The Future of U.S. Utilities and Implications Of Off-Balance Sheet Financing Models for Mid-scale Customer Sited Distributed Generation
Abstract
The current U.S. electrical generation and delivery system will inevitably undergo
a fundamental shift over the coming two decades. Distributed generation has the potential
to bring similar flexibility and cost savings to energy as personal computers did
for the computer market. Mid-scale customer-sited distributed generation (MCSDG)
will play a critical role in this transformation as a technological and regulatory
transition step and as foundational generation assets.
This master’s project explores the rapidly evolving utility business model within
new social, economic, environmental and technical forces, including Distributed Energy
Resources (DER) like Customer Sited Distributed Generation (CSDG) and integrated microgrids.
It examines how current energy regulation impacts CSDG adoption among commercial and
industrial end-users, the role utilities can play in financing and sustaining these
projects, as well as likely industry outcomes in this disruptive business landscape.
Although there is general consensus among industry experts that utilities will play
a vital role in any credible future energy scenario, final outcomes remain uncertain.
The two most plausible models either shift utilities towards customer-centric, products
and services companies, or retrench their monopolistic roots as pipes and wire integrators.
Either way, utilities will likely coordinate millions of individual demand and supply-side
resources, including critical MCSDG assets. Regulators will need to leverage different
public and private financing models to not only scale MCSDG market adoption through
utilities, but also sustain utility revenue for essential integrator functions over
time. Basic energy financing models already exist from utility and ESCO efficiency
and CHP projects; however, these don’t fully translate due to massive risk differentials
between efficiency and generation assets. Regulators will need to determine how utilities
play in the MCSDG market and whether regulated utilities can rate base behind-the-meter
DERs. Many of the most common utility business assumptions and engineering practices
will have to be reexamined by both utilities and their regulatory bodies in more sophisticated
and holistic ways. Appropriate regulation could open a flood of innovative business
models, technologies and private energy investment; however, finding the elusive balance
between competitive markets and regulated monopoly efficiencies will be a significant
and painful mid-term challenge.
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https://hdl.handle.net/10161/6843Citation
Burks, Matt (2013). The Future of U.S. Utilities and Implications Of Off-Balance Sheet Financing Models
for Mid-scale Customer Sited Distributed Generation. Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/6843.Collections
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