Distributed generation and automated transactions will change how we produce and consume electricityDeveloping technology is like driving a race car: You push the machinery as fast as it’ll go, and if you can avoid a crash, a prize awaits you at the finish line. For engineers, the reward is sometimes monetary, but more often it’s the satisfaction of seeing the world become a better place.
Thanks to many such engineers driving many such race cars, a lot of progress is about to happen in an unexpected are: energy and distribution. The power grid’s interlocking technological, economic, and regulatory underpinnings were established about a century ago and have undergone only minimal disruption in the decades since. But now the industry is facing massive change.
What’s happening in this industry stems from technology improvements, economic forces, and evolving public priorities.
For about a century, affordable electrification has been based on economies of scale, with large generating plants producing hundreds or thousands of megawatts of power, which is sent to distant users through a transmission and distribution grid. Today, many developments are complicating that simple model.
At the top of the list is the availability of low-cost solar and other renewable sources of power. Generators based on these resources can be built much closer to customers. So we are now in the early stages of an expansion of distributed generation, which is already lessening the need for costly long-distance transmission. That, in turn, is making those new sources cost competitive with giant legacy power plants.
Distributed generation has long been technically possible. What’s new now is that we are nearing a tipping point, beyond which, for many applications, distributed generation will be the least costly way to provide electricity.
While it certainly helps, the declining cost of renewables and gas-fired electricity is not all that’s spurring this change. To be competitive, the entire distributed system will have to work well as a whole. Quite a few technological advances are coming together to make that possible: advanced control; more compact, smarter, and efficient performance monitoring with real-time feedback; ever-growing ability to extract actionable information from big data.
Amid this changing scene, a picture is beginning to emerge of what a typical electrical grid may well look like in 10 or 20 years in most of the developed world. Yes, generation will be much more decentralized, and renewables such as solar and wind will proliferate. But other aspects are also shifting. For example, the distribution network—the part of the grid to which your home and business connect—will likely become more of a negotiating platform than a system that just carries electricity from place to place. Similar trends are taking place with centralized fossil fuel production and distribution via pipeline networks.
It must be understood that decentralization is going to be neither simple nor universal. In some places, decentralization will prevail, with most customers generating much of their own energy, using solar photovoltaic and solar thermal systems. Others might use small-scale wind turbines. In regions where sunlight and wind are less plentiful, natural gas may still predominate for some time. Intertwined among all of those, a continuously improving version of the legacy grid will survive for decades to come.
Many analysts expect that grid-connected, distributed solar power will be fully cost competitive with conventional forms of generation by the end of this decade.
Ultimately, the lowest-cost form of generation will dominate. But figuring out what the lowest-cost option actually is will depend on both local conditions and local decisions.
Although not everywhere on the same level and not without some steps back, generally regulators are increasingly convinced that the burning of fossil fuels leads to significant societal costs, both from the direct exposure of those living near some power plants to their noxious emissions and from greenhouse gas induced climate change. Historically, these costs were difficult to quantify. So they were typically borne not by the producers or consumers of the energy but by the victims—for example, farmers whose crops were damaged, residents of towns close to fracking operations, and a population as a whole.
There is growing public interest in understanding the true cost of pollution and possibly shifting more of it to energy producers and possibly consumers as well. Fortunately, we now have the modeling and computational capabilities to begin to put a reasonable lower limit on those costs, which gives us a defensible way to reallocate them.
Although the best strategies for reallocating those costs are still being debated, the benefits of distributed renewable generation are already very apparent—as is the feasibility. Data collected during the Pecan Street Project, funded by the U.S. Department of Energy, indicates that a house in Austin, Texas, outfitted with solar panels typically generates 4 or 5 kilowatts during the midday hours of a sunny day in summer, which exceeds the amount of power the home typically uses during such a period.
The U.S. Department of Energy’s SunShot initiative has as its goal making solar power cost competitive—without subsidies—by 2030. (A Chinese government agency has a similar agenda.) Specifically, SunShot’s goal is to reduce the cost of distributed, residential solar power to 5 U.S. cents per kilowatt-hour by 2030; it costs about 18 cents today. Today, a 6-kW rooftop residential solar system in the United States typically costs between $15,000 and $20,000; the exact figure depends on where you live. According to data from the EIA, the average retail cost of electricity delivered by the grid in the United States is 12.5 cents per kilowatt-hour. So at 18 cents, rooftop-generated solar is not yet, on average, competitive with grid-delivered electricity. But many governments, for example U.S. state governments, subsidize the purchase of solar-power systems to make them competitive.
Meanwhile, many utilities are experimenting with alternative-ownership options. One is community solar, in which individual consumers buy a small number of panels in a relatively large, utility-scale system. They then get monthly credits for the electricity generated without having panels on their roofs. Another experiment, being run by CPS Energy, in San Antonio, uses rooftop solar, but CPS Energy owns the equipment and pays the homeowner for the use of the roof.
One challenge with distributed solar is storage. For electrical energy the obvious and most known solution is a battery, although there are other alternatives such as pump storage, flywheels and others. For storing solar thermal energy highly insulated double-wall tanks, phase-change materials are good options, and of course underground storage otherwise known as geoexchange. Incorporating non-traditional typically intermittent sources of power into the grid is not straightforward. For example, right now, the grid could not handle a changeover to 100 percent solar PV (even in areas where it would make sense, like the southwestern United States or the North African desert). The grid we have today was designed around sources whose output generally varies little from day to day.
The grid must evolve in other ways, too, and quickly. One of the most important trends, already well under way, is the increasing use of microgrids. A microgrid is a group of connected power sources and loads. It can be as small as an individual house or as large as a military base or college campus. Microgrids can operate indefinitely on their own and can quickly isolate themselves if a disturbance destabilizes the larger grids to which they are normally connected.
This is an important feature during both natural and man-made disasters. Consider what happened when Hurricane Ike hit the Houston-Galveston area of Texas in 2008: Blackouts were widespread, but 95 percent of the outages were caused by damage to less than 5 percent of the grid. The grid effectively distributed the effects of what was only modest equipment damage. (I have previously written about the blackout in Calgary and other similar events, pointing to the advantages of distributed generation).
This isolating capability of microgrids also promises enhanced cybersecurity. That’s because microgrids can help keep localized intrusions local, making the grid a much less appealing target for hackers.
When disaster strikes, whatever its cause, microgrids can limit the consequences. If it is not physically damaged, a microgrid can operate as long as it has access to a source of power, whether that’s the sun, or wind, or other source, ideally with a local energy storage.
In the long term, with the timing depending as much on economics and regulation as technology, it is quite possible that the grid will evolve into a series of adjoining microgrids. Utilities have proposed to build such microgrid “clusters” in, among other places, Chicago, Pittsburgh, and Taiwan, a tropical island where grids are prone to storm damage. These adjoining microgrids would share power with one another and with the legacy grid to minimize energy cost and to maximize availability.
In an era of adjoining microgrids that are privately owned and operated, what will become of the utility company? There are at least two possibilities. It might simply supply power to the microgrids that need it, rather than doing that for individual customers. Or it might manage microgrids and their connections with one another and to the legacy grid. Across the United States, the concept of a utility is already being reinvented in some places as more competition is introduced. Microgrids are going to accelerate that trend.
The spread of distributed generation and the rise of microgrids will also be shaped by two other factors: the expansion of the Internet of Things and the growing influence of Big Data.
Despite the hopeful vision of the future, it would be remiss however not to point out some of the challenges. These include financial ones, regulatory ones, and technical ones. And they come in all shapes and sizes.
Software will play much bigger, in fact critical role in future energy strategy.
The biggest unknown is how swiftly the regulatory process can adapt. If it can’t move quickly enough to keep up with the technology (which happens already), expect agonizingly slow change. And what if governments try to prop up outmoded technologies with subsidies? That could drag out the process further. Some politicians even argue that regulators should artificially slow the rate of change (?!).
The United States’ National Academy of Engineering recently selected electrification as the top engineering accomplishment of the 20th century. But electrification now needs to be reengineered to meet the needs and opportunities of the 21st century. This is our chance to show that we are as good as our forebears of two, three, or four generations ago at technology, regulation, public policy, finance, and the management of change in general. And to leave to posterity a legacy as fine and enduring as the one that was left to us.
The post is mainly a reprint of the article by Robert Hebner originally published in IEEE Spectrum, which also available online at: Nanogrids, Microgrids and Big Data.
Some parts were skipped and some additions and minor edits are shown in italic.
The paper version of the article has a subtitle: "Rooftop solar, micro-grids and big data will revamp how we produce and consume electricity". If "electricity" would be substituted by general term "energy", and rooftop solar would include not only photovolataic but also solar thermal, I would 100% sign under that. All benefits of the micro-grids and utilizing big data would not only stay but even enhanced. Heating and cooling take a substantial portion of residential energy use (e.g. 40-45% in USA, 60-70% in Canada) and not negligible for commercial applications either, plus domestic hot water (12-15%). Employing solar thermal technology which is much more efficient in utilizing solar energy than PV (90%+ vs. 15-20%) is most cost effective for those applications. At the same time it will significantly reduce the demand for electricity, therefore make fluctuations in the (micro) grid much more manageable, and requirement for battery storage much lower. Resistance of such system against natural disasters and terrorist attacks will be higher. Real time data collection and advanced control methods will optimize performance. Eventually, the need for centralized energy generation will be if not eliminated completely but reduced dramatically, perhaps limited to very large commercial and industrial applications. Even those, with implementing efficient energy recovery technologies, may migrate to local grids. No more transmission losses. And big Thanks from Mother Nature.