The future of energy

Michael Picker’s bio at Lincoln Crow Strategic Communications, a company he co-founded, says he’s someone who “knows his way around government and elections.” No kidding.

For more than 30 years, Picker’s been an all-purpose organizer and administrator, working twice for Gov. Jerry Brown, doing a stint as deputy state treasurer, then serving as chief of staff to late Sacramento mayor Joe Serna for seven years.

In 2012, he was elected to the Sacramento Municipal Utility board, then, in 2014, Brown appointed him to the California Public Utilities Commission. He became president of that powerful regulatory body on January 1, 2015. He recently sat down with SN&R CEO Jeff vonKaenel to discuss the future of energy in California. (This interview has been edited for length and clarity.)

The basic structure of the California Public Utilities Commission was set up a century ago. Do you think it is still viable?

When I got here, people told me they had not seen so much change in the electricity industry in 100 years. I think bigger changes are coming. I’ll try to describe some of the forces that are reshaping the industry. My first point is: Most of our energy policy today does not focus so much on supply but rather on how clean it is, on air quality. Our primary energy goal is greenhouse gas reduction. We are trying to clean up our electricity supply, but it’s not just electricity that matters, it’s also all the other ways we create and use energy. For example, we use a lot of natural gas for heating and cooking and for buildings and industrial, particularly manufacturing. The other big use of energy in California is for transportation. Coincidentally, 20 percent of the carbon in California that is emitted into the atmosphere as greenhouse gas precursors comes from the electricity industry, 30 percent comes from natural gas and 40 percent comes from the use of petroleum products in transportation.

So your main point is …

That if we are buying renewables it’s because they are a way to take carbon out of the electricity industry. Where previously the PUC’s major focus was to oversee the distribution of energy, now the major focus is on greenhouse gas reduction. The message here is that clean electricity is our preferred fuel for these other energy uses. We want to use carbon-free electricity in heating, cooking and in our buildings, in our industry and in transportation. The purpose of the PUC now is to build the infrastructure that will take carbon out of California’s economy. Increasing the amount of clean electricity and allowing the electric utilities to take market share out of the gas utilities and away from the petroleum industry is the only way we can reach our GHG goals. My second point is this: Renewables are really competitive; we should stop obsessing about them. They are cheaper in most parts of the U.S. where you have good renewable resources than any other source of electricity.

What do you mean when you say we should stop obsessing about renewables?

Renewable energy is only part of the answer, and it is actually pretty easy to get; it’s a commodity. In fact, we have so much of it during certain days of the year, and certain times of the day, that we have to pay people to take it. (Laughs.)

Point No. 3?

The electricity system is increasingly variable. For example, we used to have a lot of automotive manufacturing in California that was running at consistent levels 24/7 six days a week. We don’t have that anymore. Increasingly we do things with computers that are in buildings; they get hot at the end of the day, and the computers and buildings need cooling. Now we have electricity use that starts in the morning with people waking up and turning on the lights to make coffee. Around 2 p.m. it starts to increase pretty dramatically, because that’s when people start cooling things, particularly computers, buildings and homes, and it continues to climb until 8 or 9 o’clock at night. Our resources need to match that demand, with its big ramp-up. We have resources that do that up until 6 o’clock.

Is that solar?

Solar and wind. With solar, we have a curve in generation that starts around 10 a.m. and lasts until 2 p.m. during which we have too much electricity, and then at about 5 p.m. the solar starts to drop off. The system is really variable, so we have to treat it differently.

So we have to figure out ways either to store electricity or generate it at the right times?

Hydro is useful because you can spin it up really fast. At 5 p.m., as things start to cool down, you can really turn up your hydro, and it does that really quickly. You can keep it going at higher levels up until 9 o’clock, and then you can let it back off. The other technology that matches that ramp-up is gas peakers [natural-gas-fired power plants used to meet peak power needs] and battery storage. Some technologies fit in different places better than others. You don’t have hydro in downtown San Francisco. Gas peakers are a bit smaller, so they can fit closer to where there is demand. Battery storage is really small and very flexible because you don’t have to have a gas supply; you can fit it right into the electric system right where you need it.

OK. What’s Point 4?

Point 4 is that managing these new kinds of resources and the grid probably adds more value in the electrical part of the infrastructure to replace these other technologies simply because of all of the changing technology. Accommodating these changing technologies and trying to manage them will bring more value to people in terms of how they use their electricity, where we can use it and for what other purposes. We need to allow direct transactions between customers, because Point 5 is that customers are doing more things for themselves.

Talk about that.

An example would be a bunch of warehouse owners who bought a big industrial chiller and a big water tank. At night, when we have excess hydro and wind [in the power grid], they would chill that water tank, and when they needed electricity they used that cold water mass as a big swamp cooler. They didn’t have to use electricity in that hot peak where everybody else was competing.

So the customers can influence this by reducing their total energy use, making their own energy, or moving their energy use to a better time of day?

All of those things, and they can innovate in a way that utilities don’t. These are things customers can figure out to meet their needs better than the large utility can.

That includes time-of-day use, right?

The first people who will do time of use will be those who have solar panels on their roof that are paid for by net metering. Most of them decided to be energy producers; they’re going to make their own electricity, but they are going to sell their excess. That’s the crazy thing: They’re not just making electricity for themselves, but they’re selling it back to the rest of us in the system. The system has to be plug-and-play so customers can plug it in and the system says, “Here is a battery, here is an electric vehicle, here is a solar.” You don’t have to worry about it. That is Point 5. Point 6 is that all of this is changing the nature of the utilities. As a matter of fact, it probably won’t make sense for the electric utilities to sell electricity anymore, or be the only ones who sell it. They should provide the platform, the infrastructure that allows people to use electricity to drive carbon out of their homes, and out of our industry. For a lot of people this will be a big change because they’re going to have to think about their energy use, both in terms of their personal use and their transportation choices. Their means of transportation is going to reshape some of our industries.