If you weren't convinced 12 months ago that the power sector is in a state of transformation, you probably are today.
2015 brought a number of foundational changes for electric utilities in the U.S., whether it was new regulatory schemes on the state and federal level or disruptive technologies approaching maturity in the power sector. While the core mandate of safe and reliable power delivery remains the same, the electricity sector we work in today is significantly different from the last time you popped a champagne bottle and sang "Auld Lang Syne."
Throughout the year, Utility Dive has endeavored to be your guide through the turbulent waters of the power sector transformation, bringing you news and insider insight on the biggest developments in the industry. Here's a rundown of some of most significant topics and stories of the year
Clean Power Plan finalized
The single biggest national story for electric utilities this year was likely the finalization of the first ever set of federal carbon regulations for the power sector. In August, the EPA finalized the regulations, which seek to cut carbon emissions from the industry 32% by 2030. While some in the sector decried the finalized regulations, Utility Dive reported that in the aftermath of finalization, the bigger question for many industry analysts became whether the regulations would significantly alter the trajectory of decarbonization for the sector:
Paris climate talks
While the COP-21 talks in Paris didn't result in a mandate to cut emissions aimed specifically at the American power sector, they could have a similar impact in how they shape utility investments in the coming decades.
For the first time, more than 190 nations committed to keep global temperature increases below 2 degrees Celsius — a goal that requires nations to peak greenhouse gases as soon as possible and bring their economies to zero net emissions in the second half of the century. To many in the power sector, that agreement helped signal that while the Clean Power Plan was just finalized, utilities will likely be dealing with much stricter carbon allowances in the decades to come. That means they need to make investment decisions today that will allow them to cut greenhouse gases tomorrow:
And read about pathways to deeper greenhouse gas cuts:
Tesla storage announcement
The promise of energy storage was understood by industry insiders before 2015, but this was the year that it captured the imagination of a wider audience. In particular, Tesla's announcement in May of two new products — a home battery and a scalable, utility-size pack — pushed storage into the mainstream. Relive that day and the novelty of the Tesla launch:
Wind and solar approach grid parity
While storage stole the show in terms of media publicity for the power sector in 2015, renewable resources did what they've been doing for years — increasing in deployment and declining in cost. Both wind and solar set generation records in 2015, and they got an end-of-year boost with Congressional approval of tax credit extensions for renewable resources. Taken together with the growth in storage, electric vehicles and efficiency technologies, you've got the recipe for a clean energy revolution:
And across the nation, distributed renewables are approaching cost-competitiveness as well:
2015 was big for technology in the sector, but it was also big for consolidation, and the biggest of all the merger moves was Exelon's decision to try and buy Pepco. While the acquisition was originally announced in 2014, this was the year that saw regulators in Washington, D.C. reject the merger at its final hurdle, sparking a flurry of lobbying and advertisements from the companies pushing the city to reconsider. Utility Dive was the first to report Exelon's settlement with D.C. Mayor Muriel Bowser this fall, but critics have raised questions about the deal, calling for an ethics investigation into the mayor and her negotiations with the power companies. Read an overview of the saga:
Get a more recent update:
NextEra-Hawaiian Electric merger
Exelon-Pepco isn't the only contentious utility merger proceeding of 2015. Out in Hawaii, regulators are weighing a deal to allow Florida-based NextEra Energy to buy Hawaiian Electric, the state's dominant electricity supplier. Distributed energy advocates aren't happy with the track record of NextEra's other regulated utility, Florida Power & Light, and are pushing for rejection of the merger. Some activists have formed a group pushing for a publicly-owned utility as an alternative to the merger, and regulators have decided to weigh their claims in the same proceeding as the NextEra deal. Read an overview of the merger saga in:
And get a more recent update:
State plays: New York's REV and California's DERPs
On the state level, two regulatory schemes stood out in 2015 for pushing wholesale transformations of the utility business model. Both are intended to allow more distributed resources onto the grid, reshaping the utility into a facilitator of DER deployment across the distribution system. In New York, that has meant all but prohibiting utilities from owning DERs and pushing them to become an impartial controller of the grid — akin to an air traffic controller:
In California, regulators have taken a slightly different path, engaging utilities in the DER deployment process with guidance to meet legislative mandates on clean energy and deploy distributed resources optimally on their grids. A key part of that push is the California ISO's guidance in the Distributed Energy Resource Provider draft final proposal released this summer:
Net metering decisions in Hawaii, California
Two very different decisions on net metering in two of the nation's leading solar markets present divergent paths for utility-solar policy in 2015.
In Hawaii, regulators decided this fall to end retail rate net metering for rooftop solar arrays in the state, replacing the program with two options: A "grid supply" option that will repay solar owners a lower rate than before for the energy they export to the grid, and a "self supply" option that gives them retail rate remuneration, but would discourage them from exporting. Given Hawaii's canary-in-the-coal-mine role in the electric power sector, the decision could have consequences for other states:
In California, however, regulators decided to preserve retail rate net metering with some changes, including a higher interconnection fee and establishment of non-bypassable charges. Which approach will win out nationwide? Only the new year will tell:
Fixed charge and rate design debates
By the numbers, the trend of utilities proposing high fixed charges to recoup losses to distributed generation continued in this year, with 26 dockets in 18 states open in the third quarter of this year concerning the issue. But as utilities were filing those proposals, some in the sector looked to move beyond fixed charges and toward a more balanced approach to residential rate design:
The top 10 trends
While 2015 played witness to a number of foundation-shattering news developments in the power sector, arguably more important than the headlines themselves are the trends underpinning them. In our most-read feature of the year, Utility Dive outlined the top 10 trends transforming the sector, and we think its a good end-of-year reminder of not just how far we come, but how exciting next year promises to be as well: