In summer of darkness, distributed energy offers brighter future for US West – S&P Global

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The Creek Fire threatens transmission lines in Auberry, Calif., as disasters across the West
triggered mass outages, prompting calls for the region to rethink its grid reliability strategy.
Source: Kent Nishimura/Los Angeles Times via Getty Images

As communities throughout the western United States sort through the rubble from a series of extreme heatwaves, wildfires and wind storms that devastated the region in August and September, knocking out power for millions of residents, recognition grows of the need for a reimagined and restructured power grid to ensure that the lights stay on.

“Grid reliability is a major problem,” Edward Fenster, chairman and co-founder of San Francisco-based solar and energy storage developer Sunrun Inc., said in a recent interview. “People don’t like living in the dark.”

As the warming climate continues to wreak havoc on conventional power systems that rely heavily on long-distance transmission lines and large-scale power plants in remote places, the reliability of the 21st century electric grid may rely upon a distributed network of smaller, localized assets — just as the internet depends on a web of decentralized resources to keep running when a big data center goes down.

Sunrun, the largest U.S. provider of home solar electric systems, has seen orders surge for lithium-ion battery backup power in California as utilities confront the state’s heightened wildfire risks with precautionary blackouts to keep their power lines from sparking fires. The company is among a growing group of stakeholders in the West, including renewable energy suppliers, major utilities, policy makers, tech giants, investors and researchers, seeking to extend the benefits of distributed energy resources to a broader spectrum of society. These alternative approaches to grid reliability include cloud-controlled hives of distributed batteries that combine with generation assets to form virtual power plants, traditional microgrids at self-contained and self-reliant campuses, and, in the future, community microgrids capable of sustaining entire neighborhoods or towns independent of the transmission system.

“We’re trying to not only help with the blueprint for renewable energy but also help with the blueprint for resiliency,” said Blake Richette, chairman and CEO of Sonnen Inc., an energy storage affiliate of Royal Dutch Shell PLC. Sonnen is working on several virtual power plants at apartment complexes in California and Utah.

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Order amid chaos

Reflecting spiking demand for distributed resources, there are now more than 14,000 active projects in the California’s Self-Generation Incentive Program. These total more than 1,500 MW of capacity, mostly at residential sites. Spurred in part by Pacific Gas and Electric Co.’s public safety power shutoffs, which have occurred at an unprecedented scale and left millions of residents in the San Francisco Bay area without power, program demand in 2020 has already surpassed the prior three years combined.

Sourced from ratepayer contributions, the incentives are available to customers of the PG&E Corp. utility subsidiary, as well as customers of Edison International’s Southern California Edison Co., and Sempra Energy affiliates San Diego Gas & Electric Co. and Southern California Gas Co.

The projects include battery storage additions at solar homes and businesses and new solar-plus-storage projects. With some 1.1 million distributed solar arrays already online, combining for 9,330 MW, California’s challenge now is to organize solar, batteries and other distributed energy resources into clusters of controllable assets that can withstand sprawling disasters like the wildfires that have devastated large swaths of the state. If California succeeds, it can be an example for neighboring states also increasingly at risk from wildfire-induced outages.

“The most critical point is to bring assets closer to customers and to make sure of prioritizing the most critical customers, coordinating supply and demand in a systematic way to maximize benefits,” said Becky Xilu Li, a senior associate at the Rocky Mountain Institute, a Colorado-based think tank focused on a cost-effective global transition to low-carbon, reliable energy systems.

Still falling short

On Sept. 17 the Federal Energy Regulatory Commission issued a landmark order that requires regional transmission organizations and independent system operators around the country to develop rules to enable aggregated distributed energy resources like small-scale solar arrays and battery installations.

In California, the state Public Utilities Commission is already working with utilities to implement a 2018 state law that called for widespread commercialization of microgrids. Southern California Edison, or SCE, has focused its microgrid efforts on providing power during precautionary power shutoffs, said Paul Grigaux, the utility’s vice president of asset management, strategy and engineering. One way of reducing the impact of those shutoffs is “potentially to strategically position some microgrids,” Grigaux said.

Several months ago SCE asked vendors to submit proposals for microgrid solutions, but found that the cost and technology fell short of the goal to “truly island on a moment’s notice and run in parallel with the grid for specific segments of one of our distribution circuits,” he added. “It is just not cost-competitive today and there are some technological developments that are still needed that we are working through very proactively as a company.”

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Companies in California and the broader West are seeking to use batteries and software to
control clusters of solar homes like these in Aliso Viejo, Calif., for grid reliability.
Source: Mitch Diamond/Photodisc via Getty Images

SCE plans to request another round of microgrid proposals in the next several months, Grigaux said. Technology advances will make microgrids increasingly cost-competitive for specific uses, such as in isolated communities far away from utility-scale generation sources, he added, noting that such systems may prove more cost-effective than maintaining or upgrading transmission and distribution lines to serve remote communities during peak demand.

Technology companies, meanwhile, have demanded faster progress. Silicon Valley icon Google LLC is among several California companies that recently criticized utilities and the CPUC for their cautious approach. The state’s heatwave-induced rolling blackouts in August “underscore the necessity of greatly accelerating the commercialization of microgrids in California to bolster the resiliency of the electrical grid,” a Google attorney said in a recent filing with energy regulators.

Absent from the state’s discussion of microgrids is private-sector development, “with financing that is not underwritten by ratepayers,” according to Google. The company is prepared to sponsor large-scale microgrids on tracts of land it owns or controls, but said state regulations prevent such third-party projects. Google also urged regulators to allow customer-owned microgrids that can operate independently of the primary grid during outages and interact with the grid under normal conditions.

Such regulatory innovation is key to harnessing the region’s distributed energy resources on a larger scale. A recent Rocky Mountain Institute report calls for “autonomous energy grids” built on virtual power plants and microgrids. Such systems, under development at the U.S. National Renewable Energy Laboratory in Golden, Colo., would rely on artificial intelligence to self-organize multiple microgrids and other distributed energy assets into independent energy networks when the transmission grid fails, and optimize the resources when the primary grid is online.

Here and now

In the meantime, customer-centered technologies that rely on energy efficiency and demand-side management to provide grid resilience during periods of peak demand and natural disasters are readily available. Demand response and conservation, for instance, helped avert further blackouts in California by dramatically reducing demand during this summer’s heatwaves.

Demand-side solutions should be expanded rapidly, according to Ralph Cavanagh, energy co-director of the climate and clean energy program at the Natural Resources Defense Council. “System-wide solutions are needed,” Cavanagh said in an interview. “We should not try to solve the problem house-by-house, but make it easy for everyone to contribute with a collective solution.”

Energy efficiency measures greatly reduce overall consumption and reduce the likelihood that the system will crash if demand outstrips supply, he said: “There are plenty of ways to focus on the demand side to reduce load without putting people at risk.”

Source: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/in-summer-of-darkness-distributed-energy-offers-brighter-future-for-us-west-60369551

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