I have posted several blogs in the past few weeks, focused on the potential to improve the operation of the electric power grid, reducing losses, and driving the overall efficiency up. Some of the thoughtful comments that have been posted by readers have provided food for thought. One comment was particularly important to this discussion…
“What’s best for players individually is not what’s best for the public and for the system as a whole.”
This comment reveals an issue that may soon be a problem.
For most of the 130-year history of the electric grid, utilities have charged residential customers for energy used and have NOT charged for peak power demand, as they do for commercial and industrial accounts.
Power demand by residential users may be a significant issue. The average demand by a U.S. household over one year is about 1 kW, but most homes have physical capacity for more than 30 kW. Such a connection would represent an average load factor of only 3%. The average customer pays a small basic monthly charge plus an energy charge, with no charge for the peak power demand.
Recently, with the need to reduce emissions and conserve, people have promoted the concept of a “zero net energy home.” Such a home would use and pay for no energy; only a basic monthly charge. But given a widely varying demand and an intermittent supply, they would need to rely on the utility frequently for a source of short-term energy – to be returned over an extended period of time. The public and governments seem to like the idea of zero net energy because it represents a significant effort to conserve energy and for homes to be self sufficient, but most utilities take a very different view. The customer is using power, for which there is no charge, but no net energy over time. Essentially, the utility is providing storage, based on generation, to deliver energy to meet high load periods, and having that energy returned over time, potentially at a much lower value than the energy that was taken.
The utilities appear to be in the process of responding to this approach, applying time of use rates, residential demand charges and other rate structures that will redeem their costs. While justified, these changes are taking funding from the residential customer, making their investment less feasible.
This brings back the quote from the reader of a previous blog…“What’s best for players individually is not what’s best for the public and for the system as a whole.” That certainly may be the case here. There are two groups trying independently to develop a feasible solution for themselves. Is this the best solution??
Utilities have lived with a culture that requires that they “meet customer demand” with quality (voltage and frequency) and reliability. They have done this well, but at significant cost. Generators are run continuously, at sub optimal levels, to support the supply system; demand power balance, reactive power balance, to manage voltage, provide inertia and backup capability to address system or equipment faults. Now, with the addition of independent generation capacity at the grid edge, the challenge appears to be growing with little or no benefit to the utility. The need for a cooperative solution is more important than ever.
New technology is available to manage distributed resources. This can be used for the benefit of the owner, a utility or a customer, and it may be optimized to manage the system in the best way possible, maximizing the use of clean energy sources, while maintaining the standards used by utilities.
The future is going to require a considerable amount of careful thought. The utility system generates and delivers electric power to users. The overall efficiency from primary energy to the end user application is about 30-35%, leaving ample opportunity to reduce costs, improve efficiency and reduce or eliminate emissions. Virtual Power Plants (VPPs) and Distributed Energy Resource Management Systems (DERMS) have the capability to manage and optimize operations of distributed and conventional resources that will allow both customer and utility operations to work together, to achieve and maintain an optimal operation. It is much more efficient to provide flexibility and reserves at the grid edge using loads and storage than it is to use a large central generator to deliver the same result. The biggest barriers to such changes are likely human and regulatory inertia.