San Diego’s Utility Lab
A CONVERSATION WITH MICHAEL R. NIGGLI
Published In: EnergyBiz Magazine September / October 2012
San Diego Gas & Electric is pioneering the utility industry's technology future. It is a leader in deploying and integrating renewables and is preparing for a potential major rollout of electric vehicles in its service territory. EnergyBiz recently interviewed Michael R. Niggli, the company's president and chief operating officer, to discuss his views on the ongoing transformation of the utility business. His comments, which follow, were edited for style and length.
ENERGYBIZ How is San Diego Gas & Electric changing to be a more digital, smart utility?
NIGGLI We are seeing the highest penetration of electric vehicles in the nation here in San Diego. In addition, the partnerships we have with the tech community make for a great laboratory for the future of the electric industry.
ENERGYBIZ What is happening with photovoltaics?
NIGGLI We have one of the highest rates of penetration, with about 18.000 rooftop solar units that have been installed amounting to about 138 megawatts. That is about 3 percent of our peak usage.
ENERGYBIZ What about utility-scale solar?
NIGGLI We've signed a lot of projects in the last year. Last year, we had 17 major contracts for just under 1,500 megawatts of new capacity. Later this decade, we will be the first in the nation to have 33 percent of our generation from renewables.
ENERGYBIZ So what has been the biggest challenge of integrating this intermittent resource into your grid from a reliability standpoint?
NIGGLI We are monitoring that very carefully. It is evident that our future resource mix has to change a bit. We have to pay a lot of attention to the characteristics of our backup supply. We are going to need a lot of peaking generation to back it up. Reliability is our number one goal. We are doing a lot of things to try to ensure that the grid stays highly reliable. All of the smart grid improvements that we are seeing will assist us in that area.
ENERGYBIZ You have 1.4 million electric meters and 850,000 gas meters. Are they fully smart metered now?
NIGGLI Yes. It is allowing us to use smart meters to roll out some additional demand reduction programs for the summer.
ENERGYBIZ Are you using time-of-use rates or how are you doing it?
NIGGLI We call it a "reduce your use" program. With smart meters we know how much people have purchased in any hour of any day. We provide an incentive for people to reduce their energy consumption, and we are able to track that very carefully and very accurately with our smart meters. We actually offer anywhere from 75 cents a kilowatt hour to $1.25. That is $750 per megawatt-hour and up to $1,250 per megawatt-hour. That's a pretty big incentive.
ENERGYBIZ How are you communicating this to your customers?
NIGGLI We are reaching out in multiple languages. On a hot day in the summer when we need to introduce this, we will have radio and television spots featuring local leaders.
ENERGYBIZ How will SDG&E be affected by California's sweeping new cap-and-trade program for greenhouse gas emissions?
NIGGLI The impact is going to be pretty small at first. We are working with the legislature and hope the revenues they get from a lot of this will come back to our customers in a direct rebate or to fund installation of additional electric vehicle charging stations or integration of photovoltaics.
ENERGYBIZ What's the likelihood that the politicians in Sacramento take this money and use it elsewhere in the budget?
NIGGLI I cannot predict the outcome in Sacramento. I'm hoping that logic and reason prevail and that we get a beneficial use of the funds.
ENERGYBIZ How many electric vehicles are driving around in your service territory?
NIGGLI We've got more than 1,600 right now. We have a very active car-to-go program, especially in downtown San Diego, which is all electric vehicles. As the electric vehicle charging stations get rolled out you will see a lot more people having a lot less anxiety about the range of the cars.
ENERGYBIZ How many electric vehicles will be in your service territory in the next decade?
NIGGLI Well, we've seen some experts who forecast as many as 200,000 electric vehicles in San Diego by the end of the decade. That's a very big number. The issue for us is not necessarily the number of cars as much as it is the charging capability of each one. Right now most of the Leafs can charge at about 3 kilowatts, and I know they are coming out with a version at 6 kilowatts.
ENERGYBIZ If it gets anywhere near 200,000 in your service territory, how is that going to change your generation profile?
NIGGLI We could accommodate a lot of it with existing generation, but the only way that will happen is with a very thoughtful rate structure program. Right now we are experimenting with at least three pilot rates in our area that look at different on-peak, off-peak and super-off-peak pricing ratios. The incentive you can give to the folks to charge super-off-peak really do make a huge difference. If we ever approach those kinds of numbers, we will need a sensing command-and-control system that allows us to send signals to cars about the availability of low prices.
ENERGYBIZ For a century, utilities around the nation have been very similar. Will utilities embrace very different business models going forward depending on their commitment to EVs, renewables and other technologies now coming into the market?
NIGGLI We are going to see rapid differentiation among some of the sort of business models that you have around the country. I like to think that we do have America's finest innovators here in San Diego. In states where environmental improvements are a policy imperative, you will see a more rapid development and integration of electric vehicles and solar power. The companies that will thrive are those whose culture allows them to readily adapt to some of these innovations. We are seeing that the culture differential is becoming really important.
ENERGYBIZ What kind of policies would you like to see come out of Washington after the November election?
NIGGLI Policy has to support rather substantial innovation. We have a tremendous amount of research going on in the energy field today. The grid of tomorrow has to be capable of accepting those innovations. That is why the work on smart grid is so important.