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The Future of the Grid

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I figured I'd start a discussion on this after a couple of Robert Boston's comments piqued my interest in this topic.

Specifically, that current power pricing does not reflect current costs and that distribution/infrastructure/labor represent nearly 50% of the cost of residential electricity.

Here are the two quotes I'm referencing.

Yes, provided that we've got "peak" defined correctly. Too often historic usage is enshrined in time-of-service rates; as the Duck Curve shows, many of those historical "peak" hours will probably have negative energy prices in the future. The real value will be in reducing the sharp run-up in consumption at sunset.

There's an awkward temporal line-up of California, too: sunset occurs at nearly the same minute across most of the coast, where most of the people live. E.g., today sunset is at 4:48 in San Diego, 4:50 in LA, and 4:58 in Oakland. By contrast, in the eastern/mid-Atlantic/mid-west markets, we have much more east-west diversity in the solar resource.

This talk of "negawatts" really underscores how poorly we price power. If consumers simply paid the current, 5-minute or hourly, price of power, and generators were simply paid that price, then everything would line up neatly. Instead we have "big" generators (>=10MW) seeing that real-time price, but retail tariffs burying it, both for purchases and injections.

And, I've managed to wander far from the nuke question. I'll offer this on that subject: nuclear plants see the actual prices in the market, based on actual scarcity or surplus. Rooftop solar doesn't. If rooftop solar did, my guess is that the economics would be much less attractive than it is today. Still better than building a nuke, but certainly not enough to trigger shutting down an existing, well-functioning nuke.

In round numbers, yes, $50/month for a residential property seems about right. Remember you're paying not only for the capital costs of your distribution wires, but also your pro rata share of the transmission system, as well as all the employees who keep the system running.

Based on the fairly high cost of just having a home connected to the grid (~$6000/decade), the increase in the number of wireless electrical control devices, and the cost of PV panels, I'm wondering if the grid as we know it is headed out the door.

This wouldn't be something universal, but with levelized solar costs at something like ~$.05/kWh on the low end (DIY install), the ability to integrate DSM into a home at the individual level, and the dropping costs of battery storage (probably ~$.10-.15c/kWh), my WAG is that someone could put together a set up (genset backup) where they would only pay ~$.07-.09/kWh compared to the ~$.13/kWh US residential average.

They would of course need to push ~80% of their electricity consumption into the day time in order to minimize storage costs, and charging an EV at night wouldn't be viable, but they would be able to drastically undercut the cost of grid power with hopefully similar uptime/availability.

Does anyone have any thoughts/remarks on this?
 
Certainly a great and worthy discussion. One thing I think people don't put enough value on is the reliability of the grid. I can count on one hand the number of outages I've had in the last decade.

While solar panels and batteries are getting cheaper, and it may look equivalent or more attractive price-wise to a grid connection fee (leading to a decision to go off-grid), are we really ready to do that and have an extended outage because an inverter dies or a bad battery cell takes down a string of batteries? I don't see people talking about designing redundancy into those systems at the consumer level very much. While I'm a technology guy and would love to experiment around with this stuff, I don't see severing my grid tie completely any time soon. I over generate during the day with my PV system, and use the grid as my "battery" at night. To me, it's worth a modest monthly fee to keep that grid connection and the associated reliability in place...
 
In a large part of the country you would need a huge battery as we use an electric heat pump to heat the house. In the cloudy winter with short days my production drops to less than half that of the spring and fall, while my electric use triples. I was able to to "bank" 1400 KWh or the equivalent or 16 P85 batteries. So for me the swing from day to night is MINOR compared to the swing from spring to winter.

Solar Graph.JPG
 
Randy, that's an excellent point. As long as a grid connection is reasonably priced, it's likely the best battery around, and for most people probably more reliable than an off-grid system.

Still, a properly designed off-grid system shouldn't have trouble with outages. I'd love to see someone replace the engine in a Honda/Yanmar with a 1NZ-FXE, but at idle it still makes too much power for most households. Something like ~4500W. Now, if it would run at 100RPM, that would be awesome. Just gear up the generator and modulate the throttle to go from ~500W-5000+W on demand. All while using ~70% of the fuel an efficient small engine uses.

Just connecting a Prius as a b-up generator is easier, but it won't provide as much power and it's not as efficient since everything's running through the battery.

Using a Prius as a generator

dhrivnak, that's a good point about heating costs too. I think one solution could be solar thermal and passive solar. It a system was large enough, the only electricity costs would be a few hundred kWh per heating season to run the circulating pump. Still, the DIY aspect of it is a pain for most people and likely prohibitive.

http://www.builditsolar.com/Projects/SpaceHeating/Space_Heating.htm
 
Most people don't have the real estate (rooftop or ground mount) to generate enough PV energy for their needs, so the grid isn't going away no matter what.

Also, efficiencies come into play. A friend of mine is an investor in a large ski resort in Utah. As part of the large residential community, they decided they wanted to have a lot of PV solar. First they thought rooftop, but realized a solar farm would be more efficient, so they looked at centralizing it nearby. Then they realized that their location in the mountains wasn't ideal as the panels would get covered in snow a lot. So now they are looking at building or doing a deal with a company that has utility scale solar in the relatively nearby lowlands that get a lot more sun. Ie. they are effectively buying electricity from a utility at that point. So, again, the grid is used.

Having said all that, California's insane electricity rates (which can get to $0.75/kWh in the summer peaks) pretty much forces everyone who can afford it to go solar. We are guaranteed net metering for the next few years, after which a new pricing scheme will be put forward by the utilities. If we are lucky, it will only incentivize us to have batteries to get rid of the duck curve, if we are unlucky, who knows. Our regulator just forced ratepayers to pay our electric company a 3% rate of return for a very prematurely useless and mothballed nuclear reactor (San Onofre). They'll probably tag us for decommissioning as well. Must be nice to have a company where you can make money no matter how bad your mistakes get.
 
Regarding California rates, I think most people here just accept that the default non-time-of-use rates are THE cost of electricity. I don't personally know anyone on TOU unless they have solar or an EV. So, in PG&E territory, the rates today are 15c-32c/kWh total (energy and distribution combined) depending on how much you use. Lately they have been "flattening" the rates by increasing the Tier 1 & 2 rates and lowering the Tier 3 - 5 rates. For example, in spring 2013, the prices were 13c-35c/kWh. They also decreased the baseline quantities by about 1 kWh/day in August of this year.

Anyway, the way I see it is that the Energy Commission and the Utilities Commission have set up the rates so that conservation is encouraged by high rates for high usage. All usage over about 400kWh/mo is paying at least 26c/kWh. This makes solar a true no-brainer for anyone using more than that much electricity and has a suitable rooftop and good credit.

If I lose net metering for my solar system and we go on a feed-in tariff system, I will probably get some batteries and do my best to design the system to never feed anything into the grid. My solar production at the peak of summer never exceeds 27kWh/day, so a 30 to 40 kWh battery should do fine. Right now, the summer peak time period is 2pm-9pm so my evening usage really eats up a lot of my peak generation. This is quite different than SoCal Edison, whose Peak rate window is from 10am-6pm. That is perfect for solar and does not align with the CA-ISO load curves as well as the PG&E schedule. Anyway, my goal for the battery system would be to never feed back into the grid unless the batteries were full and draw as little as possible from the grid during the peak time period. I have most of my household loads on a sub-panel, so if I ran that whole panel off the battery and its inverter and just had a variable 10kW charger connected to the grid, the battery would technically not be interconnected to the grid and I would have uninterruptible power for most of the house.

Actually, now that I think about it a little more, I would probably not be able to use all the summer generation without putting some of it into my EV. The Peak feed-in would probably be at a higher price than the Off-Peak EV charging from the grid. So, I would have to think about the arbitrage and fine-tune the strategy considering all the prices. I assume that I would still want to capture as much of the morning solar as possible in the battery to minimize the grid draw until after 9pm.

- - - Updated - - -

Certainly a great and worthy discussion. One thing I think people don't put enough value on is the reliability of the grid. I can count on one hand the number of outages I've had in the last decade.
I live in a PG&E service area that has above ground utilities and our immediate area has had at least 5 outages of more than 10 minutes in each of the last 5 years. Most outages are 1-6 hours. In nearby areas that have underground utilities, the frequency is much lower, probably less than once per year.
 
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Yeah, I agree about the service disruptions. I too live in an above ground utility area, and at least once a year some guy slams into a utility pole knocking out power for wide swathes of people. The last idiot took out a utility pole and a fire hydrant, causing water issues as well.
 
In a large part of the country you would need a huge battery as we use an electric heat pump to heat the house. In the cloudy winter with short days my production drops to less than half that of the spring and fall, while my electric use triples. I was able to to "bank" 1400 KWh or the equivalent or 16 P85 batteries. So for me the swing from day to night is MINOR compared to the swing from spring to winter.

View attachment 64110

This. A million times over.
 
I'm really wondering how much the giga-factory will drive down prices. Right now, LFP cells from China run ~10c/kWh to 70% capacity for storage, which is a little high, and potentially risky because there's no long term warranty. If the giga-factory starts releasing packs at ~7c/kWh with warranties, that's a game changer.

Someone with an S and net energy metering would still be far better off with a grid connection, but something really interesting might happen. Lets say that battery pack cost drop substantially and that someone commercializes a decent off grid system that's composed of a small'ish battery pack, PV panels, a DSM "kit", etc... This allows someone to go off-grid for ~11c/kWh levelized assuming they don't have high nightly loads, which would be pretty good in a state like CA.

As more people disconnect, the costs of grid maintenance go up, and the rates for everyone connected go up. Some things, like NEM, might get axed to reduce costs, and there goes a big advantage to grid connected solar. Arguably, you wouldn't pay for the solar energy or grid costs of all the electricity you use directly in the day time, but if EV owners with PV panels were only paid the market rate for their electricity, and then had to pay the market rate at night plus transmission/maintenance costs, that would substantially change the economics of EV ownership.
 
The New York Independent System Operator (NYISO) just released its five-year strategic plan. Several planned initiatives caught my eye, in light of discussions we've had on this forum:
  • Develop market design for electric energy storage to address generator intermittency and gas pipeline contingencies
  • Energy & capacity market enhancement: Behind-the-meter net generation
  • Facilitate efficient and reliable integration of DR [Demand Response]/DERs [Distributed Energy Resources] into operations, markets, and planning
    • Provide technical support to PSC’s “REV” initiative
    • Communications standards and protocols for DR/DER
    • Install tools to integrate distributed solar output into load forecasting
    • Integrate DER into operations, markets, and planning
So, here's at least on example of the grid operator trying to be proactive in evolving its role as more customers take a bigger role in managing and generating their own energy usage.
 
In a large part of the country you would need a huge battery as we use an electric heat pump to heat the house. In the cloudy winter with short days my production drops to less than half that of the spring and fall, while my electric use triples. I was able to to "bank" 1400 KWh or the equivalent or 16 P85 batteries. So for me the swing from day to night is MINOR compared to the swing from spring to winter.

View attachment 64110

Yes, I think many locations can pretty much forget off-grid. BUT, a battery, as well as providing solar storage, and power back-up could also _significantly_ reduce the need for grid distribution capacity. If you sized your connection for solar PV production, and alternatively steadily drew electricity at an average rate, most households could have stupidly small connections. Utilities are complaining about handling 5kW PV output from homes, while their supply is rated for 20-24kW or 40-48kW.
 
The New York Independent System Operator (NYISO) just released its five-year strategic plan. Several planned initiatives caught my eye, in light of discussions we've had on this forum:

So, here's at least on example of the grid operator trying to be proactive in evolving its role as more customers take a bigger role in managing and generating their own energy usage.

That's good news... hopefully they're sincere...
 
It's not often that one hears politicians devote a significant chunk of time in an inaugural address talking about distributed generation and micro-grids, but that's exactly what Gov. Brown of California did yesterday.
I envision a wide range of initiatives: more distributed power, expanded rooftop solar, micro-grids, an energy imbalance market, battery storage, the full integration of information technology and electrical distribution and millions of electric and low-carbon vehicles. How we achieve these goals and at what pace will take great thought and imagination mixed with pragmatic caution. It will require enormous innovation, research and investment. And we will need active collaboration at every stage with our scientists, engineers, entrepreneurs, businesses and officials at all levels.
Remembering that the California governor appoints all members of both the Public Utilities Commission and the Board of Governors of the CAISO, and that renewables has strong support among California Democrats that control both houses of the legislature, we should expect to see substantial progress on all these fronts.
 
I was just reading this report on when the UK (yes, cloudy, wet and cold UK) could move to unsubsidised solar. Some valid points and a mention of Tesla getting battery storage costs down. Utility behaviour may also drive people to offgrid solutions (bumping up grid connection fees before any usage).

I think they miss discussing the growing use of EVs and people with Solar PV charging during the day and ideas like Leaf to Home taking off, in relation to increasing utilisation of generation rather than returning to the grid.

http://www.thema1.de/wp-content/uploads/2014/12/Unsubsidised_UK_Solar.pdf
 
I see grid & mass energy producers as managers in moving use and production to each other. They have assets: producers, storage, grid, and users.

Let me give an example.

In San Jose, California, it seems like most the government schools (elementary, jr high & high school) now have massive solar panels. I see solar panels going up all over in California. Grid energy calculations are showing a massive dip compared to the past in the middle of sunny days.

Another example people bring up is the intermittent nature of wind power.

Now look quickly here: How much energy does California use to move water? | Big Picture Agriculture

Notice the 7% used for water movement. I have a question: how many of these pumps are sized for continuous operation and have to be operated continuously? In other words, how much of their pumping can be done less than all-day long? How much would we have to spend to size the pumps, water storage, transformers & electronics, and electric grid to use peak solar and peak wind immediately to pump water when that excess electricity is available? How much of this would shave off the noise, spikes, and mountains of electric generation and use mismatches?

I don't have these numbers handy, but the mere fact that we don't see this 7% figure discussed much to me seems like an obvious sign of an avoided solution. That causes me to think that anybody avoiding talking about this actually has a different agenda than sensible economic & environmental improvements. This may be a red herring, but I don't think so.

This means that I'm fantastically happy Tesla is trying to break into the home electricity storage market. This means that more tools will be available to match these uses and productions up. If the utility would become an integrated partner with water districts and home storage solutions, and the government realizes they can't legislate communist central control but instead can farm out the decisions to everyone according to real-time instantaneous economics and the tools that flow around those to fix this up right, then the tools made to fix this up would basically mean PG&E (or your local big box electric utility) would become a communication and management entity. That might even be an argument for taking away the California central grid operator and placing that back in the hands of PG&E.

And if the government and the big box utilities want to stay mired in the 20th century, then we can leave the grid entirely, and the water districts who come to us begging for more electricity money can be rebuffed with "go install solar panels of your own and stop being in bed with big box energy".

Edit: I didn't know Gov. Brown was aware of the need for imbalance markets. Hopefully he understands the words he said, and doesn't pigeon-hole their meaning. I have more optimism now, but it seems like practically everyone has to drag everyone mutually kicking and screaming into this new reality.

Edit 2: Aha, I see people discussing this in this forum here, and also online at A Philosophical Divide Emerges in States Considering the Future of Utilities : Greentech Media

It seems these issues are finally being addressed. Let's not keep off the pressure to do things right.
 
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As I see it, EVs are the key to cheaper electric rates. The major cost is the investment of infrastructure to handle peak daily loads. Instead of these costly cyclical energy demands, the grid's generation capabilities are sized for the flat line average demand. This could be easily done after the wide use and acceptance of EVs and Internet controlled charging of these vehicles. During what would have been peak usage times, instead of charging the family EV, it gives back to the grid a small amount at a premium rate. What would be the under utilized time period, the EV is charging at full tilt at a lower cost rate. With enough EVs the power company could flatten out all those peaks, giving every power customer a better rate.
 
@bwa: you make an important point that I haven't heard articulated quite so clearly before: the utility of the future is primarily an IT company, moving information to help customers and suppliers balance demand and supply. This requires a huge mindset shift at the utilities, which still view themselves primarily as industrial companies producing a commodity with a dedicated delivery system. Interesting.
 
@bwa: you make an important point that I haven't heard articulated quite so clearly before: the utility of the future is primarily an IT company, moving information to help customers and suppliers balance demand and supply. This requires a huge mindset shift at the utilities, which still view themselves primarily as industrial companies producing a commodity with a dedicated delivery system. Interesting.

And there's nothing wrong with just being the middle man, hell in most businesses that's the ideal.

Lets hope these utilities embrace their new role. If Germany is any indication, they'll have no qualms about spinning off their production and focusing on distribution.