Clean microgrid technologies are going to change the utility industry

A piece of the old grid

Large electric grids like we have in North America are awe-inspiring.  They are undoubtedly the most complex machines ever built.  People don’t usually think of them as a machine, but really they are a set of components connected by wires just like any electronic machine.  Only in this case it spans millions of square miles and contains billions of other machines, namely every other machine or appliance that is plugged into the grid.  It is not an exaggeration to say that whenever someone flicks a switch in Maine, another machine that could be anywhere east of the Mississippi adjusts in response.

It is amazing that these grids even work.  Although we do have outages, most of them are local phenomenon caused by things like a tree limb falling on a distribution line.  Occasionally, we have regional outages.  Considering the complexity of these interconnected systems it is remarkable that outages are not more common.  Most people don’t appreciate how vulnerable and fragile the system actually is.  Utilities maintain this level of reliability by being extremely conservative.  They maintain a huge amount of redundancy.  They avoid changing their operating procedures.  They resist renewable power exactly because it will require changes to their operating procedures.

Utilities have often told renewable power producers that they would buy all of the wind or solar power they could if the plants looked like a coal plant.  That simply reflects their conservatism and resistance to change. It is not a reasonable suggestion.  Many renewable power producers have wasted much effort trying to comply.  A more reasonable suggestion would be for distributed renewable power systems to make more utility customers look like interruptible industrial customers?  They already know how to deal with interruptible customers.  Only two things stand in the way. Utilities often have a minimum size for an interruptible customer.  Secondly, air quality regulations often prevent widespread non-emergency use of conventional backup generation.  New technologies are overcoming both of these obstacles.

Clean micro-grid technologies are going to change the entire structure of the utility industry.

Imagine a grand bargain that looked something like this:

  • Utilities replace capacity limits on distributed renewable projects with operational limits.  This way more renewables can be installed, but their impact on the grid can still be controlled.
    • Minimum load conditions. The utilities can curtail the import of renewable power during minimum load conditions.  These conditions currently only occur at night, so this is not an issue for solar projects.  It will take many years of very rapid growth in solar power before the utility experiences minimum load conditions at noon on sunny days.
    • Ramp rates: Utilities should also be able to limit the ramp rates of large projects.  If utilities can handle arc welders they can handle most renewable ramp events, but if there is a real issue with clouds passing over individual large arrays, a small amount of storage or load management can reduce those ramp rates.
    • Peak loads and system emergencies: Finally, during peak loads and system emergencies the utility should be able to curtail the customer with a distributed power system, just like any interruptible customer.  They should be reasonably compensated for that based on the frequency, duration, and amount of warning.
  • In return, customers with distributed power systems get the lowest rates usually reserved for large industrial customers.  These rates could be adjusted based on constraints on the frequency, duration, and amount of warning for these interruptions.
  • More flexible air quality regulations allow backup generation for these systems as long as they meet minimum standards related to the amount of renewables, combined heat and power or storage.

The Grand Bargain can be implemented in a non-disruptive way by gradually reducing the minimum size for interruptible rates.  The regulations need to be  based on solid engineering and economic analysis.  This bargain is intended only to eliminate the operational obstacles that would otherwise limit renewable penetration.  It is not intended to preclude additional incentives for clean power, if desired.

Three major technical trends – photovoltaics, electric vehicles, and distributed controls – are converging to make this vision not only possible, but clearly preferable to the traditional utility business as usual.

Distributed controls are the furthest advanced.  Distributed controls are the key technology behind the “Smart Grid”.  These technologies can be deployed in two different ways.  A centralized smart grid has serious security and regulatory obstacles.  It relies on the utility industry for adoption, which may take decades.  In the meantime, distributed controls can be used by individual consumers to manage their own power in a seamless and automatic way, provided three requirements are met. They need a financial incentive, such as access to inexpensive off-peak power or reduced interruptible rates.  That is part of the grand bargain described above.  Secondly, it needs to be automatic and seamless to the consumer.  That is provided by the distributed controls.  Finally, they need clean power and storage options.  There are many new options being developed, but two in particular are real game changers, photovoltaics and electric vehicles.

The cost of photovoltaics is plummeting, and new manufacturing capacity is being built at record rates.  Photovoltaics has essentially been a niche industry until recently, but it will soon reach a critical grid parity cost threshold that dramatically changes the market forces and makes the vision behind this grand bargain practical.

Electric vehicles are another key technology where the market adoption is starting to take off.  As oil becomes more expensive this will only accelerate.  Electric vehicles give consumers an unprecedented ability to control their electric consumption just by varying the charge rate.  The ultimate control becomes available through vehicle-to-grid controls that also allow discharging.

What happens to the utility company in this vision?  It will remain the low cost provider most of the time, so it will continue to supply bulk baseload power.  It will also be the market maker for the entire industry buying and selling power.  Finally, it will maintain its role as the coordinator of the grid, maintaining frequency stability over millions of square miles.  More flexible consumers can help immensely with this task, but there still needs to be a central coordinating function because the entire grid sees the same frequency.  Finally, there will always be customers who prefer a simple, flat rate and the reasonably high level of reliability that utilities can provide.  This grand vision will be of interest first to large energy users, those that need the highest levels of reliability, and those that want to be on the cutting edge of clean power.

It is amazing that these grids even work.  Although we do have outages, most of them are local phenomenon caused by things like a tree limb falling on a distribution line.  Occasionally, we have regional outages.  Considering the complexity of these interconnected systems it is remarkable that outages are not more common.  Most people don’t appreciate how vulnerable and fragile the system actually is.  Utilities maintain this level of reliability by being extremely conservative.  They maintain a huge amount of redundancy.  They avoid changing their operating procedures.  They resist renewable power exactly because it will require changes to their operating procedures.

Utilities have often told renewable power producers that they would buy all of the wind or solar power they could if the plants looked like a coal plant.  That simply reflects their conservatism and resistance to change. It is not a reasonable suggestion.  Many renewable power producers have wasted much effort trying to comply.  A more reasonable suggestion would be for distributed renewable power systems to make more utility customers look like interruptible industrial customers?  They already know how to deal with interruptible customers.  Only two things stand in the way. Utilities often have a minimum size for an interruptible customer.  Secondly, air quality regulations often prevent widespread non-emergency use of conventional backup generation.  New technologies are overcoming both of these obstacles.

Clean micro-grid technologies are going to change the entire structure of the utility industry.

Imagine a grand bargain that looked something like this:

  • Utilities replace capacity limits on distributed renewable projects with operational limits.  This way more renewables can be installed, but their impact on the grid can still be controlled.
    • Minimum load conditions. The utilities can curtail the import of renewable power during minimum load conditions.  These conditions currently only occur at night, so this is not an issue for solar projects.  It will take many years of very rapid growth in solar power before the utility experiences minimum load conditions at noon on sunny days.
    • Ramp rates: Utilities should also be able to limit the ramp rates of large projects.  If utilities can handle arc welders they can handle most renewable ramp events, but if there is a real issue with clouds passing over individual large arrays, a small amount of storage or load management can reduce those ramp rates.
    • Peak loads and system emergencies: Finally, during peak loads and system emergencies the utility should be able to curtail the customer with a distributed power system, just like any interruptible customer.  They should be reasonably compensated for that based on the frequency, duration, and amount of warning.
  • In return, customers with distributed power systems get the lowest rates usually reserved for large industrial customers.  These rates could be adjusted based on constraints on the frequency, duration, and amount of warning for these interruptions.
  • More flexible air quality regulations allow backup generation for these systems as long as they meet minimum standards related to the amount of renewables, combined heat and power or storage.

The Grand Bargain can be implemented in a non-disruptive way by gradually reducing the minimum size for interruptible rates.  The regulations need to be  based on solid engineering and economic analysis.  This bargain is intended only to eliminate the operational obstacles that would otherwise limit renewable penetration.  It is not intended to preclude additional incentives for clean power, if desired.

Three major technical trends – photovoltaics, electric vehicles, and distributed controls – are converging to make this vision not only possible, but clearly preferable to the traditional utility business as usual.

Distributed controls are the furthest advanced.  Distributed controls are the key technology behind the “Smart Grid”.  These technologies can be deployed in two different ways.  A centralized smart grid has serious security and regulatory obstacles.  It relies on the utility industry for adoption, which may take decades.  In the meantime, distributed controls can be used by individual consumers to manage their own power in a seamless and automatic way, provided three requirements are met. They need a financial incentive, such as access to inexpensive off-peak power or reduced interruptible rates.  That is part of the grand bargain described above.  Secondly, it needs to be automatic and seamless to the consumer.  That is provided by the distributed controls.  Finally, they need clean power and storage options.  There are many new options being developed, but two in particular are real game changers, photovoltaics and electric vehicles.

The cost of photovoltaics is plummeting, and new manufacturing capacity is being built at record rates.  Photovoltaics has essentially been a niche industry until recently, but it will soon reach a critical grid parity cost threshold that dramatically changes the market forces and makes the vision behind this grand bargain practical.

Electric vehicles are another key technology where the market adoption is starting to take off.  As oil becomes more expensive this will only accelerate.  Electric vehicles give consumers an unprecedented ability to control their electric consumption just by varying the charge rate.  The ultimate control becomes available through vehicle-to-grid controls that also allow discharging.

What happens to the utility company in this vision?  It will remain the low cost provider most of the time, so it will continue to supply bulk baseload power.  It will also be the market maker for the entire industry buying and selling power.  Finally, it will maintain its role as the coordinator of the grid, maintaining frequency stability over millions of square miles.  More flexible consumers can help immensely with this task, but there still needs to be a central coordinating function because the entire grid sees the same frequency.  Finally, there will always be customers who prefer a simple, flat rate and the reasonably high level of reliability that utilities can provide.  This grand vision will be of interest first to large energy users, those that need the highest levels of reliability, and those that want to be on the cutting edge of clean power.

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