US households can use 15 GW to meet their electricity needs at an affordable price – pv magazine USA

July 2, 2024 Ryan Kennedy

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

Deloitte’s report explains how distributed energy resources (DERs) can address these multiple challenges, filling a gap that utility-scale, centralized power cannot fill as efficiently. DERs represent home electrical resources such as home solar panels, batteries, electric vehicles, smart thermostats, and smart appliances. When intelligently coordinated, DERs can reduce grid load, lowering peak electricity demand.

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

Deloitte said that household DER capacity 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-side capacity, Deloitte said.

This could prove significant as grid planners who had assumed steady demand for decades raised their forecasts in early 2023, ending the year with doubling the five-year load forecast to 4.7%. As utilities reassess demand from domestic manufacturers, artificial intelligence data centers, cryptocurrency miners and green hydrogen producers, and transportation and building electrification, demand estimates continue to be revised upward. Achieving the Biden administration’s goal of a fully decarbonized grid by 2035 using renewable energy sources could double peak demand to 1.4 terawatts by 2035, the report said.

The development of utility-scale renewable energy sources is meeting much of this growth in demand and replacing retired fossil fuel capacity. However, grid connection delays are growing, pushing projects back or leading to cancellations.

“The bulk energy system is constrained by fossil fuel plant retirements and long project timelines for new plants to connect to limited transmission infrastructure, now stretching to five years,” Deloitte said. “In 2023, the backlog of renewables and storage waiting to connect to the grid has grown to 2.6 terawatts — more than twice the current installed capacity.”

In particular, when it comes to meeting peak demand, DERs may offer a more cost-effective solution than current methods. Peak electricity demand typically occurs during summer afternoons and evenings, when people return from work and turn on air conditioning and appliances. Peak demand is typically met by fossil fuel-fired peak power plants that are idle most of the time but are built to provide utilities with enough power to come on board quickly when electricity demand spikes. For grid-scale renewables to meet peak demand, significantly larger expansions of generation and storage are required because only a fraction of intermittent power counts toward resource adequacy requirements, and solar generation does not fit the load profile of peaking systems in winter.

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In this way, flexible home DER systems that can strategically reduce energy consumption or autonomously consume stored energy during periods of peak demand can help reduce the amount of excess reserve capacity installed on the grid.

“Research commissioned by California and New York shows that managed electrification could reduce the cost of distribution upgrades needed by 2035 by more than $30 billion in each state,” Deloitte said. “That’s because building efficiency measures and smart devices to manage energy usage and seamlessly charge electric vehicles can reduce capital expenditures for new substations, transformers, power supplies and other distribution equipment.”

There are regulatory, data and stakeholder engagement challenges to get an effective DER system up and running. The technology needed to unlock this great potential is already being actively installed, but realizing the benefits will require a coordinated, integrated effort between regulators, utilities, installers and homeowners. Deliotte offers roadmap to achieve DER expansion and integration in his report.