Staying Ahead of Renewables

Renewables

by Cameron Etheridge, City Power Development

For the past century, electric utilities have been operating under a ubiquitous paradigm when it comes to power generation and delivery. This historically steadfast landscape is shifting quickly and creating an upheaval in the bedrock of the power industry. With a grid that is designed to produce power on demand at centralized locations and deliver it where it is needed, small disruptions have large consequences.

The rapid, wide-scale adoption of utility-scale wind exposed a weakness regarding the flexibility of the grid to respond to variable, intermittent and unpredictable power generation. Although not a new realization, the popularity of solar has helped bring focus to these challenges associated with renewable deployment on a large scale. The Edison Electric Institute’s paper on disruptive challenges highlights this in response to the ever-increasing rate of solar adoption at the grid edge. This paper outlined the possibility of a utility “death spiral” if proper and timely actions are not taken. In addition, three papers released by Morgan Stanley this year support distributed solar with storage while seeming to turn a cold shoulder to the large, historically reliable investor-owned utilities.

Utility Death Spiral?

Regulations that were put in place to protect consumers from the power companies, once thought to be natural monopolies, are being used more frequently by the same power companies to protect themselves from the competition of customers who generate a portion of their energy consumption with small wind or solar equipment.

This has been the case in Arizona with a fee’s being placed on net metering customers. Moreover, customer generators threaten utilities because of archaic billing practices at most utilities. Customers are charged the same price for a unit of energy irrespective of the cost of acquisition or delivery of that energy. Because of the many regulatory and other bureaucratic impediments, a complete overhaul of traditional billing structures is unlikely to come soon enough to address this before utilities are materially affected. This impact will be reflected in costs passed on to ratepayers; those not choosing to become customer generators will pay a disproportionally large amount of the fixed costs associated with power delivery. These rising costs will incentivize rate payers further to become customer generators, thereby perpetuating the “death spiral” prognosis.

The Power Industry Response

Though varying in scope and application trajectory, one underlying theme permeates the power industry’s response to this threat: energy storage. Large-scale energy storage is not a new idea. Before 1900, several cities had compressed-air storage systems. Paris installed a 1.5-MW compressor plant and distributed compressed air through pipes to customers. More recently, the California Public Utilities Commission is leading the way with energy storage mandates of 1.325 GW required by the end of 2020 for its three major utilities. Other states have begun to follow with tailor-made policies such as the New York State Public Service Commission’s calling for utilities to become distributed system platform providers (DSPPs). Unlike the California mandate, which will increase grid-level storage, the DSPP will incentivize the installation of storage behind the meter. Although not all states are experiencing the same level of challenges faced by California and other mandate-oriented states such as New York and Hawaii, they should prepare now for the inevitable movement toward battery storage.

As San Diego Gas & Electric Senior Vice President of Power Supply James Avery said at Grid Edge Live 2014, “California is a microcosm, and what we are experiencing now are things that you (all other parts of the country) will experience in the future.”

Energy storage can provide the flexibility the grid needs to ensure a dependable power supply. Storage can be used as a load during low usage times, soaking up and storing “extra” energy. This allows generation units to run at peak efficiency as opposed to curtailment of those generation resources. The energy stored then can be deployed as generation during peak periods instead of using dirty, inefficient peaking generators. This can improve efficiencies across the entire system with benefits to all stakeholders-monetary and environmental.

Battery Storage at the Leading Edge

Many options exist when considering grid-level storage solutions: compressed-air energy storage, pumped hydro, thermal storage, hydrogen storage, flywheel systems and the ever more en vogue battery storage, to name a few. The quick response and precipitously falling price point of batteries make them ideal to handle the increasing need for frequency and voltage correction made obvious by the system challenges presented with widespread wind and solar production. The need for a quick response was formalized by Federal Energy Regulatory Commission orders 755 and 784. With geographic limitations that restrict the possibility of compressed-air energy storage and pumped hydro, batteries emerge as the ideal solution to lead the charge for energy storage. The locational and scalable nature of battery storage systems also has an added benefit of replacing costly and needed upgrades to a struggling electric infrastructure that the American Society of Civil Engineers has given a grade of D+ in its 2013 report card.

Although too early to tell what the future may hold for large utilities or the new features that the U.S. electric infrastructure landscape may develop, energy storage on distributed and utility scale will be a major factor in shaping what happens when a light switch is flipped.

Cameron Etheridge is director of power systems and engineering at City Power Development, based in Columbia, Missouri. The energy services company devises energy and infrastructure solutions for municipalities and energy delivery companies, cooperatives and investor-owned utilities. City Power does analysis, design, installation, finance and field asset management all under one roof.

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