Grid Transformation
The promise of technological advances revolutionizing the age-old electric utility model has been around for decades, but this time that promise might just become reality.
April 1, 2020
The promise of technological advances revolutionizing the age-old electric utility model has been around for decades, but this time that promise might just become reality.
Smart Grid used to mean better meters on the home and better sensors in the field; both of which would report real-time data back to utilities to improve reliability, efficiency, and operational decision-making metrics. Changes in the way power is generated, advancements in power storage, and bi-directional smart devices have drastically expanded the scope of Smart Grid and led to a whole new set of renewable vocabulary like ‘microgrid’ and ‘distributed energy resources’ (DERs).
Our legacy grid design was pretty simple, at least conceptually. Large (mostly fossil fuel) power stations would generate power, which was stepped-up in voltage for transmission to population centers, where the voltage was stepped back down before reaching the end customers through smaller distribution lines. This one-way flow system worked well for a long time. In the U.S. today, nearly two million residential solar systems have been installed, one million electric vehicles are on our roads, two-way smart thermostats can shift customer load with advanced software, and the energy storage market is expected to grow 10x over the next 5 years.
Pilot programs have already demonstrated the ability to dispatch these resources to the grid but are still small compared to the potential of coordinating across large pools of DERs. For example, GTM Research calculates the temporary suspension of EV charging during peak hours could reduce peak load by 1.6 GW, or about the equivalent of one large base load natural gas power plant. Vehicle-to-grid and residential battery-to-grid dispatch capabilities offer a decentralized approach to solving renewables intermittency and load shifting issues.
An interesting byproduct of grid transformation is the broader adoption of the ‘microgrid’. The exact definition of microgrid can be debated and/or elusive, but the official Department of Energy definition is “a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that act as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island-mode.”
Microgrids are established for any number of reasons, ranging from ensuring resiliency for critical loads to efficiently providing power to geographically remote locations (islands or very rural towns). The U.S. now has more than 2,000 microgrids, as municipal, industrial, and military load centers have invested significant time and money in recent years. A large majority of these systems have a capacity of less than 5 MW, but microgrids of 25+ MW are occasionally established.
Microgrid growth has been a story of both demand pull and supply push. On the demand pull side of things, the increased frequency of natural disasters like wildfires and hurricanes has served as a catalyst for microgrid origination, especially in places like California, which now faces strategic blackouts to mitigate wildfire risks. On the supply push side of the table, inexpensive DERs (solar, wind, CHP, fuel cell, etc.), paired with the advancement of storage and enabling technologies, are all making the microgrids operationally and economically feasible in more locations.
Microgrids, as the name would suggest, account for only a small portion of the renewable energy growth story, but they serve an important R&D and proving ground function for ways new technologies might be applied more broadly to the ‘macro grid’. Intermittency can become a serious issue when renewables account for more than 25-30% of the generation mix, as recently demonstrated in Northern Germany, and moving beyond these issues will likely be accomplished with the lessons learned in microgrid environments.
Microgrids and bi-directional flows have been, and will continue to be, disruptive to the traditional utility model but this isn’t to say the role of the traditional utility is obsolete. Rather, it looks like tech-enabled solutions from the start-up community are going to force utilities and their regulators to rethink old models in favor of new methods and structures to transition into a 21st century grid.