It was only a little more than ten years ago that a National Academy of Engineering report ranked the invention of the electric grid at the top of a list of the 20 greatest inventions of the 20th century. Not just one of the great engineering achievements, but first amongst them. The Academy ranked the Internet 13th.
Now we hear increasingly that technology is making todays electric utility model obsolete and will put its companies into a death spiral. Is it possible that so much has changed so quickly?
Post-utility advocates point to three technologies as disrupters: photovoltaics (PV), batteries, and smart or micro grids. The U.S. Department of Energy (DOE), along with a conga line of venture firms in Silicon Valley, invested tens of billions of dollars in these three domains over the past half-dozen years. Volumes of analyses and claims can be summarized in three paragraphs:
Solar arrays on the roofs of homes and buildings, it is argued, will obviate central power generation, especially much-reviled coal plants, and will do so rapidly, as PV costs decline and approach grid parity. The Department of Energy released a report chronicling the progress, titled Solar Revolution, that inspired palpitations from New York Times columnist Paul Krugman, who wrote that its no longer remotely true that we need to keep burning coal to satisfy electricity demand.
Lithium battery technology, incredibly improved courtesy of the mobile Internet, were told will now migrate into basements of homes and buildings to store PV electricity for nights and cloudy days, obviating the grid as backup. The global proliferation of lithium-powered hybrid-electric cars is just a first step. And when Tesla recently announced plans to build a gigafactory that would alone produce more than all of the worlds existing lithium battery factories combined, the green-tech media erupted with excitement, claiming such economies-of-scale promise revolution, not just for electric cars, but also the grid.
Finally, third in the triad, a smart grid, in particular in the form of micro grids, connects everything. With far more granular and real-time information about how much, when, and where electricity is used, advocates assert that social and economic behavior will change to radically reduce energy use and further undermine utility revenues.
These three technology forces in combination, the post-utility analysts claim, will transform the way the utility industry meets energy demand. It is, we frequently hear, analogous to and as inevitable as the destruction of the Ma Bell landline phone model when cell phones emerged. (Apparently none who offer this analogy notice that AT&T is doing just fine, and is still a huge if differently regulated business.)
The central problem with this post-utility construct is that the physics of information and electricity are profoundly different, and render the Bell analogy meaningless. More on that shortly. First though, it is true that the nations electric grid is morphing, but just not quite the way green energy proponents imagine.
The need for a harder grid
Modern society is in much more urgent need of a harder grid, not so much a greener grid. Demand for reliability is rising faster than demand for kilowatt-hours themselves. Two words epitomize this new reality Metcalfe and Sandy.
In the aftermath of Hurricane Sandys widespread and persistent outages, federal and state policymakers called for more spending on grid resilience and recovery. And more recently, policymakers and utilities are still reacting to the fallout from learning about a terrorist-like gunfire attack on Californias Metcalf substation last year, an incident that had been kept a secret until this past spring. That attack prompted a flurry of what if scenarios about potential blackouts from future, similar attacks on any of the nations tens of thousands of substations.
On average though, more mundane events lead to the vast majority of increasingly intolerable blackouts: car accidents, squirrels chewing through cables, and old equipment failing. The average incidence of grid outages has been rising at about 8 percent to 10 percent annually since 1990. And the duration of outages has also been rising by about 14 percent per year. (Eaton Corporation provides revealing state-by-state data and trends in their Blackout Tracker.) And then there are the rising concerns over cyber attacks on the grid arguably one of the most critical areas, it demanding increased spending and attention.
All this comes at a time of greater demand for always on power to keep our digital and information-centric economy humming. Electricity powers everything people think is modern about our economy, from conventional but indispensable things like lights, motors, refrigerators, and air conditioners, to new technologies like the Internet, electric cars, 3D printing, and gene sequencing.
The share of the U.S. GDP associated with information is three times bigger than the share associated with the transportation sector that moves people and stuff. The former is entirely dependent on electricity and is growing far faster than the latter, which uses oil. (For more on the Clouds surprising electricity appetite, see my earlier report.)
It should thus be unsurprising to learn that studies find the cost of outages, measured per kilowatt-hour, is ten to ten thousand times more than the cost of the power itself.
Even as the importance of reliability grows, the consumption of kilowatt-hours also keeps growing, despite billions invested trying to stifle that growth. U.S. electric demand today is 10 percent higher than 2001, perhaps a seemingly modest amount, but for a grid the scale of Americas this increase equals Italys entire annual use. For the future, the Energy Information Administration (EIA) forecasts a 12 percent rise over the next decade that will require the United States to add capacity equal to Germanys entire current grid.
Thus the future will not be dominated by trying to bolt more renewables onto the grid for their own sake, but in using them to meet growing demand and to add resiliency and reliability.
Smart grids. The key to a more resilient, flexible, and useful grid is to operate it like the Internet, which is nodal, interactive, and highly controllable. This is where smart meters and microgrids come in, and where solar energy and batteries play a role.
An Internet-like grid will know how much power is needed, when and where, and even what "flavor" of electrons some customers prefer say, greener or cheaper. It would help moderate variations in peak demand by using software to negotiate in real-time with local and remote power sources, as well as by purchasing avoided power (temporarily cycling off air conditioners and refrigerators, but not computers and TVs). It would also reduce outage frequency through predictive analytics that anticipate maintenance before failures. And when failures occur, it would reduce outage duration by more rapidly locating, identifying, and optimally dispatching.
But thus far, spending on making the grid smarter has been dominated by making it easier for utilities to bill customers by installing smart meters that make more granular and frequent readings and then transmit that data to the utility, eliminating the old-fashioned meter reader. But just adding a communications feature to the meters is not deeply game-changing; it is the equivalent of installing a speedometer and gas gauge without a steering wheel and brakes. The game-changer is in controlling power.
Internet-like real-time control of power is mainly found at low power levels inside homes and buildings, not on the grid, and is unimaginatively labeled building automation. This is a small part of the smart-grid architecture wherein, to continue the information analogy, it is equivalent to the era of stand-alone mainframe computing before the Internet. But control of megawatt-hours, not megabytes, on big grids is a daunting technology problem.
The difference between the two power levels, controlling traffic on the Internet versus grid-power traffic, is what dictates physical material, and safety challenges. That difference is comparable to going from controlling a toy drone to a Boeing 777. Technologies are emerging that make grid-level dynamic switching and control possible, but theyll take some time yet to get deployed. In the future youll hear a lot more about new classes of power transistors and semiconductors, like gallium nitride and silicon carbide, that can manage weapons-grade flows of electrons.
Its still early days for such technology, and deployment in smart microgrids has barely begun. The countrys most successful and arguably only operational microgrid to date is on the campus of the University of California at San Diego. That 40 MW microgrid seamlessly exits the local public grid when regional demand (or prices) peak, and keeps the campus and its supercomputer lit with on-site power that includes fuel cells, solar arrays, batteries, and natural gas turbines. Notably its natural gas that supplies 75 percent of the on-site power.
Microgrids are a start but not the end game. To continue the information analogies, microgrids no more replace central power plants than WiFi networks replace Googles central computing.
Source: The American
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