Building the Electricity System of the Future: Thinking Disruption, Doing Solutions

The speed of disruptive innovation in the electricity sector has been outpacing regulatory and utility business model reform, which is why they now sometimes feel in conflict.

That disruptive innovation is only accelerating. RMI’s recent report,The Economics of Grid Defection: When and where distributed solar generation plus storage competes with traditional utility service, sets a timeline for utilities, regulators, and others to get ahead of the curve and shift from reactive to proactive approaches. Becoming proactive and deliberate about the electricity system's transformation, and doing so ahead of any fundamental shifts in customer economics, would enable us to optimize the grid and make distributed technologies the integral and valuable piece we believe they can and should be.

When RMI issued The Economics of Grid Defection three weeks ago, our intent was to stretch the conversation among electricity system stakeholders by looking out far enough in the future to discern a point where the rules of the system change in a fundamental way. We used the best available facts to explore when and where fully off-grid solar-plus-battery systems could become cheaper than grid-purchased electricity in the U.S., thus challenging the way the current electricity system operates. Those systems, in fact, don’t even need to go fully off grid. The much less extreme but perhaps far more likely scenario would be grid-connected systems, which could be just as or even more challenging for electricity system operation and utility business models.

The takeaway is this: even under the fully off-grid scenarios we modeled, we have about 10 years—give or take a few—to really solve our electricity business model issues here in the continental U.S. before they begin compounding dramatically. The analysis also suggests we should carefully read the “postcards from the future” being sent from Hawaii today, and take much more interest in how that situation plays out as a harbinger of things to come.

As an institute with a mission to think ahead in the interest of society, consider this a public service message that these issues will crescendo to a point of consequence requiring dramatic and widespread changes well within current planning horizons. For those who are serious about finding solutions, this is also a call to action and a commitment to partnership.

At RMI, much as we pioneered the concepts of the “negawatt,” the “deep retrofit,” and the “hypercar,” we have also defined what it means to be a “think-and-do tank.” It is not enough to do smart analysis. The solutions we champion must be practically tested, broken, fixed, refined, iterated, and ultimately adopted at scale for us to feel satisfied with our work. Partnering with leading companies and institutions is how we prove an alternative path is possible to a world that is clean, prosperous, and secure.

The highly distributed electricity system of the future

The Transform scenario of our Reinventing Fire analysis, the most preferable outcome of the electricity futures we have examined, described a future for the U.S. electricity system in which 80 percent of electricity is supplied from renewable sources by 2050, with about half of that renewable supply coming from distributed resources. Given the current grid is only a few percent distributed and less than 13 percent renewable (counting a generous allotment of hydropower), we have quite a ways to go.

Achieving that end state requires many changes. Some of those changes already have momentum and likely won’t require intervention, but others will need a kick start or some other form of “strategic acupuncture” encouragement. At RMI, we would certainly prefer that a transition of this scale be orderly and proactive, because having disruption rock the boat of the current system unprepared would undoubtedly leave some combination of shareholders, ratepayers, and taxpayers smarting.

As we look at the future electricity system—the one we need to be building today—we see five critical differences from the present system. Redesigning our regulatory and market models should reflect these emergent needs.

• The future electricity system will be highly transactive. Increasingly, the grid will become a market for making many-to-many connections between suppliers and consumers, with those roles being redefined on a daily basis as self-balancing systems decide whether to take from or supply to the grid at any given time.
• Correspondingly, asset and service value will be differentiated by location and timing of availability, and perhaps even by carbon intensity or other socially demanded attributes. In a system that requires instantaneous load matching at the distribution level, and where virtual and real storage are distributed throughout the system, resource coordination will require transparent markets (with increasing automation) that provide the ability to balance autonomously using value signals. A system historically governed by averages will instead migrate to specific, dynamically varying values.
• Innovative energy solutions will proliferate. As a consequence of market forces already unlocked, we are assured to see a regular stream of distributed resource innovations that better meet customer needs at costs comparable to existing utility retail prices. These could be market-based aggregation plays (e.g., demand response) or personal technologies (e.g., a home “power plant” such as solar plus storage or a gas microturbine).
• A consequence of these first three points is that the rules governing the network must be adaptive to constantly shifting asset configurations, operations, and other factors. For example, charging EVs may make more sense at night or during the day, depending on the penetration of renewables relative to base needs. There will be lots of inflection points on how and when to encourage the development of different types of assets to reach efficient and stable outcomes.
• Finally, the customer will be increasingly empowered. The services of the grid must de-commoditize to deliver against exact customer needs for reliability, “green-ness,” and other attributes. Failure to do so will result in customers finding higher-value alternatives.

This future still prominently features a robust wires network; defection from the grid would be suboptimal for a number of reasons. We would assert that everyone is better off if we create a future network that is easier to opt in to, rather than opt out of via the risk of defection.

Moreover, distributed resources—the same ones that could but needn’t threaten defection—have the potential to become a primary tool in the planning and management of grid-based distribution systems. Already, we are working with utilities and regulators in several parts of the country in exploring new ways to incentivize electricity distribution companies to take full advantage of distributed resources to reduce distribution system costs, increase resilience, and meet specialized customer needs. Good regulation will reveal value and facilitate transactions that tap that value, thereby increasing the benefit of distributed resources for all.

Forging solutions: our work on the emerging system

Our programs at RMI are designed to honor and accelerate progress toward an electricity system that harnesses these distributed investments. Hence, we have parallel and interactive efforts to accelerate the progress of economic, distributed, and low-carbon disruptive technologies (because we believe they have an important and positive role to play in the electricity system of the future), even as we work with utilities, regulators, and other key stakeholders to migrate to new business models that deploy and integrate these resources in ways that maximize the benefits to society as a whole. We think these dual efforts place “creative tension” in the system from which progress manifests.

Our work on disruptive technologies is focused on driving down the economic costs of deploying these systems by stimulating direct cost reductions, improving risk management and access to capital, and building new business models that are either behind the meter or aggregations across meters. To do this, we work specifically to help drive down solar “balance of system costs” through understanding cost reduction opportunities and then working to implement them, through identifying pathways to more market capital and then working with consortia like truSolar and Solar Access to Public Capital to unlock, and through working on issues like microgrids or researching the prospects for alternative asset models with a wide range of partners.

These insights into disruptive models directly inform our dialogue with utilities, regulators, technology providers, and other stakeholders around ways to migrate existing business models. Our most ambitious effort at transformation is the Electricity Innovation Lab (e-Lab), a multi-year, multi-stakeholder initiative focused on rapid prototyping and fast feedback on solutions for the future energy system. This network has issued seminal thought pieces on future business models, surveys of the costs and benefits of solar, and worked directly with stakeholders like the City of Fort Collins and the U.S. Navy to develop perspectives on pieces of future solutions for all. Beyond that, we work directly with utilities such as PG&E and states like Minnesota on one-off engagements to test different ideas together in a way that provides important experience for the “think-and-do” cycle that epitomizes our approach.

We at RMI are committed to expanding and accelerating the capacity to transform the electricity industry to one epitomized by innovation and customer service above all else, in a way that meets environmental, social, and economic demands. Toward this end, we are convening 13 cross-disciplinary teams from across the country in two weeks for our first-ever e-Lab Accelerator, designed specifically to workshop some of the toughest issues facing the industry in the transition to the next electricity system. This is just one of the broader set of commitments that we have made to not just thinking about solutions, but putting them immediately to the test. Therein lies the key to our change model: think and do. Then repeat. More

 

© 2014

New Publication - The Power of Transformation -- Wind, Sun and the Economics of Flexible Power Systems

The Power of Transformation -- Wind, Sun and the Economics of Flexible Power Systems, 238 pages, ISBN PRINT 978-92-64-20802-5 / WEB 978-92-64-20803-2, paper €100, PDF €80 (2014)

Type: Studies
Subject: Climate Change ; Electricity ; Renewable Energy; Energy Security

Wind power and solar photovoltaics (PV) are crucial to meeting future energy needs while decarbonising the power sector. Deployment of both technologies has expanded rapidly in recent years, one of the few bright spots in an otherwise bleak picture of clean energy progress. However, the inherent variability of wind power and solar PV raises unique and pressing questions. Can power systems remain reliable and cost-effective while supporting high shares of variable renewable energy (VRE)? And if so, how?

Based on a thorough review of the integration challenge, this publication
- gauges the economic significance of VRE integration impacts
- highlights the need for a system-wide approach to integrating high shares of VRE
- recommends how to achieve a cost-effective transformation of the power system.

This book summarises the results of the third phase of the Grid Integration of VRE (GIVAR) project, undertaken by the IEA over the past two years. It is rooted in a set of seven case studies, comprising 15 countries on four continents. It deepens the technical analysis of previous IEA work and lays out an analytical framework for understanding the economics of VRE integration impacts. Based on detailed modelling, the impact of high shares of VRE on total system costs is analysed. In addition, the four flexible resources which are available to facilitate VRE integration – generation, grid infrastructure, storage and demand side integration – are assessed in terms of their technical performance and cost-effectiveness. More

Table of Contents

Summary

 

© 2014

Get ready for more blackouts

When Hurricane "Superstorm" Sandy hit New York, a large part of Manhattan— the wealthiest place east of the Taj Mahal— was without power for weeks. At least it wasn't unfashionable. According to a new report, blackouts are becoming the new normal.

The Department of Energy's new report answers the question, "What happens when you mix water and electrical sockets?" Actually, it's "How will climate change affect the nation's power grid?" Same thing. "In 2012, the United States suffered eleven billion-dollar weather disasters," they say, "the second-most for any year on record, behind only 2011." Hm. Someone better cover up all the plugs.

The national power grid has been cobbled together over the course of a century. Global warming means more storms, more flooding, and more power outages. The Northern US is projected to get wetter; the Atlantic is projected to produce stronger hurricanes. All in all, "The number of outages caused by severe weather is expected to rise as climate change increases the frequency and intensity of hurricanes, blizzards, floods and other extreme weather events."

The government and the energy companies are investing tens of billions, but if you think that's going to be enough, perhaps you have not looked at a life-size map of America lately. That shit isbig.

[The full report [PDF]. Photo: AP]

 

Rooftop Solar Owners vs Utilities – The Battle Begins

You don’t have to go too far into a document prepared by the US-based Edison Electric Institute (EEI) to realise what is at stake for centralised utilities from the threat of rooftop solar.

The EEI, a trade group that represents most investor owned utilities in the US, said solar PV and battery storage were two technologies (along with fuel cells and storage from electric vehicles) that could “directly threaten the centralised utility model” that has prevailed for a century or more.

How worried should they be? A lot, said the EEI. The ability of rooftop solar, battery storage and energy efficiency programs to reduce demand from the grid would likely translate into lower prices for wholesale power and reduced profits. Worse still, customers were just as likely to “leave the system entirely” if a more cost-competitive alternative is available.

“While tariff restructuring can be used to mitigate lost revenues, the longer-term threat of fully exiting from the grid (or customers solely using the electric grid for backup purposes) raises the potential for irreparable damages to revenues and growth prospects.”

In the US, utilities are now seeking to protect their business models by pushing hard against net metering and seeking to influence the pace and manner of deployment of other technologies and new energy market concept that don’t fit the decades old model.

In Australia, much the same has been happening. RenewEconomy reported on the concerns of utilities in this article last month. Feed-in-tariffs have been wound back, as they were supposed to have been as technology costs fell, but now the pendulum is swinging the other way, and utilities – with the apparent complicity of state-based pricing regulators – are now trying to extract as much revenue from solar customers as they can.

It is a dangerous game. Leading electricity executives and market analysts suggest the rollout of rooftop solar is inevitable and “unstoppable” – unless, of course, by regulation and changing tariffs.

Little wonder then, that solar consumers and rooftop solar providers are starting to organise themselves to protect the interests of individual consumers, and the industry as a whole.

In Australia, a new solar campaign initative known as “Solar Citizens” is being launched this week to ensure the interests of solar owners are protected from changes to laws and policies by power companies and governments.

Solar Citizens sees its mandate as helping existing and would-be solar owners to advocate for their rights as energy investors and aims to push for panels on every Australian rooftop.

Solar Citizens Manager Dr Geoff Evans says 2.5 million Australians now live under a solar roof (one million homes have rooftop solar PV systems), and have invested about $8 billion. Some forecasts expect those numbers to triple by 2020.

“That’s an amazing show of support for solar,” Evans said. “But to date, when the interests of solar owners have come under threat, there has been no way for them to come together and protect their interests. With Solar Citizens that will change.”

One of Solar Citizens initial targets will be Queensland, there the local competition authority has canvassed a range of controversial tariff structures that appear to favour government owned utilities over consumers, as RenewEconomy highlighted in March in this article, and again two days later. In other states such as NSW, individual homeowners have to negotiate with retailers to get a price for the power that retailer then sells to their neighbours.

“There’s a real power imbalance in those negotiations” said Evans. “The situations in NSW and Queensland highlights the trend we have seen across the country,” said Dr Evans. “We will soon be working on campaigns with solar owners in every state to make sure all Australian solar owners are ensured a fair go.”

“Network operators and energy retailers don’t want to see Australian’s take back control of the grid. They are making it harder for Aussies to go solar in order to protect their profits.

The Solar Citizens campaign is emerging in Australia just as solar companies in the US are organising themselves to counter the same potential threats to their business.

Last week, Bloomberg reported, SolarCity, Sungevity, Sunrun and Verengo, which accounted for the majority of US rooftop solar installations (most of which are financed by leasing arrangements)) formed a lobbying group called the Alliance for Solar Choice to combat efforts by “monopoly utilities” to quash programs that support renewable energy in 43 states.

The alliance is seeking initially to preserve net metering policies that require utilities to purchase surplus electricity at retail rates from customers with rooftop solar systems, and says it is responding to “the coordinated utility attack on net metering throughout the country.” More

 

 

Grid Could Run on 99.9% Renewable Energy By 2030

When a British energy minister argued that wind turbines generate a "mere trickle of non-storable energy", some eyebrows were raised.

Sure, there are challenges to shifting to clean energy, but with renewables providing an ever larger slice of the energy pie and with a number of studies showing 100% renewable energy is possible with today's technologies, his arguments were at best outdated, and at worst a severe case of misrepresentation and denial.

Now Science Daily reports on a study from the University of Delaware and Delaware Technical Community College adds weight to this thesis, suggesting that wind and solar could power the grid 99.9% of the time if combined with a certain amount of energy storage and fossil fuel backups for the rare occasion that clean energy alone was not enough.

Using computer modeling, the researchers explored 28 billion combinations of renewables and storage mechanisms, each tested with four years of weather and energy demand data. The results were encouraging, and because the study focused not just on matching supply with demand, but rather achieving the most cost effective solutions, it revealed some rather useful findings. Most notably, that it is cheaper to over-build generation capacity to a point where there is excess supply on sunny or windy days, and still an adequate direct supply when demand is high but wind or sun are in short supply. Storage was still an important part of the puzzle however, as Science Daily explains:

During the hours when there was not enough renewable electricity to meet power needs, the model drew from storage and, on the rare hours with neither renewable electricity or stored power, then fossil fuel. When there was more renewable energy generated than needed, the model would first fill storage, use the remaining to replace natural gas for heating homes and businesses and only after those, let the excess go to waste.

The study used cost estimates for renewables in 2030, that showed wind and solar at roughly half the installation price they are today, with maintenance costs remaining roughly constant. As far as I can tell, it didn't even get into the potential for radical energy and resource savings through ideas like embracing bright green cities or dematerializing the economy either.

Having just got into a heated twitter "discussion" with another naysayer who feels that fracking to avoid economic calamity is our only option, I must once again call BS. More

 

As Smart Electric Grid Evolves, Engineers Show How to Include Solar Technologies

ScienceDaily (Aug. 17, 2012) — An economically feasible way to store solar energy in existing residential power networks is the subject of an award winning paper written by two Virginia Tech electrical engineers and presented at an international conference.

Reza Arghandeh of Blacksburg, Va., a doctoral candidate in the Bradley Department of Electrical and Computer Engineering at Virginia Tech, won the best student paper award at the 20th International Conference on Nuclear Engineering, held in conjunction with the American Society of Mechanical Engineering Power 2012 Conference at Anaheim, Calif.. His advisor is Robert Broadwater, professor of electrical and computer engineering, who specializes in electric power system analysis and design.

In their paper, they acknowledge that solar energy resources are "intermittent, seasonal, and non-dispatchable." However, the current national climate with its deregulation policies, electricity tariffs, control strategies and demand management are "significant tools for flexible and resilient operation of power systems with photovoltaic adoption levels," Arghandeh argued.

"Selling the household generated electricity into the electric energy market and the storage of electricity in storage systems and demand control systems provide a variety of economic opportunities for customers and utility companies to use more renewable resources," he added.

Some residential houses are already doing just this -- selling power back to an electrical distribution industry. But Arghandeh and Broadwater's work provides an optimization algorithm for a Distributed Energy Storage (DES) system on a broad scale. The system they developed presents a fleet of batteries connected to distribution transformers. The storage system can then be used for withholding distributed photovoltaic power before it is bid to market, Arghandeh explained.

"Withholding distributed photovoltaic power, probably gained from rooftop panels, represents a gaming method to realize higher revenues due to the time varying cost of electricity," he said.

Arghandeh is referring to the peak usage of energy systems such as the early evening hours when families return home from school and from work versus the low usage times that occur in the early morning hours when most households are asleep. "The distributed photovoltaic power adoption can be controlled with the help of real-time electricity price and load profile," he confirmed. More

 

Advanced Power-Grid Research Finds Low-Cost, Low-Carbon Future in Western U.S.

ScienceDaily (Apr. 3, 2012) — The least expensive way for the Western U.S. to reduce greenhouse gas emissions enough to help prevent the worst consequences of global warming is to replace coal with renewable and other sources of energy that may include nuclear power, according to a new study by University of California, Berkeley, researchers.

The experts reached this conclusion using SWITCH, a highly detailed computer model of the electric power grid, to study generation, transmission and storage options for the states west of the Kansas/Colorado border. The model will be an important tool for utilities and government planners.

"Decarbonization of the electric power sector is critical to achieving greenhouse gas reductions that are needed for a sustainable future," said Daniel Kammen, Distinguished Professor of Energy in UC Berkeley's Energy and Resources Group. "To meet these carbon goals, coal has to go away from the region."

To achieve this level of decarbonization, policy changes are needed to cap or tax carbon emissions to provide an incentive to move toward low-carbon electricity sources, Kammen and the other study authors said.

While some previous studies have emphasized the high cost of carbon taxes or caps, the new study shows that replacing coal with more gas generation, as well as renewable sources like wind, solar and geothermal energy, would result in only a moderate increase to consumers in the cost of electric power -- at most, 20 percent. They estimate a lower ratepayer cost, Kammen said, because the evolution of the electrical grid over the next 20 years -- with coordinated construction of new power plants and transmission lines -- would substantially reduce the actual consumer cost of meeting carbon emission targets. More

 

DALLAS, Dec. 16 -- Lockheed Martin will demonstrate its Intelligent Microgrid system for electrical power distribution at Fort Bliss, Texas. 

The demonstration at an Army Brigade Combat Team complex is part of a project by the U.S. Department of Defense's Environmental Security Technology Certification Program.

"Government installations must meet challenging new energy reduction and renewable energy mandates, as well as address critical energy security objectives," said Gil Metzger, director of Intelligent Microgrid Solutions at Lockheed Martin Missiles and Fire Control. "Our Intelligent Microgrid Solutions provide the efficiency, reliability and security necessary to satisfy such demanding requirements for our customers."

An Intelligent Microgrid manages the distribution of electrical power generated by various sources, continuously balancing loads and supplies while ensuring that all elements of the grid perform at peak efficiency, whether they're connected to a larger grid or operating in an isolated mode.  More >>>