US Grid as We’ve Known it Is Over

August 29, 2013

It’s passed on. This Grid is no more. It’s ceased to be. This is an ex grid.

Don’t believe me?

Businessweek:

There are 3,200 utilities that make up the U.S. electrical grid, the largest machine in the world. These power companies sell $400 billion worth of electricity a year, mostly derived from burning fossil fuels in centralized stations and distributed over 2.7 million miles of power lines. Regulators set rates; utilities get guaranteed returns; investors get sure-thing dividends. It’s a model that hasn’t changed much since Thomas Edison invented the light bulb. And it’s doomed to obsolescence.

That’s the opinion of David Crane, chief executive officer of NRG Energy, a wholesale power company based in Princeton, N.J. What’s afoot is a confluence of green energy and computer technology, deregulation, cheap natural gas, and political pressure that, as Crane starkly frames it, poses “a mortal threat to the existing utility system.” He says that in about the time it has taken cell phones to supplant land lines in most U.S. homes, the grid will become increasingly irrelevant as customers move toward decentralized homegrown green energy. Rooftop solar, in particular, is turning tens of thousands of businesses and households into power producers. Such distributed generation, to use the industry’s term for power produced outside the grid, is certain to grow.

Crane, 54, a Harvard-educated father of five, drives himself to work every day in his electric Tesla Model S. He gave his college-age son an electric Nissan Leaf. He worries about the impact of warming on the earth his grandchildren will inherit. And he seems to relish his role as utility industry gadfly, framing its future in Cassandra-like terms. As Crane sees it, some utilities will get trapped in an economic death spiral as distributed generation eats into their regulated revenue stream and forces them to raise rates, thereby driving more customers off the grid. Some customers, particularly in the sunny West and high-cost Northeast, already realize that “they don’t need the power industry at all,” Crane says.

He’s not alone in his assessment, though. An unusually frank January report by the Edison Electric Institute (EEI), the utilities trade group, warned members that distributed generation and companion factors have essentially put them in the same position as airlines and the telecommunications industry in the late 1970s. “U.S. carriers that were in existence prior to deregulation in 1978 faced bankruptcy,” the report states. “The telecommunication businesses of 1978, meanwhile, are not recognizable today.” Crane prefers another analogy. Like the U.S. Postal Service, he says, “utilities will continue to serve the elderly or the less fortunate, but the rest of the population moves on.” And while his utility brethren may see the grid as “the one true monopoly, I’m working for the day the grid is diminished.”

Anthony Earley Jr., CEO of giant Pacific Gas & Electric, doesn’t share Crane’s timetable for the coming disruption—he thinks it’s further out—but he does agree about the seriousness of the threat. Solar users drain revenue while continuing to use utility transmission lines for backup or to sell their power back to the power company. How can power companies pay for necessary maintenance and upgrades of the grid if that free ride continues? “No less than the stability of the grid is at stake,” he says. So far regulators in Louisiana, Idaho, and California have rejected calls to impose fees or taxes on solar users.

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8 Responses to “US Grid as We’ve Known it Is Over”

  1. Gingerbaker Says:

    the grid will become increasingly irrelevant as customers move toward decentralized homegrown green energy. Rooftop solar, in particular, is turning tens of thousands of businesses and households into power producers.

    Yet, the grid is also becoming increasingly MORE important, for the simple reason that most homeowners or businesses can not come close to generating 100% of their energy needs. A typical New England home, for example, equipped with a full battalion of rooftop panels, would be lucky to generate enough electricity to run its lights and a couple of small appliances every day. There is no way for such rooftop arrays to generate enough juice to heat the home, run the stove, air conditioner; power the automobile(s), run the dryer.

    I would say it is extremely unlikely that any home, even if sited in the American Southwest which receives much more sun than every other part of the country, could generate a majority of its energy needs.

    Which means that the grid becomes even more important as time goes on, because it is going to have to carry more energy than ever before. In future, ALL our energy needs, including those that are now met with fossil fuels, will have to be distributed on that grid.

    Large-scale renewable installations will be essential for our future, and we will need a lot of them. We will need a newer, smarter grid. And a utility system that opposes these advancements is a utility system that needs to be replaced by one that is working in the public, not for-profit, interest.

    One national public utility would be the lowest-cost solution, and would allow the smartest implementation of our much-needed smart grid.

    These power companies sell $400 billion worth of electricity a year,

    Imagine if ten years ago, instead of paying that $4 trillion dollars to private for-profit utilities, we had bought ownership of a national renewable utility. We could already have in place a 100% green electric company that would be providing our electricity at cost. Which, after recouping the capital expense and upkeep costs, would then be “selling” our own electricity to us for just about zero.

    Our new green energy future works very well as a non-profit utility, and doesn’t seem to be possible in the for-profit capitalistic system. Not all needed services work in the free enterprise model. Police, Fire departments don’t. Sewer and water systems don’t.

    And electric utilities work better when they are publicly owned.


  2. Um.. Wasn’t the topic distributed generation?(DG) So the point is – distributed generation requires less transmission grid, not more.
    http://en.wikipedia.org/wiki/Distributed_generation
    This also reduces the size and number of power lines that must be constructed.

    Think about it.

    DG reduces transmission line and transformer wear and tear.
    DG (solar) reduces peak loads = less transmission gear needed.

    Think about it in reverse. All those households with rooftop solar are reducing peak demand. Less peak demand is less transmission grid and less generation.

    Now.. about solar costs for all ratepayers. You do know that rooftop solar reduces peak loads, right? Did you also know that next years rates are influence by this years peaks?
    http://www.energymanagertoday.com/curtailing-energy-during-peak-power-hour-reduces-next-years-rates-093550/

    So what’s the real problem? … Utilities and regulation has to change. The problem isn’t technical. Its social.

  3. Gingerbaker Says:

    DG reduces transmission line and transformer wear and tear.
    DG (solar) reduces peak loads = less transmission gear needed.

    DG also increases transmission wear and tear – because every single home now redundantly needs a transformer, inverter, possibly battery. A million homes, a million totally redundant electrical systems.

    Less transmission needed? I don’t think that is likely. As I pointed out, rooftop solar can not possibly come close to generating all our energy needs. Electricity is still going to have to be generated by other means, and it still going to have to be transmitted. All rooftop solar does in that regard is make rooftop owners not feel like contributing more money for transmission infrastructure.

    So when you say “The problem isn’t technical. Its social.” I wonder what is meant by ‘social’. Because the way I see it, there is a large component of rooftop solar that is ANTI social.

    A homeowner putting up rooftop solar is using his own money to make electricity for his own use, not his neighbors. Nobody constructs a home system that has way more output than can be used by the person who paid for it. It’s more about the individual, instead of the community.

    To an extent, it is vanity. Because we all pay, eventually, for rooftop solar, but we don’t all get the benefit. And personally, I don’t want to pay full retail price so someone else can make a small fraction of his energy requirements, inefficiently and at maximal cost, on his personal rooftop.

    To me, large-scale production and transmission is more “social”. We all share the financial burden, we would all share the financial reward. And we would do this at the lowest possible cost, not the highest. And we could do it with coherent planning and on a scale that could actually solve the problem quickly enough to have real meaning.


  4. Ginger – solar installations do not use (60Hz)transformers, they use inverters.
    “Less transmission needed? I don’t think that is likely.”
    Please read the references first, not just repeat your opinion. Then after you have read the references and understand them, you can give counter references, etc. It helps the discussion and possibly educates others in a mutually constructive process..

    “The problem isn’t technical. Its social.” I wonder what is meant by ‘social’.
    Since you do not know, the best thing to do there is to stop and ask. Going on with your own idea of what you thought someone else meant is not helpful. Other readers may have a better idea of what was meant by “social”. More explanation is not helpful. What is needed is more thought.

    Going back to topic, I wonder if anyone realized that rooftop solar could reduce their neighbor’s electric rate, not just their own.

    “Regulators set rates; utilities get guaranteed returns; investors get sure-thing dividends. It’s a model that hasn’t changed much since Thomas Edison invented the light bulb. And it’s doomed to obsolescence.”
    A change from this model is a social change because we decided as a society that a public utility could be a monopoly that was regulated in the manner just described. According to US law, other industries are not allowed to have monopolistic practices. Ergo, public utilities are a social construct. That social construct is changing. Ergo, the problem is social. How to construct a new social pact in the face of technological change. We are now having that great social debate as shown by Peter in recent reports. That is Arizona and other solar rooftop owners and their conflict with utilities. That is the struggle to determine net metering or whatever payback solar gets and to figure out not just that, but what do public utilities do in this era of flat or declining demand? Solar cannot be blamed for utility over capacity, although some utilities want to make solar and wind into scapegoats for their problems. Here is an idea. If demand fell, but utilities still have an oversupply of fixed assets, who pays? Do electric rates go up so that revenues stay the same or do we let utilities face some economic incentives to decrease fixed assets. I say there must be some economic feedback in the model. We cannot incentivized utilities to do uneconomic activity. That makes no sense.

    • Gingerbaker Says:

      You really are quite insufferable, you know that, Christopher? They are not transformers they are invertors? That’s some deep shit.

      Evidently, if I listened to your country grandma, thought more on the topic, understood the issues better, read the links more closely, shut up instead of asking what you meant by the word “social”, then I would be enlightened – and the proof would be that I wouldn’t disagree with you!

      Rooftop solar, contrary to your assertions, is not going to reduce the demand for transmission infrastructure one iota, because it can not possibly provide enough power to obviate the need for centralized larger scale systems, be they solar, wind, tidal, hydrothermal. Perhaps you missed the memo – our entire grid is going to need to be upgraded – that, sir, is transmission infrastructure and it is going to need to be done even if every single rooftop has a shiny new array.

      ” If demand fell, but utilities still have an oversupply of fixed assets, who pays? Do electric rates go up so that revenues stay the same or do we let utilities face some economic incentives to decrease fixed assets. I say there must be some economic feedback in the model. We cannot incentivized utilities to do uneconomic activity. That makes no sense.”

      What I have been trying to say, no doubt inelegantly, for months now is that renewables don’t fit into an economic system that is for-profit. The paradigm of public utilities needing revenues which pay for their expenses needs to end – because once the renewable infrastructure is paid for and running – there are no recurring fuel expenses. There is only upkeep and slow accrual of capital to replace the infrastructure.

      We don’t really even know the schedule of that replacement. PV panels, for instance, once thought to have a ten or twenty year lifespan, appear to test out to suffer little degradation and may have an eighty year lifespan.

      Thinking about the multivarious complicated economic incentive strategies to invigorate the imposition of renewable energy into a economic/political system which competes with and despises it has resulted in actual despair in a lot of well-meaning folks. It doesn’t fit.

      In the article above, we are seeing, for example, that even a public utility is fighting implementation of renewables. Why? Because it is still motivated by the economic necessities of of its original charter – which pays for the carbon fuel infrastructure it uses as well as the continual and growing expenses for carbon fuels. But this model is not relevant to our future.

      Renewable energy has no ‘fuel’ costs. The economic model needs to change to recognize this. Which is why I have been suggesting that we start to have a national conversation about nationalization of our electric utility system, and why I have been calling for a new national renewables-only public utility. Its charter would be to erect renewable infrastructure only, and to offer the resulting power at market rates so low as to make continued use of carbon fuel-derived power unthinkable.

      The only entity which can afford this gigantic amount of deficit spending, as far as I can see, is the Federal government. Perhaps they should be building PV panel factories, and supplying rooftop installs at government wholesale prices. As well as large-scale projects of course!

      Let me reiterate what David Roberts said at a recent Ted talk – if we have any reasonable hope of keeping civilization as we know it viable over the next two centuries, we must keep AGW to no more than 2C degrees. -> That means , he says, that we must bring our global CO2 emissions to zero in the next 5 to 10 years.

      It is time, indeed, to panic if we are about our grandchildren’s children and the world they will inherit. Do you really think anything but a Federal effort to build infrastructure is going to come close to accomplishing our goals?


  5. I’ve had complaints about it. But it keeps getting worse.


  6. […] make progress in renewable energy, the same kind of inexorable economic logic that is beginning to blow up power production models in the west, will more and more take hold in the East as […]


  7. […] While grid-tied solar has seen dramatic recent cost declines, until recently, solar-plus-battery systems have not been considered economically viable. However, concurrent declining costs of batteries, growing maturity of solar-plus-battery systems, and increasing adoption rates for these technologies are changing that. Recent media coverage, market analysis, and industry discussions—including the Edison Electric Institute’s January 2013 Disruptive Challenges—have gone so far as to suggest that low-cost solar-plus-battery systems could one day enable customers to cut the cord with their utility and go from grid connected to grid defected. […]


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