Delaware Municipal Electric Corporation looks to address state’s ongoing energy problem

In order to address the ongoing energy problem, DEMEC (Delaware Municipal Electric Corporation), DEC (Delaware Electric Co-op), and Delmarva Power have been working to expand their infrastructure and look towards the future of power generation to meet the needs of Delawareans across the three counties. Heather Contant, DEMEC’s Director of Government and Community Relations, provided insight into DEMEC’s past, purpose, and how it’s combatting the need for power.

DEMEC is a Joint Action Agency, designated as a political subdivision of the State of Delaware in 1978 (incorporated in 1979). DEMEC exists to provide economies of scale savings to the smaller municipal electric utilities, and has nine member communities: New Castle, Newark, Middletown, Smyrna, Clayton, Dover, Milford, Seaford, and Lewes. DEMEC serves roughly 146,000 people and has around 76,000 customers. All nine communities together equal about 15 percent of Delaware’s electric load, and range from residential, small business, commercial, and heavy industrial customers.

“For context, DEC has roughly 100,000 customers and about 80 percent of them are residential and agricultural, which makes up about 15 percent of Delaware’s electric load,” Contant explained. “Then DPL is the remaining 70 percent of the state’s electric load, and they have over 300,000 electric customers in Delaware.”

DEMEC’s smallest member utility is the town of Clayton with around 1,500 customers. DEMEC only provides power supply and energy services to support their members’ electric utilities. Their members, however, provide multiple utility services – typically water, wastewater, storm water, trash/recycling.

“When you go to a wholesale store to buy 10 pounds of ground beef, it is normally cheaper per pound than going to the local grocery store and buying it one pound at a time,” Contant explained. “We do the same with electricity. All nine Delaware municipalities that own a local community electric utility are members of DEMEC, and eight of them receive 100 percent of their power supply through DEMEC. To continue with the wholesale example, instead of the town of Clayton buying energy for just their 1,500 customers, we aggregate all eight utilities together and go to the market to buy for around 50,000 customers,” Contant continued. “This makes it cheaper for everyone since we have more buying power together.”

An important distinction is that DEMEC does not own the municipal electric utilities. “We are owned by our members, and, therefore, the substations and other infrastructure that serves their local customers are owned by each of the local utilities,” Contant explained. “The customers receive a monthly utility bill from the local community, not DEMEC. The local communities receive a bill from DEMEC for the total electric usage of their customers and then the community bills the customers for their usage. DEMEC does, however, own electric generation to provide power supply for our members.”

Currently, about 60 percent of DEMEC’s power supply is from owned generation assets (solar, wind, natural gas) and the other 40 percent is through staggered contracts with power suppliers. “This is similar to how a person might manage their own retirement account. You have your own personal savings and then you might go into the stock market to invest in various stocks,” Contant said. “You would not put all of your money in one type of stock with one company… you are likely to invest in different companies, that provide different services and have investments that are both short-term and long-term. We do the same with the power supply to minimize risk to our members.”

When it comes to generating power, DEMEC serves as a load-serving entity for its members, and is constantly involved at the federal, regional, and state levels when it comes to electric resource planning. DEMEC owns the Beasley Power Station which outputs around 100 megawatts (MW) of natural gas in Smyrna, several solar facilities throughout the state totaling 28.8MW of solar, wind generation out of PA and the 2MW of power coming from UD’s wind turbine onshore in Lewes, and then some natural gas in Ohio.

“We are currently studying locations throughout Delaware, primarily in Sussex where the electric grid needs power supply most, to invest in more generation.” Contant explained, “This will provide cost stability, resiliency, and enhanced reliability.”

Unfortunately, energy generation resources are not created equally. According to PJM, energy from the average solar facility is valued at eight percent of its capacity capability, whereas natural gas is valued at 78 percent. “It’s not just the environmental benefits that we have to consider, but the reality of what resource we can rely on to provide power when we need it most,” Contant said. “This is why a diverse power supply mix is advantageous. You can mix-in solar and wind to get environmental benefits and augment your supply, but ultimately you need dispatchable, on-demand resources that can be called upon at any time and brought on to the system quickly and reliably. Delaware is seeing higher costs for energy right now, largely due to the lack of power supply capacity on the peninsula.”

To help explain this further, the 400MW of coal power that was produced by the now closed Indian River Power Plant was viewed by PJM as having a capacity value of 83 percent. Offshore wind is valued at 69 percent. “You would need more than 400MW of offshore wind generation to replace the 400MW of coal,” Contant continued. “The current phase for the MarWin project off of Ocean City is sized at 300MW. That project is also developed to send all of the energy generated to Maryland. None of the energy is going to power Delaware.”

Contant stated that DEMEC continues to evaluate its options to add more dispatchable generation in Delaware and is hopeful that they will be able to submit an interconnection application with PJM in the near future. It is expected, however, that if an application is sent to PJM by the end of the year, it will probably take until 2030 for it to be commercially operational. Nuclear and offshore wind projects would take even longer. “The biggest concern relating to growth right now are very large energy users like data centers or other industries that need a large amount of power around the clock,” Contant said. “This is a concern nationwide. We are seeing some member communities with development coming in that would double the entire town’s energy usage. Upgrading infrastructure is one piece of the pie, but risk management when it comes to power supply is also critical for both the utility and customers.”

Contant continued by explaining that on top of larger energy usage, many of these businesses cannot have disruptions in power supply, and as communities and infrastructure continue to be built to distribute power locally, DEMEC also has to consider the timeline and costs to upgrade the transmission system. Several of DEMEC’s member communities are working with Delmarva Power to add redundancy at the transmission level to support reliability and resiliency for their residents and businesses that rely on electricity for their health and safety.

Editor’s note- This is the second in a series of three stories on how local and state organizations are addressing Delaware’s energy needs.