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Clean Power

Published on January 13th, 2016 | by Christopher Arcus


Can We Move Forward To The Future Of Electric Power?

January 13th, 2016 by  

future electric gridRecently, utility efforts to defeat solar have been exposed in several Western states. SolarCity has allied itself with Renew American Prosperity (RAS), an advocacy group funding Checks and Balances, a group dedicated to holding utility regulators accountable. Other solar companies have allied with The Alliance for Solar Choice (TASC), a 12-member lobby group spearheaded by Sunrun (SolarCity was part of this alliance but recently pulled out).

Meanwhile, an investigation has begun into an Arizona commissioner’s communications with utilities.

Investigations have exposed utilities’ and utility finance companies’ ties to dark money organizations.

The cozy relationship between utilities and regulators has been exposed. Unfortunately, the issues like net metering are buried behind such manipulations. Net metering has some advantages, but can also result in solar owners not being properly remunerated, or not properly reflecting utility’s costs. It’s a compromise.

The worst part of this is that lobbying and dirty tricks undermine the path to necessary change. The decades-old policy of guaranteed rate of return on capital has been a lucrative windfall for utilities, a prop for rate basing their way into complacency. And it has motivated utilities to defend stranded assets rather than avoid them.

But that era is ending, and they are trying with all their political might to hang onto their decaying monopolies.

A more edifying result would be an open discussion about how to respond to the changing customer/supplier landscape. The public/private public utility commission (PUC) regulated power system is badly out of date. Attempts to rectify imbalances in a rate-based system that subsidizes some customers at the expense of others have been found wanting. The California Public Utility Commission’s early forays into time of use metering (TOU) are anachronistic.

Setting a fixed TOU annually by committee is unacceptable in the Internet era, as are schemes based on utility central data collection. They are both borne of ideas mired in the past and overlook the central problem. If electric power is to change, it must change its institutions first. Retail rates should reflect wholesale costs. That’s what TOU is about. That would be fair to both consumers and producers. But implementing TOU won’t do much good if we don’t do it on a real time basis.

But what role would a PUC play if it didn’t set rates? The California Electricity Crisis, artificially manipulated by Enron, exposed how weak regulation is, and how vulnerable we are to utility manipulation. We need to begin a fruitful discussion of how to prevent abuses, and how to move forward to a better system that embraces renewables and the other changes ahead, as we begin to navigate the stormy sea of climate change.

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About the Author

has studied wind, electric vehicles, and environmental issues. An electrical engineer familiar with power and electronics, he has participated in the Automotive X Prize contest. He is an avid writer, specializing in electric vehicles, batteries, and wind energy.

  • neroden

    New York State’s PUC has done a pretty decent job with regulation. Other states might consider consulting with them.

  • Hazel

    Thanks for a nice piece. I’ve been advocating real-time TOU pricing here for some time. But there’s one small technical issue which needs addressing. About a year or so ago, a fellow traveler here schooled me on the inherent instability of such a system: prices drop, demand rises, prices rise, demand falls further, etc.

    Using weather reports and demand forecasts, it is not hard to forecast a market-clearing price up to 24 hours in advance, or even better one hour in advance. 24 hours would be helpful for those with time flexibility, such as EVs, some heating/cooling loads, some industrial applications, etc. as it would let them schedule demand accordingly. The (municipally-owned) utility could then contract out frequency regulation and other minor battery/gas peaker services, which would diminish over time as forecasts improve.

    So yes, let’s push forward for real-time TOU pricing. But it will not be as easy as falling off a log.

    • nakedChimp

      That sentence doesn’t make any sense:

      About a year or so ago, a fellow traveler here schooled me on the inherent instability of such a system: prices drop, demand rises, prices rise, demand falls further, etc.

      Why ‘further’?

      Also, did he look at elasticity/in-elasticity in that market?

      And what did that ‘scholar’ think of the current system, where did he put that one on the stability curve?

      • Hazel

        The fellow traveler cited a couple of papers on the topic, which I glanced at, and having been convinced, put them aside.

        A quick Google search on “real time electricity pricing stability” turns up:
        From the abstract:
        In the absence of a carefully designed control law, such direct feedback can increase sensitivity and lower the system’s robustness to uncertainty in demand and generation.

        To your point on elasticity (continuing in the abstract):
        It is shown that price volatility can be characterized in terms of the system’s maximal relative price elasticity, defined as the maximal ratio of the generalized price-elasticity of consumers to that of the producers. As this ratio increases, the system may become more volatile.

        Regarding today vs. the future:
        Since new demand response technologies increase the price-elasticity of demand, and since increased penetration of distributed generation can also increase the uncertainty in price-based demand response, the theoretical findings suggest that the architecture under examination can potentially lead to increased volatility.

        In other words, the more systems we attach to the grid which respond to pricing, the more volatile and unstable the prices become. If you have an issue with this, take it up with the author at MIT.

        EVs are potentially the biggest source of such volatility. Total useful energy for transportation (minus the enormous losses of ICEs) is roughly half of the total electrical energy produced. And since they only need to charge 2-4 hours out of the 18-20 when they’re not on the road, their demand will be very elastic. In the short term – “in the absence of a carefully designed control law” – this increases volatility. But in the long term, if we can manage volatility, this is a huge stabilizing force for intermittent renewables on the grid, as EVs can suck up cheap overnight wind and morning solar before A/C loads kick in.

        • neroden

          It’s a control system problem. I (admitting a personal bias here) therefore recommend Kohn-Nerode methods. It’s not really that hard to solve.

        • Otis11

          Ah… that’s incorrect. It’s a negative feedback loop – prices fall/demand rises/supply falls or prices rise/demand falls/supply rises. This makes them come to meet each other.

          For volatility to increase as you add more systems it would have to be a positive feedback loop. (This is particularly true when the demand time is inelastic)

          Sure, there are a few corner cases where it could pose a problem, but it just gets to basic feedback controls.

          • Hazel

            It may appear at first glance as a first order negative feedback system, like so many physical systems. But comparable physical systems operate in a continuum, with instantaneous feedback — or rather, generally really fast feedback at the speed of light or sound, at much shorter time scales than other relevant phenomena — resulting in damping, as you say.

            The difference here is that the feedback is not instantaneous, there’s a timing issue involved. Prices don’t — and can’t — “instantly” respond to changes in demand. There are delays of seconds, or tens of seconds, which are really hard to get out of the system, and by which time it’s too late. You’ve already passed the equilibrium market-clearing price, and more systems are still pushing it the wrong way.

            Based on your simplistic answer, I have to ask, did you read the paper I linked, or even its abstract?

          • Otis11

            So, I glanced at it, but I didn’t have time to read the full article.

            I understand their premise, and it’s a valid point, but I think it’s something that’s fairly simple to solve (if it even truly becomes a problem). First, as different parts of the grid start to push electricity to the grid or pull electricity of the grid in increasing amounts, we’re going to reach more local limitations (Say your neighborhood transformer can only pump so much electricity back into the grid from the rooftop solar while everyone’s at work and the houses aren’t using much).

            This is going to break the system down into many smaller zones – each with their own price. As each of these systems change prices independently we might get significant ripple on each one, but smaller grids will have less ripple and averaging lots of these systems together will make an overall smooth system (averaging lots of independent ripples yields a fairly smooth result).

            On top of that there are feedback control systems in industry that can handle many of these issues on a first order.

            All of this together, I don’t foresee this being insurmountable (or even really much harder than the problems the electric utilities already solve on a regular basis).

            Is there still something I’m overlooking/oversimplifying?
            (Apologies for over-simplifying my previous response, I was in a hurry).

          • eveee

            I read the paper. Its true that since its a control system, it must be designed for stability. That finding is expected, and it is good that it is being studied. The authors preface their statements including other studies that conclude real time pricing is good for demand management, and minimizes resource expenses.

  • Frank

    Conflict of interest. Monopoly utilities should not be allowed to own generation, or even transmission. They should not have any reason to care who’s electricity they deliver to your house. And yes, computers are cheap, and internet access is widely available. Everybody should be treated equally, whether its a couple KW of solar pannels on the roof, or a large generator, or demand response, shouldn’t matter.

    It’s not like you have to pay somebody to pick up the phone and call. The computers can do the communicating. And while you may not be told what an individual homeowner is going to do, computers can sure keep track of what they did the last bunch of times if their meter is sending them data, so they should be able to get really close city wide with good weather forecasting.

    • JamesWimberley

      Agreed on the split between generation and transmission: it’s THE key reform. Transmission and distribution are a technical monopoly: you only want to build one grid, which runs the market. Generation can and should be competitive. It’s striking how dispassionate the operators of the unbundled grids in Texas, the UK and Germany are about renewables: just another generating source, to be integrated, at a price.

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