If the cost of solar panels keeps coming down, installation costs come down and if they combine solar with battery technology and a power management system, then we have someone just using [the grid] for backup.” What happens if a whole bunch of customers start generating their own power and using the grid merely as backup? The EEI report warns of “irreparable damages to revenues and growth prospects” of utilities. What are your thoughts?
If big box stores like Wal-Mart go off the grid, which they said they intend to do, how will that affect Georgia Power and EMCs throughout our state? I am not exactly sure at this point. Before that happens though, I think Georgia Power will see it coming. The power company needs to be “at the table” and a part of any paradigm change we make in this state. That was the case with AGL when gas was deregulated in this state. These established utilities like Georgia Power bring experience and institutional knowledge and are vital to reliability. That reliability is critical for us to attract and keep business here in our state. That said, countries like Germany are flipping the traditional energy model upside down trying to use renewables for base-load, and then fill the peaks with gas and coal. I am not sure this will work. We’ll have to see.
A journalist, David Roberts wrote, Utility investors are accustomed to large, long-term, reliable investments with a 30-year cost recovery — fossil fuel plants, basically. The cost of those investments, along with investments in grid maintenance and reliability, are spread by utilities across all ratepayers in a service area. What happens if a bunch of those ratepayers start reducing their demand or opting out of the grid entirely? Well, the same investments must now be spread over a smaller group of ratepayers. In other words: higher rates for those who haven’t switched to solar. Do you agree?
Fewer customers will mean higher prices. But I for one don’t intend to see our population shrink nor do I intend to be content with low economic growth. It is in all of our best interest to continue to prosper and have an attractive business climate. Germany has demonized the big utilities, shut down plants prematurely without making them whole, and made what is normally a stable investment something risky. Their utility bond ratings have dropped. The country has so much excess energy at night that they disconnect turbines at four remaining nuclear power plants. They are paying Poland to take excess power, and then having to buy it back at peak periods. Their solar frenzy is causing them to be wasteful and make illogical decisions. According to a recent ACORE study, over the past five years, more than 35% of all new US power generation has come from renewable energy resources, including more than 49% of all new power generation in 2012 – surpassing all other energy sources, including natural gas. That means we need to be careful and not make the same mistakes Germany has made.
A recent WSJ article discussed a legal dispute in Iowa between a solar company and a large utility involving who can and cannot sell power to the city. The judge who oversaw the case ruled that the solar company “could sell solar electricity to the city without encroaching on a utility’s lawful turf.” She noted that “the city would still need to buy electricity from [the utility] when the sun isn’t shining.” This feels very familiar to a battle that has been brewing in GA involving the Territorial Service Act which grants GA Power a monopoly. Do you think this case could have any implication in GA?
I don’t favor changing the territorial law in Georgia. Both Georgia Power and the EMCs depend on it and these large utilities are very important to our economic stability. Any change needs to have both of these groups involved.
Is there a way for the power companies to work with small scale solar integrators that isn’t a conflict of a guaranteed power monopoly?
I think Georgia Power learned an awful lot through the Advanced Solar Initiative and I see the relationship evolving in a positive way moving forward.
Back to AFVs – We all know that power plants must be built to accommodate the highest demand of a given time period and that power is sometimes being generated but not used. We’ve read that the current grid could support 80% of electric vehicles charging at night and help absorb some of the power that is dumped or unused during off-peak hours which could be a pretty nice revenue pickup for power companies. Is our thought process correct?
Yes, and I think Georgia Power’s super-off-peak time of use rate is perfect for this and demonstrates their willingness to advance this technology. In fact, electric car charging overnight represents great grid utilization and stewardship. I am also encouraged by the products coming out of major manufacturers like the Volt, Leaf and CMax. I see the electric car market continuing to grow. In fact, I urged 9 members of the German Parliament to take a more serious look at electric cars and how they would help Germany utilize this excess power they have overnight and meet their goals of reducing greenhouse gases.
Georgia Public Service Commission
244 Washington Street
Atlanta, GA 30334
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