Key Enabler of Renewable Energy Resources Integration
Ahmad Faruqui is a principal with The Brattle Group. He is an energy economist whose career has been devoted to pricing innovations. He has designed and evaluated a variety of pricing experiments in the U.S. and abroad and maintains a global database of more than three hundred tests of time-varying rates. Faruqui has testified on rate-related issues in several jurisdictions and presents frequently on tariff reforms.
Lea Grausz, an associate with Brattle, has experience in rate design and incentive-based ratemaking for electricity and natural gas. She has managed several rate design projects throughout the U.S., and in several provinces in Canada. She has also managed many other projects related to utility regulatory incentives, consumer response, and deployment of smart technologies. Previously, Grausz worked for four years for GDF SUEZ (Engie) in Paris where she led the economic analysis for price negotiations and contract arbitrations in long-term gas supply contracts.
Cecile Bourbonnais is a research analyst with Brattle, where she supports utilities and energy companies across North America on rate design, resource planning, ratemaking methodology, and business risk.
There is widespread agreement in the industry. Today's residential rate designs have outlived their usefulness and need to be modernized to meet the challenges of integrating renewable energy resources into the grid. There is also general agreement on what constitutes a modern rate design. Examples include cost-reflective rate designs such as time-of-use rate and dynamic pricing coupled with demand charges.
However, there are several reasons why the transition to modern rate designs has yet to be deployed to scale. Those reasons are discussed in this article along with proposed solutions.
Smart meter deployments now encompass half of the residential customer population in the United States, removing a major barrier to the modernization of rate designs. Smart technologies continue to proliferate in customer premises, including smart thermostats and appliances, high-efficiency air conditioners and heat pumps, battery storage, and smart phones.
The Internet of Things has arrived. With it a new generation of customers is born, customers who want better control over their energy use, who are avid for data, who want to have a minimum impact on the climate of the planet, and are willing to pay extra to do so.