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Published on November 28th, 2011 | by John Farrell

9

America’s Energy Future a Battle Between Entrenched Utilities and Clean, Local Power

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November 28th, 2011 by  

This post originally appeared on Energy Self-Reliant States, a resource of the Institute for Local Self-Reliance’s New Rules Project.

While Americans transition their electricity system to the 21st century, they should ask this question: Does it make sense to pursue strategies such as accelerating the development of new high-voltage power lines that reinforce an outdated paradigm of electricity delivery, or should scarce energy dollars be spent on adding new, clean, local energy to the grid in the most cost-effective manner?

Fossil fuel power lends itself to centralized power systems, requiring long supply lines (rail or pipeline) to provide a constant supply of fuel and significant economies of scale in thermal energy production. These supply lines and huge power plants require enormous concentrations of capital, concentrating not only power generation but control of the grid. This explains the 20th century electricity system.

Renewable energy is fundamentally different. Wind, solar, and geothermal are available everywhere and are so broadly commercially viable that 31 states could meet their entire electricity need with in-state renewable energy resources. It’s also modular, with large-scale wind and solar power plants made up of smaller increments of 2 megawatts (wind) or 250 Watts (solar). There are much more modest economies of scale for both wind and solar, no long supply lines, and much smaller capital requirements for cost-effective power generation. Thus, renewable energy lends itself to a decentralized system of power generation and ownership.

Mixing the 20th-century centralized paradigm with the 21st century renewable energy paradigm can be an exercise in futility.

The challenge is technical and political.

Technically, large quantities of renewable energy are incompatible with big coal and nuclear power plants that can’t adjust their output to accommodate more wind and solar. For example, traditional large-scale thermal power plants operate effectively only at high capacity. They can’t scale their production rapidly to adjust to fluctuations in demand, so utilities tend to be careful to build only enough “baseload” capacity to fulfill the minimum level of demand. More adjustable natural gas and diesel generators provide the rapid-response power necessary to meet hour-to-hour and minute-to-minute changes in grid needs. Simply put, a clean energy grid needs more flexible power plants and fewer baseload ones.

The Germans, with their sights set on a 100% renewable energy grid, have already confronted this problem. In a report by their renewable energy agency, they note that:

Clearly, on many days in the year, no traditional base load power plants – those that run year-round – will be needed at all. This will be the case if the feed-in from renewables is particularly high and consumption particularly low. The traditional base load power plants will have to be shut down completely at these times. If the residual load then increases again, i.e. if electricity generation from renewable energies drops, and/or the demand for electricity rises, power plants which can provide regular energy fast from a standstill will be needed. But that is exactly what base load power plants cannot achieve. Nuclear power plants for example have a technically mandated minimum down time of approx. 15 to 24 hours, and it takes up to 2 days to get them up and running again.

Simply put, a clean energy grid is technically incompatible with a grid management strategy that prioritizes always-on, baseload power from fossil fuel and nuclear plants.  It’s like mixing typewriters and iPads. The following graphic provides a nice illustration of the necessary paradigm shift.

In a way, this vision is not a radical departure. Inflexible generation is still the priority, but in the new paradigm, your “always-on” power sources are variable. On top of that, flexible energy sources are stacked (including energy storage and demand-side management). For greater detail on the technical and economic components of this shift, see our report on Democratizing the Electricity System released in mid-2011.

But the transition to a clean energy future is not just technical, it’s political. With electricity consumption relatively flat, achieving clean energy goals rapidly will mean curtailing output from existing fossil fuel power plants. It becomes a battle between the established financial interest of utilities and clean energy producers. That’s because incumbent utilities own coal and nuclear plants and find it more financially attractive to operate them than to buy power from independent wind and solar producers. Maximizing clean energy production means a transformation in the technology powering the grid but also the entities who control the grid.

This battle is already underway (Anne Butterfield, Daily Camera):

 Coal doesn’t just present financial uncertainties, it also hampers clean energy. Wind plants selling power to Xcel in Colorado have seen more of their power curtailed for the sake of coal (which cannot ramp up and down for renewable sources the way that natural gas or hydro can). Since Xcel makes its return on its coal plants and not on wind plants owned by others, it will often run their coal when forced to choose.

Xcel’s cost of wind curtailment has jumped by 30-fold in the past 3-4 years, a hike in which customers pay twice — once for the wind contract and again for the coal when it displaces the wind.

The prioritization of renewable energy, developed in a decentralized fashion, will undermine the traditional utility financial model. Thousands of megawatts of distributed wind and solar can be added to the existing grid, near cities and towns where electricity is used, and at a minimum of expense. For utilities dependent on building power plants and power lines to make a return on investment, the new, decentralized, low-infrastructure electricity system is anathema.

To re-use our analogy of the technical problems, what’s happening is the typewriter industry is using its vast resources to kill the iPad, only this time the typewriters have guns.

Utilities have responded by clamping down where they can, limiting access to the grid for independent power producers and attempting to corner the market on clean energy added to their grid system. Allowing them to do so will undermine the progress on clean energy, as utilities will wastefully cram inherently decentralized renewable energy production into an outdated centralized power paradigm. They will overbuild infrastructure to make the best return and they will also limit the dispersion of economic benefits from clean energy.

There’s a need for urgency, because decisions made now in the utility planning process can be on the balance sheet for 50 years or more. Is it really time to be building new coal plants that we’ll have to pay for until 2061 when solar is likely to be cheaper than any other power source by 2020?

America’s clean energy future requires a paradigm shift in the utility system and there’s no time to waste.  The technical challenges are significant but surmountable, and, already, leading countries like Germany are finding the solutions. The political challenges must also be confronted, and all it takes is action.

Americans can tell policymakers that they want a future dominated by clean energy, rather than existing utilities. They can advocate for opening data on the utility distribution system to allow more distributed energy development, as the California Public Utilities Commission has required. They can advocate for sensible incentives for renewable energy that broaden the opportunities for ownership, as the cash grant program has done. And they can support CLEAN Contracts or feed-in tariffs that require utilities to connect and contract with distributed renewable energy producers.

Renewable energy has opened the door to a democratized electricity system and Americans need to reach out and grasp it.

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About the Author

directs the Democratic Energy program at ILSR and he focuses on energy policy developments that best expand the benefits of local ownership and dispersed generation of renewable energy. His seminal paper, Democratizing the Electricity System, describes how to blast the roadblocks to distributed renewable energy generation, and how such small-scale renewable energy projects are the key to the biggest strides in renewable energy development.   Farrell also authored the landmark report Energy Self-Reliant States, which serves as the definitive energy atlas for the United States, detailing the state-by-state renewable electricity generation potential. Farrell regularly provides discussion and analysis of distributed renewable energy policy on his blog, Energy Self-Reliant States (energyselfreliantstates.org), and articles are regularly syndicated on Grist and Renewable Energy World.   John Farrell can also be found on Twitter @johnffarrell, or at jfarrell@ilsr.org.



  • Wxv6

    Some ppl are paying attention to thorium, its the only technology that can mitigate the worst impacts of peak oil (as long as there are ev vehicles to run on the electricity). Our (western) society is accustomed to levels of energy use much too high to transition to solar/wind without societal and economic shocks.

    Please don’t misunderstand, I’m all for solar and wind too, but, it must be admitted that a society powered by only solar and wind will look different than a society that has a constant base load power supply like we have now. Of course, I admit, that could be a good thing to force a different society to evolve. I’m just saying you have to be honest about the change that is coming and assess the risks.

    Meanwhile Wallace flippantly dismisses thorium, which, ironically, is how the fossil fuel industry treats solar and wind. He should be more respectful and if he has criticism be specific and logical about it.

    The feasibility tests for thorium were done in the 60’s and were successful. The thorium reactors weren’t shut down due to infeasibility, but rather, hawkish instincts of a Cold-War era US military which preferred a uranium nuclear fuel cycle that produced bomb-making material (which thorium fuel cycles do not).

    • Anonymous

      You cannot build reactors cheaply, even if you fuel them with peanut butter.
      Nuclear is priced out of the game. Just accept the fact. It’s the great big building with all its complex systems and many years to build.

      I can go through the math again if you need me to.

      We do not need “baseline” generation. We need power when we need it. Demand is not constant 24 hours a day and 365 days a year. The grid constantly adjusts supply in order to meet demand.

      There in not a single “always on”, “always reliable” generation technology. Stuff is constantly causing problems. Nuclear goes down for refueling and because it “breaks” and because it runs out of cooling water.

      We already use dispatchable generation and storage to meet the variability of supply and demand. We built 25GW of storage because the nuclear we built ‘back when’ so poorly fit our grid needs. We’ll use dispatchable gas while storage technology matures and finishes the replacement of fossil fuels. We’ll also do a lot more load shifting as we move to an intelligent grid.

      Wind and solar will work great for EVs. EVs are very forgiving about when they charge. They sit parked 90% of their lives. On average EVs will need
      1.5 hours of power per day (based on 12,000 miles and Nissan Leaf charge
      times on a 240vac outlet). Many EVs will be able to skip a day or more if
      we hit a particularly low supply or high demand period. Wind and solar are
      going to be much cheaper ways to charge our EVs than new nuclear.

      Please excuse me for talking back to you, sire. (Tugs forelock….)

      • Wxv6

        No excuses necessary, Mr. Wallace, I welcome the conversation.

        You say “Nuclear goes down… because it runs out of cooling water.”
        Source: Clean Technica (http://s.tt/14kpF)

        Well for uranium fuel cycle reactors, that’s true, but thorium fuel cycles don’t use water cooling, so you are not addressing the technology I am talking about, and instead you are arguing against thorium by tearing down the strawman of uranium water cooled reactors. ( I agree that uranium water cooled reactors are a poor technology and ideally shouldn’t be pursued any longer)

        You speak about “nuclear” as if it is some monolithic technology, which it is not. There are dozens of fuel cycle types and reactor designs each with their own pros and cons. It doesn’t advance the conversation to simply disparage one type such as uranium water cooled reactors and declare game over for every kind of nuclear technology as a result.

        The largest hurdle for nuclear of any kind is obtaining insurance policies against plant failure, because they are expensive and currently only governments will provide those policies. But this is due to the hysteria around radiation because of the tarnished track record of uranium water-cooled reactors, and the fact that the public and even well educated individuals conflate that particular type of nuclear technology with all nuclear technology. A thorium molten salt reactor doesn’t carry nearly the risk of a uranium water cooled reactor and the insurance policy should be cheaper as a result. Unfortunately this won’t ever happen because of the hysteria I mentioned and the history of around uranium reactors, and it could be enough to sink thorium reactors for good.

        Thorium reactors have the added benefit of being an ideal solution to our current uranium nuclear waste fiasco of having thousands of caskets of uranium cycle actinide waste in cooling pools all over the world. This radioactive material has a half life of tens of thousands of years. Too long for any human institution to responsibly manage. A thorium reactor could probably get those nuclear facilities to pay for the service of removing that actinide material to be used in the thorium cycle, which would transmute the spent waste to a less hazardous waste product with a half-life on the order of a few hundred years. A time frame which human institutions could oversee if good generational transition plans were in place.

        • Anonymous

          Well, the discussion had been about CANDU reactors running a steam turbine. Cooling water is generally used in those systems. I suppose you could use a cooling tower but that would further raise the price (lowers efficiency) as well as make it harder to locate. (People who are tolerant of reactors in their backyards still are apt to disapprove of lots of noise.)

          Of course insurance is a massive problem. That’s one of the the things that makes nuclear too expensive. As it is taxpayers are providing most of the insurance for the industry now. Even existing nuclear can’t support itself but has to depend on subsidies.

          But, whatever….

          Tell you what, if the Chinese or the Indians can make a functioning thorium reactor which can be built for small enough money to compete with renewable energy then I’ll reconsider my stance.

          Let’s check back with each other in a couple of decades and see if things have moved past the U-Toob stage.

          • Wxv6

            I suppose that’s fair enough, but it will be a shame if we are buying our kids’ plastic toys AND our thorium reactor designs from China.

          • Anonymous

            I can’t see reactors of any sort being our energy future. Reactors cost too much to build. We’ll use up the ones we have. Or, if we have another TMI/Chernobyl/Fukushima, we’ll start shutting them down before they fall apart.

            We now have cheap electricity from wind and solar has now reached “affordable” and on its way to cheap. Inexpensive storage is being developed.

            Economics will determine what we use for our electricity production.

            China can build reactors for less money because China has massive amounts of cash. The can use government money to build reactors and will not have to account to voters for not making better use of that money.

            By the time China gets their first thorium reactor built (they’re just starting the R&D process) the US will have massive amounts of wind and solar generation on line.

            By the time China perfects and proves their thorium reactor design the US will be enjoying cheaper electricity because the present generation of wind turbines and solar panels will be paid off and producing almost free electricity.

            By the time China debates a large scale thorium reactor project to build
            lots of new reactors my guess is that China will have figured out that
            reactors are not the way to generate electricity. China is pouring money
            into wind and solar right now. China can do math.

  • Anonymous

    We’re paying attention.

    We’re also paying attention to jet packs and time travel.

    If any of this stuff becomes feasible then we can consider using it.

  • Freealex1

    Hi John,

    Thanks for the article. A challenge I would make, however, is regarding transmission requirements for renewables, especially in a European (specifically German) context.

    – Yes, Germany has installed / is installing vast amounts of solar PV which, for the most part, is relatively small and de-centralised. But as the sun doesn’t always shine, they either need to build a lot more PV + storage, or a combination of other clean-energy solutions (like wind, biomass, hydro, etc) + storage.
    – However, one of the challenges they are facing is the need for increased transmission due to wind power which tends to be multiple-turbine (and therefore multiple-MWp) installations. This is certainly the case for offshore wind.
    – And the chart above shows ‘Solar Thermal w/ Storage’…none of that will be in Germany. In fact, it’s envisioned that most of it won’t even be in Europe. That’s the point of the Desertec Industrial Initiative that will have HVDC transmission from North Africa (or ‘only’ from Greece via the proposed Project Helios)
    – Storage: at the moment, and for the foreseeable future, the storage that gets used (for nuclear and renewables and others) are in places like Norwegian and Swiss pumped-hydro facilities…again, involve a LOT of transmission

    By all means, I agree that the cost-effectiveness of distributed generation (especially solar PV) going forward is going eat into the business model of centralised utilities. And I would argue that many of them see it as a genuine, existential threat to them.

    But in the absence of a very affordable, scalable storage solution, we are still going to require large-scale thermal back-up (coal, gas, biogas, biomass, etc) OR significant transmission (bigger the area, the better the spread of renewables) OR BOTH.

    best regards…

    • Anonymous

      Good points Alex.

      I don’t think centralized utilities are threatened by distributed solar. Or at least shouldn’t be threatened.

      They will lose some of their peak hour sales, but at the same time that relieves them of the need to purchase/supply very expensive peaking power. If they are doing merit order pricing tight peak hour supply leaves them paying tremendous amounts for power (from existing coal/nuclear plants, for example) which would otherwise be cheap. There are many hours during which utility companies take a big loss on peak hour sales.

      Centralized utilities will still own the distribution system. They’ll take the extra solar from roof owners at <maximum peak cost and sell it on at a profit. And then they will sell power to the roof owners when the Sun is not shining.

      The only thing that would threaten centralized utilities is if a very large portion of the public went 'stand-alone'. And you just can't do stand-alone as cheaply as doing grid-tied roof top.

      I totally get John's point about the value of distributed generation. Generating close to point of use makes sense. But I think John goes overboard in his support of distributed. Sometimes it's cheaper to buy
      from outside ones neighborhood, even with transmission costs included.
      It's almost always more dependable/reliable.

      The final form of our grid, I think, will be a unified grid covering all of
      North America. (Perhaps Alaska will be separate.) We'll generate
      electricity wherever it is the cheapest to generate. Local PV will make a
      lot of sense in most parts of the country as it will cut down on
      transmission line size. We'll also likely see local storage, especially if
      new battery technology succeeds. That, also, will cut transmission line
      size. (Run the line at full capacity during off-peak hours and store power
      locally for peak needs.)

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