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THE “PROSUMER” HAS ARRIVED. HOW WILL REGULATORS RESPOND?

Electricity networks are facing unprecedented pressures to change.

Coal is no longer the “go to” fuel for new generation. The pollution and carbon dioxide emissions associated with burning coal are just too high. As coal plants across North America reach the end of their economic life, many are being replaced by plants fuelled with natural gas.  

Large wind farms have become competitive. A recent auction conducted by the Alberta government set all time low prices for renewable wind energy that is giving coal, natural gas and nuclear power a run for their money.

New power players, called, “prosumers”, are showing up in the electricity market. “Prosumers” both produce and consume power. They come in all sizes. Energy consumers, such as greenhouse growers, are installing co-generation facilities to both power their lights and heat their buildings. Home and business owners with small loads are installing solar panels. Regardless of size, prosumers are lowering their costs and their greenhouse gas (GHG) emissions.

The number of consumers making the switch to on-site generation has grown steadily from a tiny trickle. As more and more electricity consumers are aware of their choices, they are opting to take control.

Where is the tipping point that turns those numbers into a mainstream?

One indicator is that regulators are taking notice. For example, the Alberta Utilities Commission (AUC) has just convened an Inquiry into the future of Alberta’s electricity distribution networks.

The AUC is seeking answers to three questions. They want to understand how new technologies are affecting the distribution grid; what elements should be subject to regulation; and how price signals should be used to ensure the electricity grid is developed efficiently and cost effectively.

Prosumers have shown up to help the AUC with its Inquiry. Among those who have applied to participate at the Inquiry is a group of Calgary area solar micro-generators. Their submission notes:

  • An investment in a solar array may result in an 80% reduction in electricity imported from the grid. However, these investments only reduce the monthly utility bill by 10% to 25%. The balance is levied for infrastructure that may neither be used nor needed by the micro generation participant.
  • An energy efficiency investment in Manitoba that reduces average monthly consumption by 50% reduces the monthly bill by 45%. In Calgary the same investment would reduce the monthly bill by just 18%.

Alberta’s largest prosumers are oil sands operations that use on-site co-generation to produce steam for extraction operations and electricity for export to Alberta’s grid. The AUC will likely be asked to consider treating smaller prosumers similarly to the large prosumers. If small co-gen and solar producers were relieved from transmission and market capacity costs, they would earn a competitive return without subsidies or feed-in-tariffs.

Another consideration for the AUC will be implementing a voluntary rate tariff tied to time-of-use meters and variable time-of-use energy charges. By having access to daytime market rates, solar producers could access higher revenues. Greenhouse operators could benefit from lower night time market rates when their energy use is heaviest. This rate structure could lead to load shifting, making distribution networks more efficient and overall demand less volatile.

Market transitions can sometimes take a long period of time to materialize. However, when a tipping point is reached, a transition can move with unexpected speed. It all depends on how widely and quickly the benefits of the transition can be experienced.

Centralized, large scale electricity generation is being challenged on several fronts. As both large and small scale consumers take control of their own energy production, the transition may happen more quickly than anyone expects.