How Would A 100% Distributed Energy Grid Work?
Below is another initial version of an article I wrote for The Economist Group’s GE Look Ahead website (months ago). This one focuses on how a 100% or nearly 100% distributed energy grid would work, assuming a hypothetical grid like this ever came about. Again, this article seemed like something that CleanTechnica readers would enjoy, and it also seemed like a good fit for this week (as COP21 people are wrestling with how to stop global warming and various anti-renewable myths). So, here’s a slightly modified version of the original piece, for your reading pleasure.
Solar power and wind power are already the most cost-competitive options for new power capacity in many places. As costs continue to come down, these sources are expected to quickly grow in market share. They are still a small percentage of electricity generation, but their distributed and intermittent nature are already affecting how grids around the world work and are managed. The question is, how much different would grids as well as related businesses and regulations be in a world where the majority or even 100% of electricity generation came from solar power, wind power, and other distributed power sources?
Rather than profiting from electricity sales and monopolistic control of large power plants, there is a common assumption that utilities will be forced to shift their revenue generation and profit-making focus from electricity generation sales to management of the network that connects electricity generators and consumers, including the enabling of a two-way market system in which many electricity consumers are also electricity producers.
They will “provide a distributed system platform whereby third-party service providers can plug into the system, energy easily travels in a bi-directional fashion and customer-generators can easily connect to the system,” Greenpeace Energy & Climate Campaigner Emily Rochon stated in an interview. Efforts are already underway in New York to lay down the detailed vision for such a scenario, she added.
“Utilities will have to allow customers to benefit from having moved from consumer to prosumer (also producing power): the grid therefore moves from a one-way to a two-way street,” Remco Van Der Horst, COO of DuurzaamInvesteren and owner of Greenproc, nicely summarizes. “Competition therefore comes from the back door (solar & batteries), rather than the front door.”
In such a world, competition exists between companies and organizations selling energy management software and services as well as between small-scale renewable energy and energy storage providers. Energy efficiency and demand response are critical components of such a grid, so there should be diverse incentives for energy efficiency as well as demand response capability and implementation. Time of use (TOU) electricity pricing will also be the norm, since it helps to match electricity demand with the times when electricity is most easily and cheaply produced.
Jonathan Koomey, Ph.D., a Research Fellow at the Steyer-Taylor Center for Energy Policy and Finance at Stanford University, stated in an interview, “Smaller customers are unlikely to be sophisticated enough to take advantage of real-time rates in large numbers, but more and more of them will move to simpler time of use pricing, and will take advantage of demand response on specific end-uses, like water heaters and air conditioners (where the utility will pay them a fixed fee per month with the understanding that in times of high prices the utility can turn off the heating element in their water heater for 5-10 minutes, not noticeably affecting service to the customer but reducing demand measurably across the utility’s service territory).”
Since much more energy storage would be required to enable a 100% distributed power world versus a 70% distributed power world, the energy storage industry would play a much bigger role in the former case. In either case, though, energy storage is an important component of the system, and compensation methods would need to be in place for the frequency regulation, voltage regulation, backup, and other benefits storage provides. Aside from daily storage needs, seasonal storage would be a much bigger market in a fully distributed power grid. Pumped-hydro storage and power-to-gas storage lend themselves well to such needs, and could be implemented on a large scale by competing specialized companies.
Importantly, different regions will end up with quite different grid systems. Sunny places in the developing world that currently lack electricity could very likely end up centered around microgrids and self-reliant solar-plus-storage systems, skipping the development of large, centrally controlled grid networks altogether. Even developed countries like Australia, where this more decentralized approach is quickly becoming cost competitive and grid defection is growing, the end result could be a large number of off-grid homes and businesses, numerous microgrids, and much smaller grid networks than exist today.
That’s one take, based on input from several distributed energy experts, but how do you think a grid dominated by distributed power would be different from your grid today?
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