![]() ![]() ![]() Treasury, while on leave from UC Berkeley. From March 2021 to October 2022, she served as the Deputy Assistant Secretary for Climate and Energy Economics at the U.S. She previously served as the Cora Jane Flood Professor of Business Administration at the Haas School of Business at UC Berkeley. Pounds Professor of Energy Economics at the MIT Sloan School of Management. But, if there are cheaper ways to achieve the same objectives, policy should be designed to find them. We don’t want storage just to have storage we want services that storage providers can supply. That way, the market can make the call about the best way to integrate more renewables. Ideally, regulators should pit storage providers against pricing schemes that reward consumers for shifting their load, and any other technologies that can help shorten the duck’s neck. Given that the vast majority of households are starting from prices that do not vary at all over the course of the day, week or month, I have to believe that there’s room for improvement. Presumably, though, similar dynamic pricing schemes could incentivize consumers to shift their load to help smooth the duck graph. The problems highlighted by the duck graph are most pronounced in spring and fall months, when the sun sets before the daytime load subsides. The SmartRate was not designed to address renewables integration. As we tried to figure out how to do that, we learned that our dryer is a major part of our midday load, so we try to keep it off when prices spike. Now that we are on the SmartRate, we try to keep our electricity consumption low from 2 to 7 PM on SmartDays (roughly, the 12 hottest weekdays each summer). We paid $.31 per kWh no matter when we dried our clothes. Until my family switched to the PG&E SmartRate (inspired by Severin’s blog post), we had no incentive to run the dryer after 8PM instead of from 5 to 6PM. If we want to address the duck graph, why not set up incentives that reward behaviors and technologies that help smooth the worrisome swing in net load from 5 to 6 PM?įor example, why take load as given? In other words, why subsidize storage operators to smooth net load fluctuations before giving consumers the ability to shift their loads? ![]() What gives me pause is that the policymakers seem to be legislating a means to an end rather than the end itself. (Why the duck graph is not projected to generate very low energy prices at the duck’s belly and very high energy prices at the duck’s neck could be the subject of another post.) I am accustomed to thinking about electricity storage as an arbitrage play – capture energy in the middle of the night when prices are low, store it until the middle of the day when electricity prices typically double or even triple relative to 12 hours ago and then sell at a substantial margin.īut, regulators seem interested in storage primarily as a resource to provide the capacity necessary to address the operational issues associated with the duck graph. ![]() For example, the California Public Utilities Commission is in the process of implementing legislation requiring it to consider electricity storage procurement mandates. One answer policymakers are offering is electricity storage. If the California electricity system has significant solar capacity, what happens on a typical March weekday when the sun gets low on the horizon just as office buildings are turning on their lights? How will system operators deal with a wild swing in net load as they lose solar generation? The duck graph encapsulates the collective uncertainty about how the electricity system will operate as the state adds more and more renewables. Adding insult to injury, the duck graph swing is projected to happen in shoulder months like March or October, when total system load will be low. Currently, the largest swing system operators typically have to deal with is less than half that size. One point of concern is the duck’s long neck, representing a 14,000 MW swing in net load in a roughly one hour period from 5 to 6PM. (For an update on the duck curve, see Meredith Fowlie’s recent blog: The Duck Has Landed, May 2, 2016) The Duck Graph It depicts electricity demand net of projected renewable generation (“net load”) on a representative day in the not too distant future. An aptly named picture – the “duck graph” – is captivating the California energy policy world. ![]()
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