Electrification of transportation is putting additional demand on electrical grids. Meeting this higher demand while diversifying with renewable sources will require innovative energy solutions that meet the unique needs of regulated and wholesale markets.
Our executive director of Origination, Robert Day, and executive director of Business Development, Grant Wilkerson, were recently featured on Smart Energy Voices podcast, where they discussed the challenges and solutions for renewable energy in regulated and wholesale markets.
What are regulated markets looking for with renewables?
Power suppliers in regulated markets want to lower emissions and meet power supply needs in a sustainable and affordable way. They also need more flexibility and control to navigate fluctuations in power demand, changes in regulation, availability of resources, and even extreme weather conditions.
For utilities in regulated markets, state commissions oversee whether rates are just and reasonable. Whereas, in open markets, the customer determines the price. This has two major implications for regulated markets: we must consider if a new renewable product is reasonable compared to the base price, and we should expect for regulatory environments to move slower than wholesale markets.
How is Evergy responding to customer needs for renewables in regulated territories?
Evergy offers two green tariff structures for customers in Missouri and Kansas.
Our Missouri tariff is structured like a virtual power purchase agreement. The utility procures renewable resources and assigns a resource to customers at a fixed price. The utility is responsible for settlements. At the end of the month, we give customers any market revenues that are above the fixed price.
Our Kansas tariff allows customers to stay on their current tariff and sign onto a specific renewable project. We replace a floating rate with a fixed rate associated with renewable energy resources. This allows the customer to have budget certainty under long-term contracts.
There were several challenges to creating these green tariff structures. They require state regulatory approval and long-term analytics tracking to assess the benefits and risks for our customers. We also have to consider not only how it benefits our customer, but other customers in the service territory.
Both of Evergy’s green tariffs are fully subscribed in Missouri and Kansas. We are continuing to monitor how the tariffs are working for our current customers and seeking out new projects to meet growing demand for renewables in these markets.
What is Evergy doing outside of regulated territories?
Aggregation and fractional shares are key to renewable energy solutions in wholesale markets. Not many companies can support big renewable projects by themselves, but fractional shares offer more accessible renewable opportunities for a broader group of organizations.
At Evergy, we offer aggregated wind farms and solar arrays at a variety of sizes and demands for wholesale municipality customers. These solutions lock in a very competitive price compared to customers developing new renewable sources on their own. While prices are rising for fractional share business, it’s not too late for customers in wholesale markets to capitalize on the opportunity to break up larger sources to meet their budget.