Getting Strategic: What SCE’s new tariffs say about grid-level constraints and how thermal energy storage is helping

by Alex Collins, Co-COO, Ice Energy

In general terms, the energy market has evolved in the past year, and nowhere more so than in California. Take a look at the energy pricing in SCE’s new real time pricing tariff that went into effect March 1 (footnote 1 and 2):

The high cost of peak hour electricity spikes even higher on hot days.

Under their CPP (critical peak pricing) and RTP (real-time pricing) tariffs, business customers that were fairly insulated from wholesale price fluctuations will now be much more exposed to the true cost of the energy they consume. This is particularly true of the RTP tariff, which is as close to wholesale pricing fluctuations as has been seen in California to date.

In this new tariff, not only is the cost of energy higher during peak hours, but there is also a temperature component to it, confirming the fact that air conditioning is the preeminent source of grid constraints and energy use during peak periods.

In the old rate structures, customers would pay, at most, a 5-6x premium for using power during peak hours. In the new RTP tariff, off-peak tariffs are only $0.02-0.04/kWh – it is likely that SCE is seeing negative pricing during these hours, and are trying to entice business owners to shift power usage to these times as much as possible… whereas on the warmest of days, at 4PM, this goes up to $3.2/kWh, a >100-fold increase in energy cost, demonstrating the paucity of energy sources and the cost of dispatching peaker capacity during SCE’s most constrained periods.

Using Ice Bears, cooling energy usage can be permanently transferred to the lowest cost off-peak hours of the day. In summer months, this could mean that a business using a single Ice Bear could save up to $150 per day. Over the course of a warm summer, this means that a business could save upwards of $3,000 a month. Energy savings are now at the point where incentives are not necessary to generate attractive returns and savings for end-users – and these savings numbers will only continue to climb, as utility generation revenue is continuously eroded by on-site generation, the utilities continue to carry T&D costs and have the legal obligation to be able to provide their grids’ full load as mandated by the Public Utility Commission.

 

1. GS-2-RTP (real time pricing) for customers using <= 200 kW (most commercial, office and retail buildings in the territory): https://www1.sce.com/NR/sc3/tm2/pdf/CE331.pdf

2. TOU-8-RTP for customers using >200 kW (larger buildings such as theaters, big box stores etc) https://www1.sce.com/NR/sc3/tm2/pdf/ce78-12.pdf



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