Beneficial Electrification: Opportunity Knocks for Utilities
It is increasingly apparent that power sector transformation isn’t happening in the future; it’s occurring now. Already, resources are cleaner and more distributed, previously docile customers are actively seeking opportunities to save, consume, and even produce energy in new ways, and unregulated service providers are emerging to motivate customers and make it easy.
One of the dramatic changes underway is “environmentally beneficial electrification,” a term that describes the electrification of end-uses that have historically been powered by fossil fuels (natural gas, propane, fuel oil, or gasoline), in order to reduce costs as well as greenhouse gas and other emissions. Examples include electrification of vehicles, space heating, and water heating.
Environmentally beneficial electrification, often shortened simply to “beneficial electrification,” is possible now due to dramatic increases in the efficiency of end-use equipment (e.g., heat pumps), technological advances in other sectors (e.g., electric vehicles), declining electric sector emissions, and the growing need for flexible resources to better manage the grid and help integrate renewable energy.
These developments are widely recognized throughout the utility sector, but the metrics, policies, and rules of thumb we usually apply lag behind. They, too, need to recognize the shift away from fossil-fueled energy end-uses to electric alternatives.
New metrics are crucial because the power sector is rapidly getting cleaner overall. The U.S. power sector now emits the same amount of CO2 that it did in 1993, for example, despite producing nearly 30 percent more energy annually. The Energy Information Administration reports that, in 2016, 26 GWs of capacity were added to the U.S. resource mix, 93 percent of which emit zero or very low emissions.
This means that, even where the efficiency of electrical end-use devices isn’t improving appreciably, the emissions efficiency or “emiciency” of the power sector overall continues to improve. The increase in emiciency, in turn, results in lower emissions from electrical devices—fewer pounds of pollution per mile from electric vehicles, per gallon of hot water produced by electric water heaters, and so on.
More broadly, beneficial electrification represents good news for utilities. It can hedge against flat or declining load as technology and efficiency improve, the under-utilization of distribution system assets, and the associated risk of stranded costs. It can also help utilities meet the challenge of integrating greater amounts of distributed resources into the grid. And it’s certainly good news for the environment. David Roberts summarized this well in Vox recently, observing that beneficial electrification provides “a path to zero-carbon electricity…The same cannot yet be said of combustion fuels…”
Beneficial electrification provides utilities with the opportunity to improve load, environmental performance, and grid management, all of which are key concerns facing the power sector today. Future posts in this series will explore these opportunities in greater detail.