The post-Sandy electric grid
Steven Collier is an IEEE Smart Grid expert whose broad experience includes being a consultant and executive with energy, telecommunications and information technology companies. FierceSmartGrid Editor Barbara Vergetis Lundin talked with him about grid dependence post-Hurricane Sandy, the value of nanogrids, and the proliferation of the EnerNet.
FierceSmartGrid: You've written that in a post-Hurricane Sandy world, more consumers and businesses will seek more independence from the grid while still relying on it for some needs. Would you elaborate?
Steven Collier: Recent, prolonged power outages caused by Hurricane Sandy and other severe weather events caused many people to ask themselves as a homeowner or business person, "What can I do to operate my home or business and maintain safety, basic amenities and the information and communications I need when the grid is down?"
Those who can afford it install backup engine/turbine generators, but fuel can be difficult to obtain during emergencies. And backup engine/turbine generators still burn carbon and are not particularly efficient. A more convenient and sustainable solution may eventually include installing DC sources (e.g., solar photovoltaic panels, fuel cells, battery storage, even EVs/PHEVs) that directly power DC end uses on the premises, including lighting, computers, other electronics and appliances. The steadily declining cost and improving performance of all of those DC sources will accelerate uptake. In fact, DC end uses make up a rapidly increasing proportion of total retail energy consumption. Of course, today's electric end uses, including electronics, are wired for AC, and appliances driven by electric motors (refrigeration, compression, transport) will likely continue to be, so this solution won't happen quickly and it's not comprehensive. But affordable DC-to-DC subsystems will find a market.
The value of these "nanogrids" will not be limited to backup for occasional grid outages. Customers may continue to operate them as isolated systems even when the grid power is available to displace utility costs, reduce their carbon footprint, improve energy sustainability, avoid transients and harmonics from the AC grid, or just achieve some measure of independence and control.
FierceSmartGrid: How do you think a significant reduction in consumer dependence on the grid would affect utilities?
SC: Many utilities are pondering that now. In the near term, unless it is limited to charging batteries with grid power, these nanogrids will reduce total energy consumption and, therefore, reduce an electric utility's revenues. But the utility may not experience an equal reduction in costs, so that may lead to kilowatt-hour price increases. The potential for decreased revenue is why utilities have focused on demand response instead of energy efficiency and conservation. Customer self-sufficiency also undercuts efforts by investor-owned utilities to invest in and earn a return on their infrastructure, not to mention the foundation for their good credit in the financial markets. And it introduces new variables and complexity to the operation of the legacy grid.
The fact remains that utilities cannot spend their way to a perfectly reliable grid, and their customers cannot tolerate being without power for days or even weeks. At the same time, legislators and regulators are becoming more aggressive in requiring that utilities increase their conservation and renewable energy efforts as well as reduce their carbon emissions. Utilities must get ahead of the curve and offer alternatives to customers or the dreaded disintermediaries will.
FierceSmartGrid: Your scenarios depend on solar photovoltaic panels at affordable prices. What's the biggest driver affecting that market?
SC: Solar PV is already being deployed widely in both developed and developing economies. Two drivers push down the cost of solar PV: First, the cost of the technology itself, which is declining steadily, and second, the cost of manufacturing, which decline with economies of scale. The world's emerging economies will adopt solar PV systems in such quantities that global prices will drop low enough to energize customers in the U.S. and other developed countries to adopt them. Most of the global population does not already have a legacy, centralized power grid. And less than one-fourth of the world's population uses more than three-fourths of the world's electric energy. More than a billion and a half people in the world have no access to electricity at all. The rest of the world will catch up.
A relatively modest solar PV array for DC-based electrical loads that include LED lighting, Internet access, computing and telecommunications could not only change a person's life, it could also benefit commercial facilities and entire industries, and drive economic growth in economies lacking a centralized grid. The number of kilowatt hours needed is modest in large sectors of emerging economies -- just a fraction of the energy density Americans enjoy. So I don't think this is much of a stretch. In fact, I'm sure it's being done now. And when that movement takes off, it'll bring economies of scale to PV production and Americans will adopt this form of DC generation in much greater numbers.
China has showed the world that their citizens couldn't breathe if all their power comes from coal-fired power plants, at least absent some remarkable improvement in efficiency and emission controls. So China already leads the world in the pace of adoption of renewable, sustainable power at a large scale. That alone will contribute mightily to the advances in technology and economies of scale that bring down prices, improve performance, and drive market adoption.
FierceSmartGrid: Another concept you've championed is that of the so-called "EnerNet." Sounds great but how close are we really?
SC: I'm seeing a glimpse of the EnerNet (i.e., the confluence of the Smart Grid and The Internet of Things) at Great River Energy, a generation and transmission cooperative in Minnesota that's exploring the possibility of connecting thermal storage in electric hot water heaters via the Internet to the day-ahead energy market in MISO. The oversized, highly insulated water heaters would automatically detect and schedule operation during times when energy is least expensive, which might be at night when there is an excess of both wind and traditional utility base-load generation. The stored hot water would last long enough for the water heater to avoid operation during the times when energy is most expensive. Similar programs are being tested by other utilities for charging EVs and PHEVs. Once retail customers and their aggregators are granted participation in organized energy markets, the possibilities become practically endless.
These kinds of activities will lead to a new kind of grid operation, one in which distributed electronic devices associated with customer end-use devices interact with the grid directly through machine-to-machine (M2M) technology, moving away from centralized electric utility monitoring and control and one-customer-one-meter connection. I've been advising a group of young entrepreneurs at the Carbon War Room who are doing research on the potential of M2M communications to reduce carbon emissions. They have actually started a new company that will use computer algorithms and artificial intelligence to derive actionable data from EnerNet M2M chatter. Sound like science fiction? It's starting to happen now.
FierceSmartGrid: Wouldn't your scenario of connectedness further facilitate third-party aggregators who gather demand response and distributed generation resources and participate in the market?
SC: Absolutely. There are a number of organized energy markets in the U.S. and abroad. And there are companies that are already aggregating retail demand response for participation in a few of those markets that are not blocking them. It is inevitable that aggregators of retail generation, storage and end-use management will eventually be participating in all energy markets -- in an EnerNet -- because it's the customers who are the market, not the utilities. While most individual customers will not have the expertise and resources to participate, aggregators can.
Obviously, complex monitoring and control issues must be resolved, but advances in electronics, telecommunications and information technologies will get us there. Generation, transmission and distribution constraints mean that a wide-area synchronous grid cannot be a limitless sink for all possible combinations of transactions. Within those constraints, however, participation by aggregated retail output/input becomes just a matter of accounting and payment. Organized energy markets and aggregators are decoupling the purchase and sale of the commodity from the ownership and control of the generation, transmission, and distribution. This restructuring will take on new forms as all forms of generation and curtailment, customers and their end-use devices are linked to an intelligent grid via the Internet of things.
FierceSmartGrid: What about the incumbents? What choices will utilities face under this sort of scenario?
SC: I've heard recent discussions along the lines of, "Do utilities support or oppose distributed generation?" And a fundamental conclusion appeared to be that utilities are more likely to support it if they own and operate it. Recall that we have had a fairly simple, highly protected legacy model for the electric utility business in this country. It's central-station carbon and uranium burning generation delivered through bulk transmission corridors to distant load centers in a patchwork of wide-area synchronous AC grids that are owned and operated by monopolies that sell at average cost-plus pricing.
With distributed generation, storage and energy management systems, not to mention non-utility providers and aggregators, almost every aspect of that paradigm will be eroded, even destroyed. So if an incumbent market participant has a vested interest in preserving some aspect of this legacy, they'll encounter disruptive forces. Of course, opportunities for innovators and entrepreneurs abound in the midst of market disruption. Incumbent utilities that can recognize the value to consumers and society in general in terms of reliability, sustainability, security and customer satisfaction can benefit by innovating. That comes with risks. But the competitiveness of our nation and its industries as well as the quality of life of our citizens depends on it.