By Nichola Groom
Orange County, Ca (Reuters) - Welcome to the utility industry's future - or at least that's what Southern California Edison is hoping.
Here in a non-descript, 53,500-square-foot building, the $12 billion utility's research team is testing everything from charging electronic vehicles via cell phone to devices that smooth out the power created by rooftop solar panels.
Those are some of the roughly 60 projects in the works at Edison's Advanced Technology division. It has a small $19 million annual budget, but its influence far exceeds that.
The engineers from California's largest utility are hatching plans to insure its survival - and maybe even the survival of the nation's other big utilities, which are watching the project closely.
The lab was formed by Southern California Edison in 2009 after California passed a landmark law to lower its greenhouse gas emissions to 1990 levels - and source one third of its electricity from renewable sources by 2020.
The result has been more electric vehicles here in the Golden State. And more solar and wind power, which has got the state's utilities, and those nationwide, scrambling to adapt. Unlike traditional electricity, power from solar and wind sources fluctuates depending on the weather, making it tricky to manage on the grid.
Also the cost of solar power has come down so much that more homeowners are producing their own power and paying less to their utility.
Simply put: long term, utilities will need new sources of revenue.
In 2013, California's three largest utilities sourced nearly 23 percent of their power from renewable sources, and Gov. Jerry Brown has called for a target of 50 percent by 2030. Twenty nine states have laws requiring more renewables, according to North Carolina State University's Database of State Incentives for Renewables & Efficiency.
With so much "distributed" energy on the grid now, mainly from solar panels, says Accenture, the utility industry could see revenues fall by between $18 billion and $48 billion a year by 2025. That's why some call it the utility "death spiral."
INDUSTRY MODEL
There's a reason why the lab's work is getting a lot of attention: It is producing results and they share the work with utility officials and researchers from as far away as China. For instance, Edison's work designing cyber security systems and developing uses for advanced energy meters have received high marks from other utilities, said Mark McGranaghan, a vice president at the Electric Power Research Institute.
Edison's lab has emerged as a model for others, too. In 2013 The National Renewable Energy Laboratory opened its $135 million Energy Systems Integration Facility, which complements Edison's research. The New York Power Authority is also working to establish a similar lab.
"The concept is really built off of learnings from Southern California Edison," McGranaghan said. "They have taken so many people through their labs, it's amazing."
THE WILD WEST
Edison is focused on energy storage, automation and digital communications that will improve the efficiency and reliability of the grid. That, the utility hopes, will result in new revenue as power demand flattens (more energy-efficient homes) and rooftop solar ramps up.
"There is only one provider of the wires, which is us," said Ted Craver, CEO of Edison International, the utility's parent company. "These new technologies are going to become much more prevalent and we, maybe immodestly, feel we are on the cutting edge."
Many of those technologies have yet to be commercialized, but the market is booming. Smart grid spending will grow to $70.2 billion in 2023 from $44.1 billion in 2014, according to Navigant Research.
That's why Edison built nine labs here.
In one room Edison researchers replicate a complete power grid. That was used to troubleshoot when Edison was working on a new transmission line to connect its grid with California's other behemoth utility, Pacific Gas & Electric. In another lab, "smart" inverters are being tested that are capable of smoothing out the voltage sent to the grid by solar panels. These devices are common in Europe, but have yet to be rolled out widely in the United States.
"It's a bit of the Wild West right now," Doug Kim, director of the utility's advanced technology group, said of the proliferation of new energy technologies.
Every year The Advanced Technology group solicits project proposals from the rest of the utility. Among them: a project that studied how large amounts of wind and solar power affect power restoration during blackouts; another tested different kinds of batteries to see how they perform when storing energy along the grid.
ELECTRIC GUINEA PIGS
Many of the new technologies are taken for a test drive at University of California, Irvine, faculty housing. "The Irvine Smart Grid Demonstration," a $79 million project launched in 2010 and funded in part by the U.S. Department of Energy, will wrap up later this year.
SCE's take: If you can figure out ways to generate electricity at home, and use it more efficiently, you can cut costs related to new generation and transmission equipment.
"We threw everything in there that we could think of, thinking that maybe someday it was going to be real," SCE's Kim said. "Sure enough just about everything we are testing here is now real."
Crista Lopes, a computer science professor, said the project cut her electric bill to zero in the summer. The utility outfitted her house with solar panels, about 50 LED light bulbs and new appliances like a "smart" refrigerator whose power usage she can track.
THE ENDGAME
The stakes for the Irvine project are high. At the conclusion, Edison will make recommendations on smart grid technologies to the industry. The utility will then take the testing to a larger area - perhaps thousands of homes.
Of course, the industry will hear about the mishaps too. For example, Crista Lopes has a device that controls energy consumption when demand is high. That was great until she was without air conditioning for three hours during a heat wave; Edison planned the outage for just 15 minutes, but a system that worked in the lab failed to send the correct command.
But those stumbles are why the project is valuable, said Bob Yinger, the chief engineer. "We learn about what the issues are," he said, "and manufacturers learn about how their products behave in the real world."