New Technologies and Approaches Will Change the Electric Grid Forever


 
6.5.13   Devon Bass, Managing Partner, Vault Energy Solutions, LLC


The old top-down utility infrastructure model will increasingly come under pressure as new technologies become a disruptive force in electricity infrastructure. Renewable energy, microgrids, and distributed generation will change the way we manage our electricity forever.

Microgrids are smaller, self-contained electricity grids with their own sources of power.  The sources of power vary, but they often utilize renewable energy such as solar or wind.  They can operate in conjunction with the main utility grids but can also operate independent of the main grid for extended periods of time; often indefinitely depending on the energy source.

The primary mandate of the utility industry is and always has been to keep the lights on.  Despite the growing trend toward deregulation and free market competition lead by states like Texas, utility infrastructure is still treated primarily like a public service rather than a consumer product; a philosophy that values stability and risk avoidance over innovation.

Bottom-up Electricity Deregulation

However, the fact that utilities have been slow to embrace microgrids doesn’t really mater.  The disruptive effects of distributed renewable energy production and microgrid adoption have been dubbed “cascading natural deregulation”.  This means that as alternatives to the main, centrally planned, power grids become more attractive, consumers will eventually choose to leave the main grid in favor of microgrids.  As fewer people remain on the grid, the fixed costs of the massive infrastructure are spread across fewer users.  This would result in higher rates which would, in turn, promote more flight to alternative grids.   Centralized utility grids will be forced to adapt or collapse under their own weight.

If this seems an unlikely occurrence, consider the fact that the price of alternative energy and renewable energy technology continues to trend down while efficiency continues to improve.  At the same time, electricity rates continue to climb in much of the U.S.   If this were to continue, at some point the two trend lines cross.  Therein, you have the makings of a paradigm shift.

The tern “cascading natural deregulation” was coined by Hawaiian Electric Company (HECO), the Hawaiian utility, and the scenario is actually playing itself out in Hawaii.   Demand for electricity from Hawaii’s central grid peaked in 2004 and has been dropping since.  At the same time solar installations have doubled each year. 

The fixed costs for Hawaii’s electricity grid don’t go down when people leave the grid.  As a result, fewer ratepayers are left to pay those costs.  Rates go up which incentivizes more people to leave the grid.  Could this be a look at the future of other centrally planned utilities around the world?

Old Technology - New Goals

Government incentives and renewable energy mandates have resulted in an ever-increasing adoption of alternative energy to meet the county’s electricity needs.  But incorporating alternative energy sources into legacy electricity infrastructures isn’t always easy and is sometimes awkward.   The result is large utility scale projects such as the expansive wind farms in West Texas which generate energy from renewable sources but transmit that electricity pretty much the same way its been done for the last 100 years.

In the Texas example, the state is relying on multi-billion dollar new high capacity transmission lines to transmit wind generated electricity hundreds of miles from West Texas to the population centers in the eastern half of the state.  The cost, of course, is borne by ratepayers.

Microgrids are indicative of another approach to alternative energy adoption.  Distributed electricity generation means decentralizing electricity production and creating the energy closer to where it is used.  While this approach lacks the economies of scale inherent in a centralized approach, it does introduce much more redundancy, local reliability, and local energy independence.

States and municipalities have become increasingly aggressive in their renewable energy goals.  A recent study concluded that New York should pursue a goal of 100% renewable energy by 2050.  California has a goal of 30% renewable energy by 2020 with a heavy emphasis on local generation such as solar panels.

The San Diego County California community of Borrego Springs is home to an experimental microgrid funded in part by a grant from the U.S. Department of Energy.   The goal is to showcase and test various aspects of microgrid technology including smart meters, distributed renewable energy generation, and energy storage.   While not completely cut-off from the main grid, the Borrego Springs micro grid can act as a self-contained island grid that can maintain power on its own should the main grid experience a power shortage.

The Future is Micro

The traditional centralized approach to electricity production and distribution has long been susceptible to the domino effect where a relatively minor event in one part of the grid can lead to cascading failures effecting large numbers of customers.  Microgrids and distributed electricity generation can firewall the grid, creating local independence and enhanced reliability among many other benefits.

For the developing world, microgrids could mean the difference between having electricity and not having electricity.   Just as the cell phone brought telecommunications to many underdeveloped parts of the world where telephone landline infrastructure was never put into place, microgrids can have a similar impact on parts of the world that lack the expensive infrastructure required to bring electricity to the masses. 

These new technologies will be disruptive because they are smaller, cheaper, better and, perhaps most importantly, they empower individuals, and communities.

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