There is a big energy transition coming, and I’m not talking about renewables.
That’s not to take anything away from the success of renewables. Last year, the majority of resources added by utilities worldwide were renewable, exceeding additions of coal-, gas- and oil-based capacity combined. In Arkansas, all the recent additions to utilities’ energy portfolios have been wind and solar. Your electric cooperative’s wholesale power supplier, Arkansas Electric Cooperative Corporation (AECC), recently announced new contracts to acquire wind and solar energy at prices below those of conventional fossil fuels. These resources will stabilize your energy bills for decades to come.
But that’s not the transition I’m talking about.
Since Thomas Edison put the very first electric grid online in 1882, electricity has been a just-in-time commodity of the most “just-in-time” kind. Without a cost-effective way to store large amounts of electric energy, utilities have operated the energy grid to deliver your electricity at the instant you demand it. To maintain reliability, we have to keep large amounts of excess generating resources in instantaneous reserve, and many others in a state of constant standby, ready to respond to the unceasing deviations in consumer demand. All that excess capacity costs money. And all that is soon to change.
The story of battery development is full of hyperbole and senseless speculation, but we can now envision a day in the not-too-distant future where utility-scale batteries will help stabilize the grid and your energy bill.
History tells the story. Storage battery prices have dropped, on average, 20 percent per year, every year for the last seven years. At that rate of decline, batteries will become cost-effective for large-scale utility deployment within five years. Already in Arkansas, electric cooperatives are evaluating the potential addition of batteries in select areas to offset momentary peak demand. Construction of the state’s first large storage systems could begin within a year.
This same reduction in battery prices will drive a major transformation in the transportation sector. Electrification of cars, buses and delivery trucks will reduce costs, increase reliability and benefit the environment. Electric vehicles have fewer moving parts, which reduces maintenance costs, and the per-mile cost of electricity is about one-third that of gasoline. Because of such potential benefits, every major auto manufacturer has announced plans to transition their fleet from conventional gasoline to hybrids and all-electric vehicles by the mid 2020s. Win-win!
During this transition, your electric cooperative stands ready to assist and will pursue every cost-effective option to keep your energy reliable and affordable. What won’t change is our commitment to the member-owned cooperative business model. We don’t exist to make a profit, so we can keep your electric rates as low as possible, even returning surplus margins when we generate them. In a sea of transition, that’s an island of stability, and that’s the cooperative difference.
Duane Highley is president and CEO of Arkansas Electric Cooperatives, Inc., (AECI) and Arkansas Electric Cooperative Corporation (AECC). AECI, a statewide service co-op, and AECC, a wholesale power supply co-op, are owned by Arkansas’ 17 local distribution co-ops, which provide retail electric service to more than 1 million members.