The Future of Energy Co-ops: Part I

Courtesy Photo Small solar or wind farms owned by groups of members that work with their co-ops might be a potential for rural co-ops in the near future.

Entrepreneur Elon Musk predicts there will be a full home service energy battery invented in 5-10 years. He notes there will be terrific opportunities for utilities but some write about it “terrifying utilities.”

We asked Rod Jensen, Board Chair of Lower Valley Electric (LVE), the current management company for local Beartooth electric Cooperative about these changes and what it could mean to small rural co-ops. He wanted to make it clear he was giving his opinion as an individual, not in his corporate position. Jensen was asked how having homes almost energy independent would help LVE or BEC if there are already decreasing rural populations and usage.

He replied, “Distributive generation, or what you call alternative energy, will either help or harm cooperatives depending upon how prepared they are to face this emerging reality. Some rural areas, such as the area LVE serves, have growing populations, but most rural areas in the US are in fact declining. A decreasing population clearly makes the energy business much more challenging, but is an issue LVE has not had to deal with to date.”

“However,” he continued, “the issues and challenges of distributive generation go beyond simple population demographics.” Changing times might change co-ops “from a transmission and distribution system where we take blocks of power from a major power contract(s) and then distribute that power to individual members to becoming the manager of the grid with multiple sources of energy generation.”

Co-ops will also provide user support such as the transmission of power from and to the user. Jensen explained, “The cooperative will in fact act much like a battery for those who generate power at their properties, and remain an all requirement provider for those to choose to not generate power.” Even home use is currently in need of off hour coverage for gaps when power is not available-such as solar power not being available at night.

When asked why future home batteries couldn’t simply include storage for this gap he said it was possible but unlikely for the technology to evolve so quickly.

Instead, Jensen sees a future for co-ops with a mix of member needs. “Potentially, the new world could realistically include multiple sources of generation, with energy feeding into and out of the cooperative power grid from small sources such as home solar, fuel cells and/or wind. The cooperative will need to provide for and manage the grid and at the same time meet energy demands when distributive generation output is low or during peak system demand periods.”

There might also be a change in poles and lines. They “may be modified with use of smaller power generation sources at certain points on the system, such as the use of member owned solar farms, to competitively meet energy demand in differing areas,” he said. “If this world does happen, then cooperatives will have to provide value to the members.” Jensen said members should be thinking of value beyond just lower rates. “That value may be the ability to manage and transmit energy and ensure power reliability and quality as well as consulting and assistance to the respective member as they pursue distributive generation alternatives.”

Looking at the future he said, “economies of scale and efficiency become more and more important to the success of a cooperative and its member owners.” Net metering is the concept that a member producing excess electricity could sell it back to the utility or get a credit. At the last BEC membership meeting, one member in the audience talked about changing BEC meters now to meet evolving needs so we don’t have to suddenly “tech up.” He said, “New meter technology helps you run a more efficient operation as well as bill differently based upon what you are trying to meter…. demand and/or energy.”

When asked about it, Jensen said, “Net metering is an emerging reality and cooperatives need to not only manage for it, but embrace it. This means developing a net metering system which is fair and equitable to all members, not only those who chose distributive generation, but also those who elect to not pursue such…We need to fully support them in those choices – remembering we exist only to serve our members!”

However regarding cost he said, “If the cost and life expectancy of the respective meters are comparable, then yes; but if the meters for net metering are more expensive (which I assume is likely) and / or have a different, (shorter) life, then no. This is really a question of economics and return on investment and I have not studied it. It would be very likely that any cost difference in meter cost and life expectancy would need to be factored into the net metering rate to provide rate equity for all members and prevent cross subsidization between individuals within the system.”

A member said, “I read a lot about what other utilities are doing in this area…primarily Arizona, California, Nevada and Colorado. They seem to be ahead of the curve. It’s probably an unfair question to ask Rod because they haven’t had the discussion about how they are going to design future rates and cost of service studies. I see these other utilities using demand meters on all residential accounts as well as Net Metering.”

The member added, “Demand meters are not new technology, they just may need to be deployed to different customer groups in the future.”