For more than 100 years utilities have supplied electrical power to customers and have done so with good reliability. The principle is simple. Loads may do as they wish. They may be random or intermittent and generally are not individually monitored by the utility. Generation, on the other hand, MUST be both dispatchable and monitorable, and electric system operators must be able to manage the real and reactive power from a generator.
Historically, utilities have become very adept at managing generation capacity to maintain a continuous balance between supply and demand. But today, the world is faced with a need to reduce or even eliminate carbon emissions, which complicates the supply-demand balance. Most electricity in the US, for example, is generated by burning fossil fuel. This needs to change, along with change to the electricity supply system and the direct customer use of fossil fuel. We are looking to remove the steady performers, and to replace them with supplies that are intermittent and perhaps random, all the time maintaining a balance between supply and demand.
Natural gas for home typically delivers almost 2x the energy supplied by electric utilities, and US gasoline-powered domestic automobiles use almost as much energy as the entire electric system generates in the US. Expanding the electric system to minimize the use of carbon fuel, while expanding it to accommodate the existing electric load and much of the direct fossil fuel load (natural gas and vehicle fuel are two examples), will be a major challenge.
Managing Intermittency Challenges
Renewable resources with their intermittency operate much like a “negative” load. They can be random, but in general, they can also follow a pattern that provides elements of predictability for their available capacity. There is little solar energy available through the night, but between sunrise and sunsets, solar energy may be plentiful.
Many utilities have real concerns with the need to change their approach to manage intermittent generating sources. Storage is seen as a means of making intermittent resources into firm resources. The use of battery storage to deliver firm power over a 24-hour period is easily handled. But the concept of storing surplus summer solar energy to carry one through a cold month in winter remains a costly challenge. A typical electrically powered house, with an EV for transportation, may need 2.5 – 3.5 MWh of storage valued at $250-350k based on 2025 estimates for battery costs ($100/kWh).
A home user hoping to go off grid may be shocked by the cost. Batteries and managed loads can do well on daily storage, where the energy stored is relatively small, but monthly storage over longer times is generally done by adding generation, or using hydro generating facilities that have large reservoir storage. Typically, batteries do well where they can cycle at least once daily.
The Solar ROI Conundrum
At the same time, many utilities are seeing energy sales declining, the result of higher penetration of rooftop solar, but as this source does not provide energy after dark, when the peak may occur, the peak demand is continuing to grow. The electric grid is designed to meet peak demands. With a growing peak demand, additions to the generation, transmission and distribution systems are required, but with declining or even stable revenue, the costs are difficult to justify or support.
The use of revenue from customers that do not have solar generation to subsidize solar-equipped customers is difficult to justify. Many utilities have implemented or applied to implement a residential demand charge, similar to the structure of commercial and industrial rates. Under a demand-based tariff, the customer pays a fee for peak demand. The demand charge may apply to the peak in the previous billing period or in some cases may apply to the peak over several months. Such a rate structure would potentially solve the utility’s financial issue, but it would also reduce or eliminate the benefits of using rooftop solar for residential use. A solar owner would need to purchase battery storage to save energy from the day, using it to reduce their after dark peak load.
This appears to be a classic zero-sum game where there is a clear winner and loser. But this will not support a transfer to clean energy. The electric grid would have to be able to deliver far more energy than it currently delivers to displace fossil fuel applications. This may be achieved by large-scale construction of new facilities, or a combination of conservation, the addition of some new large scale clean energy source such as nuclear, and the addition of distributed generation, storage and managed loads at the grid edge. One optimization process would oversee the operation, minimizing both costs and losses. In this case, the optimization would need to be global, including utility and customer system operations.
Is it Time to Turn the Power Grid Upside Down?
Is this the time to switch the system to adjust the load side and let the generation run at its most efficient level at all times when it has capability? Intermittent generators can come and go as available, much like loads have done in the past. Controlled loads storage and some distributed generation would provide the required balance between supply and demand.
There are many loads that have inherent storage, such as electric water heaters and EV chargers, but this may only be the tip of the iceberg. New communications technology can enable us to manage many of these loads in ways that were never feasible in the past. Load owners may see the opportunity to get some revenue in return for providing load flexibility through the remote access to control their loads, storage or renewable capacity. Essentially, we would turn the power grid upside down and balance from the bottom -- the load side of the equation.
In looking carefully at this concept there may be significant advantages that can be captured. Distributed loads, distributed storage and distributed generation -- all at the grid edge -- may be easily controlled, and the remaining central sources can be run at a stable maximum efficiency level. Local response to local changes is always more efficient at reducing delivery losses than remote generation changes to provide the same service.
Most of the central fossil fuel-powered generation may need to be eliminated or replaced, but this too may create opportunities. Natural gas, as an example, will generate electricity at a very low efficiency if a simple cycle gas turbine used. But if the unit is replaced with a Combined Heat and Power (CHP) system that is located at the grid edge near where the changes occur, and where it delivers heating, cooling and electricity for local loads, then significant gains in efficiency can be captured. The gains can be optimized by allowing control of the CHP to be used, optimized with other grid edge devices.
There appear to be many opportunities to improve operations, maximizing efficiency, minimizing losses and hopefully keeping costs at acceptably low levels.
This process will require detailed thought and coordinated planning. The concept may cause real concern for utility professionals with a long history of central management and control. It may also appear stressful for home solar owners. But surely it can offer many advantages that can help us to get through this transition to clean energy without damaging our way of life. The one large difference between the current path and this concept is that this approach will require a high level of cooperation between the utilities, solar companies and renewable generation owners. I’m confident that we can rise to this challenge.