To bring on the amounts of variable wind and solar energy and plug-in vehicles needed to meet our vast energy challenges, we will need a smart grid capable of managing much more complex power flows. Outside of some progressive exemplars, however, don't expect leadership to come from the utility sector. Instead, changes will be forced by new policies and players, including some you might not expect, like big box retailers.
Those were my key takeaways from the stellar line-up of smart grid speakers at the Discover Brilliant sustainable technology conference in Seattle this week. David has been blogging away from the conference, so I don't want to go over too much of the same turf. Instead I'm going to synthesize what I heard across a number of sessions and offer my interpretations.
A few statistics from the conference underscore the sluggishness of the electric utility industry when it comes to advanced technologies:
- Only 60 percent of the transmission system has Supervisory Control and Data Acquisition (SCADA) systems, the basic technology to find out what is happening on the wires. Only two percent of the local distribution network has SCADA. (via Steve Pullins of the Modern Grid Initiative)
- After 15 years in the marketplace, even relatively simple smart meters serve only one-third of U.S. power customers. (via Mike Burns with Itron)
- The utility industry spends one-tenth of one percent of its revenues on R&D, less than any other major U.S. industry. (via Terry Oliver with Bonneville Power Administration)
So if the utilities are going to drag their heels, who is going to advance the smart grid?
For the past several years I've been hearing about the Galvin Energy Initiative. Bob Galvin of Motorola asked a question: "Why can't the grid supply perfect power?" To get at exactly how to supply perfectly reliable power, he engaged two smart-grid veterans from Electric Power Research Institute (EPRI), Kurt Yeager and Clark Gellings. The set of answers they developed points strongly to a decentralized power grid.
"Galvin nailed it," noted IBM Energy & Utilities Global Research Leader Ron Ambrosio in the "Brilliant Grid for North America" session. "You focus on reliability where you need it, not 99.9999 percent reliable over the whole grid but at the end use."
The backstory is that EPRI has long promoted visionary smart-grid technologies, which utilities have been slow to adopt. So Yeager and Gellings are working on an end run around the utils. Galvin is developing localized grid systems from building to neighborhood level. A pilot microgrid at the Illinois Institute of Technology will include local generation and energy storage.
I put a scenario to Gellings, another panelist in the session, that Galvin has long suggested to me: Say a new development is being constructed. Instead of being served by a utility, it is supplied electrical power by an independent energy services company. The ESCO operates a local smart grid that supplies power from localized generation. At the portal of the community there is one intersection point between the local and big grid where surplus electricity can be transmitted out and power drawn in, when economical and needed. Gellings confirmed that is indeed one of the potentials of Galvin.
"We will always have a bulk power system," Gellings said. The big grid can supply low-cost power and balance intermittent renewables. But there will be many more localized grids, he said.
Ambrosio compares this trend to computing. At one point, he noted, even IBM thought central mainframe computing was going away with the rise in distributed computing. Instead, central and distributed networks now sit beside one another and interact.
Steve Pullins of the Modern Grid Initiative, a U.S. Department of Energy effort to accelerate the smart grid, noted "a diverging gulf between utilities and consumers." That is evidenced by what Pullins called "grid divorce." Only 185,000 buildings nationwide have pulled out of the grid, but those numbers have grown 33 percent annually for the past 10 years. Extrapolating that trend, Pullins noted that there will be four million in 10 years and 53 million in 20.
"Key innovations in the industry are happening at the edge of the network," Pullins said. "They are not driven by federal research or the utilities, but by consumer electronics and service companies."
Later, in the hallway, I asked Pullins, whom I have found to be one of the best sources on grid trends, where he thinks the change drivers will emerge. Look to Wal-Mart, Costco, and Target, he said. Those big box retailers have small margins and big energy costs. With increases in grid power costs -- double in some parts of the U.S., recently -- and improvements in distributed generation economics, they are seeing bottom-line interest in new models for energy. So they will generate more of their own power and pull from the grid when it makes economic sense, Steve said.
Indeed, major retailers are proving to be one of the best markets for large-scale solar photovoltaic installations. Despite many justified complaints one might have about the big box model, its very scale and market power are set to play a central role in breaking utility monopolies and pushing toward localized grids.
Some progressive utilities are getting in front of the curve, and Discover Brilliant prominently featured a couple of them -- Pacific Gas & Electric and Austin Energy. Janice Berman, PG&E's lead for customer generation and emerging technologies, noted the utility particularly sees opportunities in three areas:
- extending advanced metering to all customers,
- running plug-in hybrids vehicle-to-grid as energy storage resources, and
- engaging in whole community planning.
She gave an example of working with developers who planned to pipe wastewater 16 miles from a new subdivision. The utility suggested on-site wastewater treatment, saving 95 percent of the energy.
PG&E is already facing challenges of mass-scale intermittent renewables. Berman said the cutting edge is all-solar-home developments now emerging in northern California. The grid there needs to be configured to ship power out during the day and import at night. California's solar goals, 3,000 megawatts in the next 10 years, could force the utility to reconfigure some existing grids, she added. "We have to design a smarter transmission and distribution system. We will need a lot more communications infrastructure."
Austin Energy, meanwhile, is a national leader in the movement pushing car makers to produce plug-ins. They are also working with A123 Systems on converting standard hybrids to plug-in. That is tied to a utility goal for 30 percent renewables by 2020. Tax credits have already "rained wind projects on Texas," Austin Energy Chief Strategy Officer John Baker told a Smart Grid/Renewables session. By next December, the Texas grid will have problems absorbing all that wind power. While major new transmission investments are needed, "there are answers downstream of the meter as well as across the grid," Baker said. One is a high level of coordination between wind output and end use through automated demand response systems. Another is charging plug-ins at night when wind tends to blow in Texas.
But progressive utilities such as these are relatively rare, said SAIC Assistant Vice President Todd Davis, who works extensively with power companies in the Northeast. California, the Northwest, parts of the upper Midwest, and Austin are the notable geographies where utilities are integrating climate considerations with demand management and renewables. Elsewhere, even where these pieces are on the radar, utility action occurs in a fragmented manner, Davis said. "We have a huge integrated technology opportunity," he noted, but only a few clear leaders.
Outside the U.S., one clear leader is Denmark. Pullins pointed out that the country now supplies 32 percent of its power from renewables, primarily wind and biomass. So it has moved from a standard centralized control system into a series of local cells that are managed in a microgrid approach.
Ambrosio added that mass renewables set up "an absolute requirement for a much smarter grid" that can manage power variability with demand response.
Andy Frank of U.C.-Davis, godfather of the plug-in movement, made a similar comment: Plug-ins could drive renewable energy. Renewable energy would pay back investments four times faster competing with gasoline than competing with other grid power. To feed power back into the grid, which many observers see providing a potential cash stream offsetting the cost of plug-ins, "The chokepoint is an intelligent grid, so the grid can tell the car, 'I need a little power now.'"
The utility industry is notoriously conservative. As Gellings noted, "Utilities are very fast to be the second or third." But new competitors will emerge that provide services such as 100 percent reliable power and clean energy. Much the same way new distributed telecommunications companies emerged to beat down Ma Bell, these new grid players will break the standard utility model. Utilities that hope to maintain their position will do well to emulate leaders such as PG&E or Austin Energy, or be left in the dust by dynamic new energy providers.
EPA affirms California’s right to set tougher automobile emissions standards
Daimler launches first German hybrid car
One man’s plan to re-create suburbia, sans cars
Comments View as Flat
GreyFlcn Posted 4:52 am
21 Sep 2007
Ah, that Mazza
Assuming you are this Patrick Mazza. Hey there.
Before over on you were rather speculative on the impact of N2O on biofuels.
Turns out the nobel laurete who developed the ozone hole theory has expanded on this, and actually says the N2O issue is far more serious than previously thought in a report released today.
Permalink
kayser Posted 5:41 am
21 Sep 2007
Still don't understand Andy's comment
Andy Frank of U.C.-Davis, godfather of the plug-in movement, made a similar comment: Plug-ins could drive renewable energy. Renewable energy would pay back investments four times faster competing with gasoline than competing with other grid power.
I remain mystified by this comment. Suppose a bunch of people trade in their gasoline cars for plugins. That doesn't change the fact that renewable electricity generation is competing with coal/natural gas generation.
Does anyone have an interpretation of that comment that makes sense?
Permalink
David Roberts Posted 6:42 am
21 Sep 2007
Kayser,
We're both confused, because I'm confused about why you're confused.
Here's what Frank's getting at, as I interpret it:
Solar volataic power beats any fuel-based energy (coal, gas, oil, whatever) given a sufficiently long time horizon. The cost of solar energy is capital + maintenance, and that's it. The cost for fuel-based energy is capital + maintenance + fuel. That third cost may go up, it may go down, but it never goes away, and sunlight is always free.
So. Solar wins in the end. The question is how long. As of now, that time horizon is too distant to tip the balance for electricity investors, for the most part.
Coal and natural gas are fairly cheap, so it takes solar a long time to push its cumulative average electricity costs below theirs (particularly since coal and gas don't have to pay for the extra transmission central plants need).
However, petroleum is more expensive than coal or gas (and rising). If solar generation were competing with oil refineries (i.e., powering transportation) rather than coal plants, it would pay itself back (i.e., provide lower per-mile transportation fuel costs than petrol) faster than it would against coal or gas plants.
Make more sense? Or, um, less.
grist.org
Permalink
Kristina & Jason Makansi Posted 7:01 am
21 Sep 2007
smart grids in a regulated industry
Whenever someone asks me about the smart grid, I always like to remind them that electric utilities, particularly at the transmission and distribution level, are still highly regulated. Even in deregulated states, the movement is reversing towards re-regulation of electricity. The business model of a regulated utility is to invest in something and be allowed a reasonable rate of return on that investment by the regulator, the public utility commission (PUC). For the most part, utilities don't much care what they invest in, as long as they can be assured of a predictable rate of return.
So, you want a smart grid? Lobby regulators to compel utilities to invest in a smart grid. You want an advanced electric meter at every home and business (I do, and I advocate both smart grids and advanced meters in my book, Lights Out: The Electricity Crisis, the Global Economy, and What It Means to You.)? If the PUC allows the utilities a regulated rate of return on the investment, it will happen. In fact, it's in the Energy Policy Act of 2005 that the utility is obliged to provide a smart meter to anyone that demands one.
I know someone will accuse me of being an apologist for the utility industry, but the situation we face is not all their fault. It's a viscious circle of competing interests including the state PUC, the utility, and a generally disengaged consumer base...consumers rarely pay attention to their electricity unless, of course, they've just experienced a loss of service or their rates are escalating abnormally.
And whoever said that EPRI will try to do an end-around the utilities is surely smoking something strong. EPRI's budget is paid for by a percentage formula based on the member utility's annual revenue. I don't know what an end run around the hand that feeds you would look like but that poster from the 1960s, Your Problem Is Obvious sure comes to mind.
Pearl Street::Jason and Kristina Makansi Read Lights Out reviews
Permalink
sunflower Posted 7:41 am
21 Sep 2007
Andy's plug for plug-in
If the car engine converts crude at 15% (probably far too generous) then a barrel of oil will yield 240 kWh(p). At $82/bbl. that is $0.34/kWh. Easy competition.
Solar HIPV at $1/W and 25% capacity with a 25 year 15% recovery factor is about $0.07/kWh(e) fixed (no price escalation). Wind could even be cheaper.
Now, if you consider the future prices of oil for the next 25 years then I suspect renewable electric transportation will be much more than four times cheaper than oil.
Permalink
sunflower Posted 8:09 am
21 Sep 2007
$1/W HIPV with 2% O&M = $0.08/kWh
Permalink
WWAGD?! Posted 8:18 am
21 Sep 2007
Free Hi-Fi for all!
I was visiting down in Portland and my friend was interested in getting some broadband -- he's an old fashioned modem kind of guy right now. I walked him through the options and then another friend of ours, Justin, mentioned that Portand has a public wifi (not Muni) made up of individuals who sponsor nodes for free...his powerbook picked up a weak but fast 768K signal in Brian's backyard.
So how about this: at the point we get some houses with solar and wind that can generate hydrogen, they start putting a hose on the front yard for anyone who wants to "gas up" -- because it won't cost them an extra cent to do so.
Public Hi-Fi
John Bailo
Sutext:
Permalink
Patrick Mazza Posted 3:04 am
22 Sep 2007
Responses
Andy Frank was simply saying that gasoline sells for around four times more than electricity for the equivalent energy unit, so if you use a solar panel to fuel a plug-in the payback will be four times faster.
Gellings and Yeager are not doing Galvin under the EPRI banner but independently. And I agree that getting smart grid technologies in under the regulated ratebase is effective.
I hesitate to mix up the biofuels stuff I do with this post - all I can say is I'm paying close attention to nitrous oxide - It's no laughing matter! And emissions very much depend on agronomy and even specific fields.
Patrick Mazza
Permalink
mkayser Posted 7:50 am
22 Sep 2007
You made it clearer but I disagree
The disagreement here is in the definition of "payback time."
I would define it as "time it takes till a method becomes cheaper than the cheapest available alternative."
Your definition (I think) would be "time it takes till a method becomes cheaper than what I am doing now."
We agree about all the facts, so there's nothing more than a definitional thing going on.
For example, if I am propelling my car with really expensive rocket fuel, and then I switch to solar-powered plug-in EV, I could claim that my "payback time" is really low. But I'd say the baseline was a bad baseline. Similarly in this case: The baseline of "gasoline" is bad because it's not the cheapest alternative. The cheapest, given our assumptions, is EV powered by coal. (Cheapest in terms of dollars, today, not cheapest in terms of "plus a certain estimate of internalized externalities." I know how you feel about how this changes the coal picture.)
I think of payback time basically like opportunity cost, whereas you're treating it as a way of comparing exactly two things. No problem. But, if you stick with your definition, then I stop caring about payback time. For me the only relevant measure is opportunity cost.
Permalink
sunflower Posted 8:55 am
22 Sep 2007
Slippery slope between $20/bbl and $83/bbl.
Oil has a high fuel cost. Coal has a high burner cost. Different animals. Solar thermal collectors are cheaper than new coal burners and solar power is cheaper than oil car power, and getting cheaper.
It is not difficult to visualize net present worth. Put the principal in the bank and draw down, year by year, while collecting interest, to pay more each year for energy and inflation, until the principal is gone in 25 years.
Most people like simple payback time frames sans variables. Oil or solar is like renting or buying. The rent for oil pays for the ownership of solar in less than four years. Then it is a twenty year free ride.
Permalink