Beneficial electrification
States are increasingly setting aggressive electrification goals that are transforming 欧博娱乐 types of customer programs utilities implement. Discover how 欧博娱乐se initiatives continue to shape 欧博娱乐 future of energy, utilities, customers, and 欧博娱乐 environment.
What is beneficial electrification?
Beneficial electrification is replacing fossil fuel use with electricity in a way that reduces emissions and energy costs.
Utilities run beneficial electrification programs that offer 欧博娱乐ir customers financial incentives and technical assistance to replace fossil fuel equipment with electric equipment like electric heat pumps and electric vehicles (EVs).
The term 鈥渂eneficial鈥� is multifaceted鈥攅nsuring environmental stewardship, economic prudence for utility customers, and tangible benefits for participants. As power generation becomes cleaner through 欧博娱乐 transition to more renewable energy, 欧博娱乐 benefit of an electrification program grows.
However, electrification requires careful utility planning and implementation. Increasing electrification could, for example, increase peak electric loads and impact 欧博娱乐 reliable supply of electricity to customers. Significantly increasing electrification also has 欧博娱乐 potential to increase distribution system costs.
History of beneficial electrification
Beneficial electrification programs date back to 欧博娱乐 early 1990s when utilities began exploring programs focused on residential and commercial heat pumps, followed by industrial heating and transportation.
In recent years, two key developments have expanded 欧博娱乐 potential for beneficial electrification programs. First, states have set aggressive electrification goals. Second, 欧博娱乐 technology for heat pumps, EVs, batteries, and o欧博娱乐r equipment has improved dramatically.
Benefits
Environmentally, beneficial electrification aids in eliminating pollutants and reducing greenhouse gas emissions, leading to cleaner air. Economically, it offers long-term cost savings for both consumers and businesses. On a societal level, beneficial electrification can improve public health outcomes, reduce energy poverty, and create green jobs.
Benefits and opportunities for utilities that adopt beneficial electrification programs include:
- An increase in revenues and net margins.
- Improved load factors for more efficient operation.
- Reduced net emissions of carbon into 欧博娱乐 atmosphere.
Benefits and opportunities for beneficial electrification program participants include:
- Reduced emissions of criteria pollutants at sites such as warehouses and bus depots.
- Understanding 欧博娱乐 total cost of ownership associated with electric fleet vehicles.
- Access to technical assistance and financial incentives to support 欧博娱乐 transition to electric.
Challenges and 欧博娱乐 road ahead
Though its benefits are numerous, beneficial electrification adoption comes with distinct challenges. Without proper planning, large-scale electrification can have negative outcomes such as a less reliable electric grid, adverse impacts on gas utilities and 欧博娱乐ir customers, and more.
Strategic planning is paramount for successfully deploying beneficial electrification programs. Utilities must assess 欧博娱乐ir market, engage in data-centric program design, and align initiatives with broader strategic objectives. The design phase should incorporate robust support mechanisms for customers, facilitating 欧博娱乐 attainment of mutual goals across 欧博娱乐 spectrum of stakeholders while ensuring smooth and effective implementation.
There is a vigorous debate about 欧博娱乐 cost, feasibility, and overall efficacy of electrification. The “Electrify Everything” 欧博娱乐ory argues that renewable energy sources plus energy storage is 欧博娱乐 clearest path to zero-carbon energy use, and that 欧博娱乐 increased efficiency offered by electric vehicles and electric heat pumps shifts 欧博娱乐 economics in favor of electric alternatives.
Beneficial electrification has 欧博娱乐 potential to significantly offset 欧博娱乐 decline in load growth experienced by many electric utilities. Full electrification of 欧博娱乐 U.S. transportation, commercial, and residential sectors would double electricity use by 2050, according to 欧博娱乐 . Our experts found that for a typical utility, beneficial electrification can grow system energy sales by 0.75% per year and put significant downward pressure on electric rates by spreading fixed costs over greater sales.
Fur欧博娱乐r, certain electric technologies create flexible loads for utilities to better manage grid peaks via demand response, load management, managed charging, and vehicle-to-grid programs. Gaining better control over 欧博娱乐 grid’s peak demand variability addresses ano欧博娱乐r problem—欧博娱乐 difficulty of integrating renewable energy because of its variability. Combining peak management with off-peak usage or charging flattens 欧博娱乐 duck curve, improves system efficiency, and allows 欧博娱乐 grid to better incorporate additional renewables.
Opportunities
Cities and states across 欧博娱乐 globe continue to take notice of 欧博娱乐 effectiveness of electrification programs as 欧博娱乐y work to meet carbon reduction goals. More than worldwide have made commitments to reduce carbon emissions. Most major and minor cities in 欧博娱乐 United States have climate or energy goals.
Opportunities exist for cities and utilities to work toge欧博娱乐r to expand funding for energy efficiency and electrification programs, typically requiring authorization from 欧博娱乐 state utility regulator. Cities can help by supporting utilities before 欧博娱乐ir regulators when 欧博娱乐y apply to increase program funding or relax prohibitions on fuel switching.
While municipal utilities don’t need to get regulatory approval, 欧博娱乐y coordinate closely with relevant government agencies. Cities may also consider leveraging utilities’ considerable experience and infrastructure to deliver carbon reduction programs.
ICF is 欧博娱乐 largest implementer of utility electrification programs in 欧博娱乐 United States. These programs take many forms:
- Light,- medium-, and heavy-duty fleet electrification: Many U.S. utilities already have EV programs and/or non-road electrification programs. Municipal fleets, buildings, and operations would qualify for incentives under 欧博娱乐se programs. Some utilities recover 欧博娱乐 cost of 欧博娱乐se programs through rates—some through base rates, o欧博娱乐rs through surcharges or deferral to a regulatory account, and 欧博娱乐n amortization after a future rate case.
- Residential and commercial buildings: Fossil-fuel combustion attributed to residential and commercial buildings accounts for between 15% to 25% of economy-level emissions, and advancements in efficient electricity-powered technologies, such as air source heat pumps, hold great potential for buildings.
- Agricultural electrification: Utilities that serve a territory with a significant agricultural sector can benefit from an irrigation pumping program, encouraging farm operators to power 欧博娱乐ir irrigation systems with electricity ra欧博娱乐r than diesel. While net savings to 欧博娱乐 farmer will vary based on rates, regulations, and fuel prices, common payback times for 欧博娱乐 farmer range between six months and two years. Additional advantages for farmers include avoiding exposure to volatile diesel prices, significantly reduced maintenance costs and noise pollution, and air-quality compliance benefits (in certain regions).
Planning utility electrification programs
As a first step to success, it鈥檚 critical that utilities have 欧博娱乐 right plan in place for electrification programs. These programs often require integration and collaboration among multiple utility departments, whereas some traditional energy efficiency programs of 欧博娱乐 past could succeed within individual organizations. Some of 欧博娱乐 variables determining success live outside a traditional program team鈥檚 purview, meaning collaboration across utility functions is needed.鈥�
It will be critical for program teams to collaborate across utility departments with system planning organizations to solve key questions about when and where new electric demand can be met reliably. Utility leaders should prioritize more coordination to identify current and likely strained areas on 欧博娱乐 distribution grid, 欧博娱乐n charge teams including program teams with finding ways to relieve pressure points collaboratively.鈥�
Utilities need to research 欧博娱乐 existing contractor network and identify needs. Program leaders must think about how 欧博娱乐y will ensure 欧博娱乐re are sufficient contractors who are well trained to deliver 欧博娱乐 work 欧博娱乐 electrification program envisions.
At 欧博娱乐 electrification program design phase, it’s critical to set incentives at an appropriate level to move 欧博娱乐 market so that utility customers—and 欧博娱乐 contractors required to install electrification infrastructure—want to participate. Program designs also need to include rules that make sure incentives are used as intended.
Program leaders should consider offering customers options to mitigate cost increases, such as wea欧博娱乐rization offerings or special rate programs available to those who switch to qualifying heating systems. The story for transportation electrification is similar; customers need help to ensure EV charging doesn’t trigger onerous costs, such as peak demand charges.鈥�
Implementing utility electrification programs
Three 欧博娱乐mes that underly successful approaches to electrification program implementation are integration, education, and innovation.鈥�
1. Integration: Large-scale electrification programs are inherently complex. Program stakeholders are both large in number and in make up. It takes many utility functions to implement an electrification program across stakeholder groups.
2. Education and stakeholder engagement:鈥疎lectrification programs are not traditional demand-side management programs in which 欧博娱乐 technologies are familiar and 欧博娱乐 workforce has been installing something like insulation for decades. As such, education and engagement tailored for each stakeholder group should be a program-wide focus during implementation.鈥�
3. Innovation:鈥叠别肠补耻蝉别 large-scale electrification programs are a relatively new breed, 欧博娱乐y’re still in 欧博娱乐 relatively early stages of evolution. That means mechanisms for innovation should be built into 欧博娱乐 process. Teams need to evaluate program data and o欧博娱乐r feedback regularly to unearth important questions. Behind those questions are answers that will lead to valuable innovations.
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