Generac Grid Services Blog

This blog was co-authored by Enbala and the Rocky Mountain Institute (RMI). Enbala extends its heartfelt thanks to the Institute for the insights and effort that went into creating this piece. 

INTRODUCTION:

Demand flexibility - allowing household devices like HVAC systems and smart appliances to interact with the electric grid in response to real-time price changes - can save customers money and lower the overall cost of electricity. The Rocky Mountain Institute's recent paper, The Economics of Demand Flexibility, analyzed the economics of making common household loads controllable and responsive to electricity price signals. The Institute found that just making two devices flexible, i.e., smart thermostats that could flex an HVAC system’s output up or down by 2 degrees and smart water heaters that could change the timing of water heating, could lower system-wide peak demand by eight percent and save $10–15 billion in costs to the grid annually. 

The National Renewable Energy Lab has a great paper titled Flexibility in 21^st Century Power Systems. The paper addresses three grid requirements to accommodate increasing numbers of variable generation resources like wind and solar energy.

1. The first among those requirements is flexible generation. We need power plants that can run efficiently with a very low output level and ramp rapidly from those deep turn-down rates.
2. We also need flexible transmission to carry power without bottlenecks and facilitate access to a broad range of balancing resources. That’s requirement number two.
3. And, finally, the NREL authors say requirement number three is flexible demand-side resources. Those resources include storage, responsive distributed generation and loads engaged in demand response programs that can support the grid by responding to market signals or direct load control.

Amen to requirement number three.

According to FERC’s most recent "Demand Response and Advanced Metering Assessment," 74 percent of the potential peak reduction in retail demand-management programs comes from C&I customers. That means that the biggest, most valuable energy customers are also the most likely  allies in a demand response initiative.

I’ve said this before, but it’s worth repeating: Utilities deliver three things: voltage, frequency and reliability. The first two items impact the third. And, frequency – at least in an interconnected system with plenty of inertia like what we have in continental North America – is pretty easy to manage because it’s the same throughout the power system. Here in the Western interconnection where I live, that means the frequency is the same in Denver, Las Vegas, San Diego and Vancouver, BC.

This past March, Chinese energy regulators put the brakes on further deployment of wind-energy projects in Mongolia during 2016. Why? Call it too much of a good thing. China, now the world leader in solar and wind installations, doesn’t have the transmission infrastructure necessary to transport electricity from the windswept Mongolian steppes to the power-hungry cities that need it.

During 2015, China installed some 33 gigawatts of wind turbines, which was more than half of new wind installations worldwide. But, in the same year, government statistics show “33.9 billion kilowatt-hours of wind-powered electricity was wasted … equivalent to the electricity consumed by 3 million American households a year,” according to an article published by InsideClimate News. ”That was about 15 percent of China's total wind power generation, up from 8 percent a year earlier.”

This past Earth Day, plenty of power system participants celebrated our lovely planet. PECO used the date to launch it’s new Solar Stakeholder Collaborative. Louisville Gas & Electric sponsored a do at the Louisville Zoo. First Energy held EarthFest, Ohio's largest environmental education event, for some of its six million customers. Even California’s Independent System Operator (CAISO) used the date to push eco-friendly living. It issued its summer power supply forecast via a press release that sported the headline, “Energy Conservation: What’s Good for the Planet is Good for the Power Grid.”

Ultimately, that’s true. Ironically, a recent survey by the consultancy West Monroe Partners found that most utilities treat DERs -- like customer-sited solar -- as a threat. The same survey shows that only 3 percent of executives who responded view the growth of DER as an opportunity.

Given the proliferation of renewables — plus the dramatic growth rates predicted for solar and wind power over the next year or two — plenty of people are looking to storage as the way to save us from renewable intermittency. But, storage is pricey. And, given the potential for long stretches of inclement weather that knocks solar PV output down or fails to turn the wind turbines, the storage we have available today is unlikely to be sufficient for the power grid’s needs.