The United States electric power industry, like so many others, has had to adapt to the unprecedented headwinds fueled by the ongoing coronavirus pandemic. Chief among these challenges is the patchwork of lockdowns that has resulted in millions of American businesses suspending operations and millions more citizens staying at home.
The immediate effects on the U.S. power sector are plain to see. Similar to emerging global trends, our communities’ compliance with social distancing measures are contributing to a precipitous decline in domestic energy consumption. During one week in April of this year, aggregate electricity demand sank to a 16-year low. The EIA expects that, by the end of 2020, U.S. retail sales of electricity in the commercial and industrial sectors will be down 6.5%.
The U.S. electricity supply chain has so far proven capable of withstanding the disruptive effects of slumping electricity demand. And some leading industry experts have even insisted that the U.S. electrical grid is not seriously threatened by the coronavirus pandemic. However, the national electrical power system is not out of the proverbial woods yet.
This is due in large part to the fact that a not insignificant portion of the power system’s infrastructure – particularly transmission and distribution assets – is approaching the end of its useful life, an increasingly hazardous liability that in 2017 earned a D+ from the American Society of Civil Engineers (ASCE).
U.S. regulators, power producers, grid operators and other stakeholders accurately see this perennial issue as a vulnerability that, unaddressed, will impair load management and increase avoidable costs, ultimately weakening grid resilience and reliability. This raises the specter of more frequent and severe blackouts, brownouts, and other symptoms of power system instability.
This is bad for business. And absent swift concerted action, the so far accommodable impacts of the coronavirus upon the U.S. electric grid – obligatory maintenance deferrals, uncertain demand forecasts, supply chain disruptions – may prove ruinous in the long-term as they exacerbate this long-standing, systemic deficiency.
It is therefore imperative that utilities and other players in the U.S. electric power sector consider all opportunities for grid stability enhancement.
Our building infrastructure is a good place to start. Indeed, the Lawrence Berkeley National Laboratory found that buildings account for up to 75% of U.S. electricity consumption, making them the largest source of load flexibility. Accordingly, both utilities and policymakers would do well to designate these already built assets as part of their respective efforts to secure and strengthen the electric grid.
Grid-interactive efficient buildings (GEBs), otherwise referred to as “smart buildings,” are facilities that use sensors, data analytics, automated controls and other smart assets to integrate and optimize the interaction between the grid and a range of distributed energy resources (DERs), dramatically improving grid management and efficiency. Smart buildings not only have the opportunity to support grid operations, but also improve the working conditions inside the building – something clearly necessary in the post-pandemic world. Yet, how can these smart building assets be made available for use by the grid operator?
Energy efficiency service companies can perform retrofits and other technological upgrades that improve a building’s ability to communicate its operating conditions to grid networks, respond to grid operators’ control commands and otherwise coordinate load management with power providers. These retrofits are done with established technology, and when completed as part of a comprehensive building retrofit, often provide sufficient savings to cover the cost of the project. The default financing mechanism – energy savings performance contracts (ESPCs) – is designed to assure the performance of the building to meet the expected outcomes.
Indeed, the true, longer-term threat to the power grid is not necessarily the pandemic itself, but rather it is how our federal government especially, as well as businesses, investors, and state and local governments, handles the ensuing economic recovery.
In the event Congress backs a “green recovery“ with an infrastructure focus, industry stakeholders can expect to see grid power source diversification with increased variable sources, furthering the need for a deep bench of grid resources to add control. The emergence of GEBs and similar technologies – especially in communication and control systems – has drastically improved the U.S. power system’s ability to utilize this resource.
In other words, our improving ability to coordinate and integrate the production and use of electrical power yields similar improvements in power system “flexibility,” or the grid’s capacity to accommodate more variable sources of demand (e.g. electrified space heating and cooling systems, automotive vehicles and industrial processes) and supply (e.g. solar and wind farms; grid-scale battery storage).
Policymakers must recognize that smart grid investments that accelerate the modernization of the complete electrical system must happen across many fronts. Research and development activities, such as those underway at the Energy System Integration Facility and the Flat Irons Campus at the National Renewable Energy Laboratory (NREL), build the necessary foundation. Implementation of advanced load and source controls through system and building retrofits establish the capability. However, the creation of policy pathways, primarily through rate structures, is needed to establish the financial incentives for it all to work together.
Ultimately, GEBs are simply one of many perfectly realistic options for addressing the present and future needs of the U.S. electric power sector. That much was well-understood before COVID-19. What the pandemic has done, however, is underscore the importance of a resilient and reliable grid. To be sure, it would be difficult to imagine any pandemic response, let alone post-pandemic recovery, without this necessity.