US households could use 15 GW to meet electricity demand at lower cost – pv magazine USA

July 2, 2024 Ryan Kennedy

As households increasingly electrify their appliances, heating and cooling systems, and shift to driving electric vehicles, electric utilities face new challenges in meeting demand while achieving decarbonization and maintaining affordability for customers.

A Deloitte report explains how distributed energy resources (DERs) can address these multiple challenges, filling a gap that centralized power plants can’t address as effectively. DERs represent household electrical resources such as home solar, batteries, electric vehicles, smart thermostats, and smart appliances. When coordinated intelligently, DERs can reduce strain on the grid, reducing peak electricity needs.

“If utilities can successfully mobilize their customers, they could leverage DERs to meet peak clean energy demand and provide essential grid services, while equitably sharing revenue and resilience benefits with households and putting downward pressure on rates,” Deloitte said.

Deloitte said household electricity generation capacity from DERs could exceed total peak demand by 2035 in a decarbonized grid scenario. U.S. households could have more than 1,500 GW of generation, storage and flexible demand capacity, Deloitte said.

That could prove significant, as grid planners who had assumed stable demand for decades increased their projections in early 2023, ending the year in doubling their five-year load forecast to 4.7%. As utilities reassess demand from domestic manufacturers, artificial intelligence data centers, cryptocurrency miners and green hydrogen producers, as well as the electrification of transportation and buildings, demand estimates continue to be revised upward. Meeting the Biden administration’s goal of a fully carbon-free grid by 2035 through renewables could double peak demand to 1.4 terawatts by 2035, the report said.

Large-scale renewable energy development is meeting most of this demand growth and replacing abandoned fossil fuel generation capacity. But grid interconnection delays are mounting, delaying projects or leading to cancellations.

“The bulk energy system is constrained by the closure of fossil fuel plants and long lead times for new plants to connect to limited transmission infrastructure, now extending to five years,” Deloitte said. “By 2023, the stock of renewables and storage awaiting grid interconnection, primarily at utility scale, has reached 2.6 terawatts, more than double the current installed capacity.”

Particularly for meeting peak demand, DERs can offer a more cost-effective solution than current methods. Peak electricity demand typically occurs in the summer afternoons and evenings, when people come home from work and run their air conditioning and appliances. Peak demand is typically met by peaking fossil fuel power plants Plants that are mostly idle but built to ensure utilities have enough capacity to start up quickly when electricity demand increases. For grid-scale renewables to meet peak demand, much more generation and storage capacity is needed, as only a fraction of intermittent capacity counts toward resource adequacy requirements, and solar generation does not match the load profile of winter peaking systems.

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Thus, flexible home DERs, which can strategically reduce energy consumption or self-consume stored energy at these peak demand times, can help reduce the amount of excess reserve capacity built on the grid.

“Studies commissioned by the states of California and New York show that managed electrification could reduce the cost of needed distribution upgrades by more than $30 billion by 2035 in each of these states,” Deloitte said. “Indeed, building efficiency measures and smart devices to manage energy use and facilitate electric vehicle charging could reduce capital expenditures for new substations, transformers, feeders and other distribution equipment.”

Building an effective DER system presents regulatory, data, and stakeholder engagement challenges. The technology needed to harness this great potential is already actively being installed, but a coordinated integration effort between regulators, utilities, installers, and homeowners will be required for the benefits to be realized. Deliotte proposes a roadmap to achieve the development and integration of DERs in his report.