Generac Grid Services Blog

Renewable Energy a Threat to Conventional Utilities?

Posted by Enbala on Apr 25, 2016 9:59:50 AM

This past Earth Day, plenty of power system participants celebrated our lovely planet. PECO used the date to launch it’s new Solar Stakeholder Collaborative. Louisville Gas & Electric sponsored a do at the Louisville Zoo. First Energy held EarthFest, Ohio's largest environmental education event, for some of its six million customers. Even California’s Independent System Operator (CAISO) used the date to push eco-friendly living. It issued its summer power supply forecast via a press release that sported the headline, “Energy Conservation: What’s Good for the Planet is Good for the Power Grid.”

Ultimately, that’s true. Ironically, a recent survey by the consultancy West Monroe Partners found that most utilities treat DERs -- like customer-sited solar -- as a threat. The same survey shows that only 3 percent of executives who responded view the growth of DER as an opportunity.

For those that believe that DER is a threat, there are essentially three strategies that can be used:

  1. Business as usual – address issues as they occur
  2. Take steps to slow, stop or fully control the advance of DER
  3. Find a means to convert the threat into an opportunity

Why utilities dread DERs

Utilities have traditionally worked hard to meet customer demand, where and when needed, so they end up following an unspoken industry motto: “Turn on any load – at any time – and the power will be there.” By managing central generation to meet customer demands, load tends to vary dramatically on a daily basis. That’s especially troublesome because residential users, who usually are not charged for peak consumption, now account for 42 percent of energy use, and that percentage is growing.

The end result is this: Average utilization of the grid hovers around 50 to 55 percent, and residential use is far worse. The average residence has a connection designed to deliver 35 to 50 kW of power, but average use is about 1 kW, less than 3 percent of capacity. Yet, on a few days each year, many of these customers will use nearly the full capacity of their connection for a very short time.

The chart below – which is borrowed from a utility facing high levels of solar penetration in the Southwest United States – shows what’s happening on the utility side. You can see the same thing depicted differently in CAISO’s famous duck curve

Picture1-2.pngHere’s what’s going on:

  1. Average residential is falling, sometimes to zero, but peak demand generally remains.
  2. Fixed solar collection systems are often aimed south to collect the maximum energy. These collectors generate considerable energy during daytime but, after 6 p.m., their output is near zero. Meanwhile, the system daily peak load generally occurs in the 6 p.m. to 8 p.m. time period. The utility sees a growing peak demand but falling energy sales. The graph shows the impact of solar generation on system peak and energy sales.

To recap, utilities often are seeing growing peaks that requires added generation, transmission and distribution, coupled with declining energy sales. This will drive utility unit costs up, followed by an increase in electric rates. That increase would, in turn, drive more residents to convert to solar.

Utility Opportunity

Utilities, by the nature of their service, have designed generation and the grid to meet peak demand, and they have run this system to follow customer demand between maximum and minimum values, operating on average at 50 to 55 percent of the peak capacity. This approach, while offering great benefits to the customers, is inherently inefficient. Why?

  1. Generation that is operated at capacity levels that change continuously do not operate at maximum efficiency for much of the time.
  2. Delivery losses (transmission and distribution) are minimized by transporting a constant kVA capacity. Unit losses increase when the same energy is delivered at higher levels for a part of the time and lower levels for the remainder of the time.
  3. The transmission and distribution grids are capital-intensive, and any change that can increase overall utilization factors will have significant benefits for utilities as well as their customers.

But, there’s a way to address all three of the above issues that are driving efficiency levels downward. We can leverage customers’ generation, storage and loads.

Why you need an orchestrator

It is clear that the future is in managing the grid from the edges. The system can be run more efficiently if central generation is base loaded, and the ups and downs are accommodated by orchestrating and controlling DERs, including loads themselves.

By using the entire system more effectively, perhaps we could displace quite a bit of traditional coal-based generation --which is only about 33 percent efficient -- with large combined cycle gas turbine (CCGT) systems that have much greater efficiency because they use waste heat from the first turbine’s generation to turn the second turbine. CCGT systems have an efficiency around 50 percent. You also can add in combined heat and power (CHP) generation, which can use the waste heat from initial generation to heat a building. With CHP, you also can run waste heat through an absorption chiller, which uses hot water or steam to power a refrigeration cycle. That’s how CHP systems can both heat or cool facilities and deliver efficiency in the range of 80 percent.


Coordination and optimizing DERS

Enbala can manage load, storage and small generation plants like CHP systems. By coordinating and optimizing these DERs, we minimize loss and provide local grid balance. In other words, a platform like Symphony by Enbala transforms DERs into grid and utility allies, not threats. What’s more, implementing such a system requires little new development and investment and, by bidding capacity into wholesale markets, utilities could pass savings or revenue on to the customers in the optimization network.

Wouldn’t that make for happier Earth Days in the future? It would help power providers defer capital investment and make the most of any generation source we use.

CAISO was right: What’s good for the planet really is good for the grid.



Topics: distributed energy resources, Solar energy, DERs, DERMs

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