India, with its enormous and rapidly growing population, has a voracious appetite for electricity. Until recently, that appetite has been met by building more and more coal fired generating plants. Coal was cheaper than any other power source. So what if the emissions from all those coal plants slowly poisoned the population? India was on a mission to bring its citizens all the conveniences of the modern world and coal was the answer.
Unhappy with any of the available methods of solar storage, a German inventor and engineer has put his favorite pastime of tinkering to good use. While others are attempting to build a better battery, Wolfram Walter is instead building a better way to use the batteries he already has.
It’s not a long stretch of the imagination for Walter. The inventive German has already modified his bicycle and his Porsche, upgrading both of them to EVs. Featured on PRI’s The World, Walter is described as “a man obsessed with things electric.”
With Governor Jerry Brown’s recent call for 50% of the state’s energy to come from renewable sources, California’s power grid operators are focusing on meeting the emerging challenges this call brings to the energy industry.
Meeting at the California Independent System Operator (ISO) headquarters in Folsom recently, the ISO Board of Governors approved a blueprint for further greening the power grid. This blueprint, a document entitled, Pursuing a Strategic Vision for a Sustainable Energy Future, illuminates changes required to the electricity landscape and describes the ways in which California’s grid operator can meet Governor Brown’s call for more renewable sources.
Path 26 of Southern California's Power Grid. From wikimedia commons.
Steve Berberich, ISO president and chief executive officer said in a statement regarding the new document, “This strategic vision outlines how the ISO will respond to a rapidly changing electric system.” Continuing, Berberich explained, “We will keep our focus on reducing carbon, lowering costs and working collaboratively for everyone’s benefit, while maintaining a reliable grid.”
Richard Maullin, Chair of the ISO Board, noted that the vision statement is necessary because of the speed at which the energy industry is changing. Challenges are arising from increasing the amount of renewable energy that is integrated into the power grid, Maullin noted. This includes the rising incidence of overgeneration, or producing excess power at times in the day when it’s not needed.
Maullin stated, “The strategic vision summarizes the opportunities and challenges facing California and the West in the ongoing transition to a low-carbon electric grid, through the integration of more renewable energy generation into our power mix.” He continued, “The vision statement emphasizes strategies for matching supply with energy demand and coordinating usage to match energy production, and the benefits of enhanced regional cooperation for assuring grid reliability along with carbon reduction.”
Operating one of the largest power grids in the world, the California ISO network of high-voltage transmission power lines is supported by a competitive energy market and comprehensive grid planning. Partnering with about a hundred clients, the ISO is a nonprofit public benefit corporation, and states that it is dedicated to the continual development and reliable operation of a modern power grid for the benefit of its consumers.
“Recognizing the importance of the global climate challenge,” reports California ISO, “the ISO is at the forefront of integrating renewable power and advanced technologies that will help meet a sustainable energy future efficiently and cleanly.”
Click here to read the ISO report, “Pursuing a Strategic Vision for a Sustainable Energy Future”.
The future in which power company customers transitioning to solar electricity generation can choose to either maintain grid connection or cost-effectively generate off-grid has arrived. The implications of this reality, however, are only just beginning to dawn.
Rising on the horizon of a new solar energy era, concerns for stranded assets are keeping power company stakeholders up at night. Equally disconcerting, low- and fixed-income electricity consumers with no financial ability to upgrade to solar will find themselves unable to handle higher utility bills as electricity prices increase, due to increased grid-defection.
Only with an informed roadmap of the economic implications of America’s rising love affair with solar energy, can we navigate a socially just and economically viable way forward. The Economics of Load Defection, a new report released today by Rocky Mountain Institute (RMI), offers this roadmap.
Noting that retail prices for grid electricity are climbing while costs for solar PV and batteries are declining, The Economics of Load Defection projects the coming electricity load and revenue loss that utilities could well face in the coming 10-15 years. Implications for utility companies and regulators are clearly detailed in the new report, as well as possible paths forward.
solar-plus-battery systems are expected to play a major role in America’s future electricity grid. But exactly what that role will be is not yet clear. Retail pricing structures, utility business models, and regulatory frameworks are all evolving at a steady pace, and outcomes of these evolutionary processes will largely determine which trajectory the grid will follow into the rising solar energy era.
As the report authors point out, solar-plus-battery systems are increasingly becoming a cost-effective option for property owners. And, as these utility customers determine and adopt economically optimal solar energy configurations, their dependence on the grid for meeting electricity needs decreases significantly, while solar PV rises to supply the majority of their needs at significantly reduced cost. Although this sounds alarmingly like an S.O.S. from a sinking ship, the report authors offer this for reassurance:
“While the presence of such customer choice has important implications, the number of customers who would actually choose to defect is probably small. The far more likely scenario is customer investment in grid-connected solar-plus-battery systems. Since such systems would benefit from grid resources, they could be more optimally sized, thus making them smaller, less expensive, economic for more customers sooner, and adopted faster. More specifically how system configurations and economics would evolve over time, and what magnitude of customers, load, and revenue that could represent, are the focus of this analysis.”
James Mandel, RMI Principal and report author notes, “These findings should be compelling for customers and technology providers.” Mandel continues, “No matter how expensive retail electricity gets in the future, customers that invest in these grid-connected systems can contain their electricity costs at or below a ‘peak price,’ yielding significant savings on their monthly utility bill.”
“This is not all risk,” explained RMI manager and report coauthor Leia Guccione. “Because these solar-plus-battery systems are grid-connected, they can offer value and services back to the grid. We need not see them only as a threat.”
Nevertheless, exploring the implications of increased load defection, the report points out that “even if only a fraction of customers adopt such systems, utilities could face lost kWh sales from central generation, potentially undermining revenue needed for ongoing grid investment and maintenance. For example, in the Northeast United States, by 2030 maximum residential and commercial load defection could total 140 million MWh and $35 billion per year.”
In reality, however, the report authors appear to favor utility company adoption of solar-friendly regulatory reform and solar energy grid-connection strategies as a way of slowing the arrival of the inevitable death of the grid. According to the report, even the prevalent “net energy metering” (NEM) strategies and more recently proposed “fixed energy charges,” are not strong enough measures to control ultimate load defection:
“Net energy metering is a contentious yet prevalent policy that has successfully supported distributed solar PV’s growth in the U.S. Some argue that it hastens load loss from the grid (net-metered solar PV customers quickly reach effectively zero net grid purchases) and that abolishing net metering will preserve grid load.
Our findings suggest that eliminating net metering merely delays inevitable significant load loss. Grid-connected solar-plus-battery systems will gradually but ultimately cause a near-total load loss even in net metering’s absence. However, fixed charges—which some utilities have recently proposed—don’t ‘fix’ the problem. Similar to our “with” and “without” NEM scenarios, residential fixed charges would likely alter (i.e., delay) the economics for grid-connected solar and solar-plus-battery systems, but likely wouldn’t alter the ultimate load defection outcome. Customers might instead wait until economics and other factors reach a tipping point threshold and more dramatically “jump” from grid dependence to off-grid solar-plus-battery systems that offer better economics for electric service.”
The major findings reported in The Economics of Load Defection are as follows:
• Solar-plus-Battery Systems Rapidly Become Cost Effective
From the utility customer’s economic perspective, a grid only system configuration evolves in the near term to grid-plus-solar, and then to grid-plus-solar-plus-batteries in the longer term. The report states, “Grid-connected systems of this analysis become economic for customers much sooner, with substantial utility load loss well within the economic life and cost recovery period for major assets. Smaller solar-only systems are economic today in three of our five geographies, and will be so for all geographies within a decade. New customers will find solar-plus-battery systems configurations most economic in three of our geographies within the next 10–15 years.”
• Solar PV Supplants the Grid Supplying the Majority of Customers’ Electricity
The utility customer initially receives the majority of his electricity supply from the grid. “Over time as retail electricity prices from the grid increase and solar and battery costs decrease, customers logically reduce their grid purchases until the grid takes a backup-only role. Meanwhile, solar-plus-battery systems eventually provide the majority of customers’ electricity. For example, in Westchester County, NY, our analysis shows the grid’s contribution shrinking from 100% today for commercial customers to ~25% by around 2030 to less than 5% by 2050. Inversely, solar PV’s contribution rises significantly to make up the difference.”
• Potentially Large kWh Defection Could Undermine Revenue for Grid Investment Under Current Rate Structure and Business Models
The report authors estimate that the grid requires an approximate investment of $100 billion a year, or $2 trillion between 2010 and 2030. This annual investment is expected to be recovered through electricity sales revenue. They point out, however, that a large impact on system economics can come from a relatively small decline in kWh sales revenue. “Notably, our analysis shows that grid-connected solar-plus-battery systems become economic for large numbers of customers, and those systems have the potential to supply greater and greater portions of customers’ electricity. Assuming customer adoption follows optimal economics, the magnitude of potential kWh defection from the grid is large.”
As an example, the report projects what the maximum possible kWh sales erosion might be in the U.S. Northeast by 2030, only 15 years away:
Residential:
• ~58 million MWh annually
(50% of utility residential kWh sales)
• 9.6 million customers
• $15.4 billion
Commercial:
• ~83 million MWh
(60% of utility commercial kWh sales)
• 1.9 million customers
• $19.4 billion
While implications from the above findings could be very large, the report also recognizes emerging opportunities. Although grid-connected customers are projected to represent significant electricity load loss, the customers’ grid-connected solar-plus-battery systems “can potentially provide benefits, services, and values back to the grid, especially if those value flows are monetized with new rate structures, business models, and regulatory frameworks.” Crucially, grid-connected customers are projected to maintain their connection to the grid, as long as grid defection isn’t encouraged by penalizing charges and/or changes to retail electricity price rate structures.
Participants in the electricity system market and other stakeholders are facing profound impacts which, according to the report authors, come with the following considerations:
• For customers that invest in solar PV and solar-plus-battery systems, the emergence of choice is good news.
Report analysis suggests that, “with smart solar-plus-battery investments, customers could see peak pricing emerge, insulating themselves from rising prices for grid-supplied electricity.” However, traditional grid-supplied customers would see higher pricing from rising retail prices, and defected customers (off-grid) would face the necessity of larger, more expensive stand-alone solar-plus-battery systems.
• For owners and operators of central generation and transmission (such as independent power producers and merchant power plants), report findings are likely bad news.
The report analysis predicts that the decline of sales from central generation will accelerate with the adoption of solar-plus-battery systems, and the risk of stranded assets is real. As noted in the report, “Existing assets still within their economic life and cost recovery period will serve a smaller and smaller remaining load, requiring price increases to cover costs and returns. Meanwhile, assets in the planning pipeline won’t see the future demand to justify their capacity and generation output.” Reductions in peak price spikes are also likely in deregulated markets, and solar-plus-battery systems are additionally expected to encroach on markets for ancillary services.
• For distribution grid operators (such as wires-only utilities), the emergence of distributed solar PV and batteries is good news.
Distribution grid customers with solar and battery systems are anticipated to provide value to the grid including upgrade deferrals, congestion relief, and ancillary services. However, the report notes that in order to fully capitalize on these opportunities, new business models, pricing schedules, and regulatory reforms need to evolve.
• For vertically integrated utilities, these systems will strain current business models, and adjustments will be necessary.
New business models are needed to fully capitalize on the rising adoption of solar PV and batteries. The report authors anticipate that similar challenges will be faced by distribution utilities whose revenue depends on volumetric sales of electricity.
Jules Kortenhorst, CEO of Rocky Mountain Institute and Carbon War Room notes, “Today’s electricity system is at a metaphorical fork in the road. Down one path are pricing structures, business models and regulatory environments that favor eventual grid defection.” The report authors explain that this path favors grid defection, resulting in an upward price spiral. This path leads to the inevitable stranding of grid assets serving a dwindling load.
Adopting an off-grid solar-plus-battery option will become increasingly appealing for increasing numbers of customers, leading to skyrocketing prices for customers remaining on the grid. In particular, low- and fixed-income customers will be forced to bear a disproportionate burden of the rising retail price for electricity. Down this path, resources on both the grid-side and the customer-side reach a point of being overbuilt and underutilized, a classic example of stranded assets leaving excess capital on both sides of the electric meter.
On the other hand, RMI CEO Kortenhorst explains this possible future, “Down another road, those same factors are appropriately valued as part of a transactive grid with lower system-wide costs and the foundation of a reliable, resilient, affordable and low-carbon grid of the future in which customers are empowered with choice.”
This alternative path favors business models, regulatory reforms, and stable price structures in which, as the report authors suggest, “distributed energy resources [DERs] such as solar PV and batteries – and their inherent benefits and costs – are appropriately valued as part of an integrated grid.” Such an integrated grid offers a future, according to the report, where grid and customer-side resources collaborate with far greater efficiency in the generation and usage of both capital and physical assets.
These two pathways into the rising solar energy era are not set in stone. There is ample room for innovative thinking, entrepreneurial planning, and socially just strategies. However, the decisions being made today are likely to set us on a course that becomes more and more difficult to correct. The time frame for optimizing the future grid is relatively short, and growing shorter and more urgent for some geographical regions where solar options are already prevalent and appealing.
Kortenhorst summarizes this urgent need for determining the best path forward: “That’s why RMI is focused on new utility business models, regulatory reform in places like New York, and accelerated adoption of rooftop solar and other DERs—so that the grid of the future can provide customers reliable, clean, affordable power for decades to come.”
Founded in 1982, Rocky Mountain Institute is an “independent, nonprofit think-and-do tank.” Engaging with businesses, communities, and institutions, RMI promotes advanced market-based solutions to drive a cost-effective divestment from fossil fuels to efficiency and renewables. Their work aims to accelerate and scale replicable solutions that transform global energy use for a clean, prosperous, and secure future.
Click here to download RMI’s new report, “The Economics of Load Defection.”
Residential and commercial load defection graphs. © RMI.org
All Photo Credits: © RMI.org
(Originally published on Planetsave.com)
Several months in advance of the March 20, 2015 total solar eclipse, the European Network of Transmission System Operators for Electricity (ENTSO-E) began evaluating the risk to Europe’s energy grid. Because the European energy grid incorporates significant solar generation, the risk of negative impact during a solar eclipse needed to be carefully mitigated in order to maintain the security of power supplies throughout the event.
Although solar eclipses are not typically associated with negative impacts to the earth, risks of negative impact on the energy supply have risen with the increase of installed PV energy generation. Initiating a Solar Eclipse Impact Analysis , ENTSO-E concluded that operational coordination among Europe’s TSOs would be critical during the eclipse. Continuous coordination between control rooms across Europe was planned well in advance of the event, to ensure successful deployment of scheduled remedial actions.
Europe's energy grid, from ENTSO-E website banner screenshot © ENTSO-E
It had been anticipated that, under clear skies, around 35,000 MW of solar energy would decrease from Europe’s electrical system over the course of just over two hours. Occurring in the busy morning hours of a typical workweek, this energy loss would be the same as losing nearly 80 medium size conventional energy generation units. Managing such a monumental event offered an unprecedented challenge to European Transmission System Operators (TSOs).
Fortunately, the challenge was met with excellent planning. A statement released by ENTSO-E shortly after the eclipse read, “European citizens and businesses could rely on a secure supply of electricity this morning. The fast variations in solar generation and difficult to anticipate impact on demand were successfully managed by Transmission System Operators (TSO) thanks to meticulous preparation, and strong regional and European cooperation.”
Balancing the European energy system is performed in milliseconds. Pierre Bornard, Deputy CEO of the French TSO RTE and Chairman of the Board of the ENTSO-E said, “Europeans are used to just push a button to switch the light on. They tend to forget all the highly technical and complex systems and tasks needed to maintain a constant balance between generation and demand on an interconnected Power System.”
Reinforcing their already tight coordination with doubled staffing, TSOs had to balance the unusually speedy loss of solar energy from the grid as shadow overtook the sun, beginning at 9am Brussels time. The swift loss of around 17GW was then followed by an even speedier (three times the normal maximum, according to Reuters) reintegration of 25GW solar generation as the shadow completed its course. The eclipse event concluded at 12:00pm Brussels time, but the TSOs were still precision-balancing the fluctuating energy on the wires.
Solar Eclipse 20 March 2012 © NASA Goddard Flickr
Taking into account the “worst case scenario” – that the eclipse would take place on a sunny day, motivated the TSOs to forecast the impact on solar energy generation as precisely as possible. And, in fact, the sun was shining brightly in Southern Germany and Northern Italy where photovoltaic concentration is higher than anywhere else in the ENTSO-E area. In Berlin, pv magazine reported that its “intrepid – and dare we say, just a little bit too excited – editorial team was out on the street, conducting ad-hoc science experiments, live-blogging, and trying to ignore the funny looks of passers-by as they enjoyed a beautiful 85% eclipse.”
With the largest solar energy generation installations in the world, Germany is Europe’s economic powerhouse. Now at the epicenter of the solar eclipse impact zone, Germany’s 38.2GW of solar capacity was literally “on the line.” In Germany, reported ENTSO-E, “solar generation this morning was even exceeding the normal seasonal level, as a result of very sunny weather. But despite this challenge, German TSOs managed very smoothly the high and fast variations of 39 GW of installed solar generation relying on power reserves at national and regional level.”
According to a Reuters report, German TSOs wanted to prove their systems were able to meet the challenge, and were relieved at the lower-than-expected initial drop of 15GW. Drawing on alternative energy sources, such as coal, natural gas, biogas, nuclear, and hydroelectric energy drawn from storage, they were also relieved of some industrial demand, including from four aluminium plants.
The most critical moment, according to ENTSO-E, was between 10:45 and 11:15am, when the supply of solar energy generation started rising again. Coming back in at three times the speed of normal maximum, there was concern all around for possible disruptions.
Energy fluctuation during solar eclipse 20 March 2015 © ENTSO-E
In Italy, energy grid operator Terna had decided ahead to reduce their risks by turning off all of its large-scale (>100 kW) PV plants for the day in order to prevent severe energy fluctuations on the grid. Approximately 5GW PV were taken off the system between 7am and 2pm. After 2pm, Italian TSOs began reconnecting the PV, restoring full capacity.
In many European countries, preparations were made and announced ahead of the solar eclipse. Reuters reported that in the UK, “the National Grid said solar output would be reduced by 850 megawatts but there would be a small drop in demand as people were expected to go outside to see the phenomenon.” Regarding Spain, energy grid firm Red Electrica told Reuters that “reserve levels had been raised and big consumers could have been disconnected.” Italy’s Terna “decided to switch off 30 percent of solar capacity and make it up from other sources.” Norwegian, Danish, and Czech energy grid sources told Reuters that the power supply was kept under control.
As for the view, reported pv magazine, “In the U.K., where the very fact that the sun can be seen at all is usually cause for celebration – particularly on a Friday – observers in England’s southwest and Scotland’s far north were treated to the best spectacles, while those in London were left unimpressed by the low, grey cloud that hovered over the city, blocking out the eclipse entirely.”
Viewing the solar eclipse 20 March 2015 © Marius-Lehr Flickr
Ulrike Hoerchens, spokeswoman for TenneT, a high-voltage energy grid firm, told Reuters, “Good preparations paid off, we were able to handle all swings in production.” TenneT operates in the region with the highest share of photovoltaic units.
Congratulating all the staff in the TSO control rooms, ENTSO-E Chairman Pierre Bornard was pleased with their success in managing the unprecedented event. He appreciated the “very important role played by the TSOs’ Regional Security Coordination Initiatives (RSCIs) in keeping the energy system stable.” ENTSO-E noted that RSCIs were set up by European TSOs, “deciding for coordinated answers to more variable power sources as well as more European energy market integration. In the case of the eclipse, the planning information on cross border electricity flows provided by RSCIs complemented the TSOs’ real time operation and allowed for a better coordination of actions.” Bornard stated, “Our management of the challenging solar eclipse is an illustration that the TSOs’ regional and bottom-up approach to an efficient coordination is the right way to go.”
Konstantin Staschus, Secretary-General of ENTSO-E, said, “The solar eclipse is an example of the success of European and regional cooperation organised by ENTSO-E.” Staschus added, “Many other aspects of European electricity market integration are solved in the network codes delivered by ENTSO-E to regulators and the European Commission. It is urgent that we see a swift adoption of the network codes. With the network codes in place, when the next solar eclipse takes place in 2026, the management of such challenging event will be much easier.”
While taking every necessary measure to mitigate energy security risks, ENTSO-E points out that the march 20, 2015 solar eclipse illustrated the current energy challenge perfectly: “Maintaining system security with more and more volatile and dispersed generation is becoming increasingly challenging.” Nevertheless, ENTSO-E points out that all of its work products “are designed to ensure that the transition towards a decarbonised economy is as smooth, efficient, secure and cost effective as possible.”
Hawaii is just about the only place in the US that relies on oil for electricity. And because it does, it’s electricity is tremendously more expensive than in most of the US (as you’ll see in the infographic below). Combine that with Hawaii’s wonderful sunshine and the increasingly low price of solar power, and you can see that solar has hit grid parity in “The Aloha State.”
From more fun Hawaii solar facts, check out this visualistic (yes, I made that word up) infographic from Alternate Energy, a solar installer in Hawaii: