Bloomberg Law
Nov. 12, 2019, 9:01 AM

INSIGHT: Optimizing a More Flexible Power Grid

Eric Lustgarten
Eric Lustgarten
Hygge Power

Despite being one of the largest machines in the world—with a record electricity generation high of 4,178 million megawatt hours in 2018 — the U.S.’s centralized, single-direction power grids are hopelessly outdated and ill-equipped for today’s modern needs.

Complicating the issue even further, the combination of the growing penetration of renewable energy sources and other distributed energy resources have led to challenges related to intermittence and bidirectional flows if not properly managed. Designed for static, centralized power production, today’s grid was not built with the variability of renewable energy resources, such as solar and wind power, in mind.

For communities looking to meet their sustainability goals, not to mention the growing number of states and municipalities that have enacted renewable energy requirements, the grid needs to adapt to the evolving energy landscape.

Enabled with new technologies and hardware, utilities have more options than ever to deliver clean, more affordable energy to customers. Some of the most popular—demand response, grid flexibility, and new information technologies—offer a promising glimpse into a more adaptive and nimble grid.

Demand Response as Cost-Saving Mechanism

Think about it: our society is always plugged into something. Whether it’s smartphone chargers or smart TVs or large appliances or electric vehicles, we are consuming more energy than we ever have before. This has led to a host of efforts by utilities to implement demand response programs, which seek to adjust the demand for power, rather than adjusting the supply to meet the demand.

Demand response efforts come in many packages: time-of-use (TOU) pricing, dynamic pricing, behavioral demand and direct load control programs, which provide the ability for utilities to cycle smart-enabled air conditioners and water heaters during peak demand periods.

Today, demand response programs are used as an option for balancing supply with demand but only can account for and clear 6.7% (about 59 GW) of the wholesale market—and that is mostly commercial and industrial DR.

From a cost perspective, demand response is showing great promise in helping utilities avoid expensive investment, and is helping ratepayers save millions of dollars in the process through a range of financial incentives in exchange for program participation.

To that end, a recent study by the Brattle Group contended the cost-effective load flexibility potential in the U.S. will be nearly 200 GW (nearly 20% peak demand) by 2030 and the majority of that potential lies in new emerging load flexibility programs, underscoring the impact of how effective these programs can be in the future.

Grid Flexibility

With renewable energy overtaking coal for the first time in our nation’s history, there is also an imperative to help make the grid become more flexible for clean energy sources and better manage intermittent supply. Grid flexibility (sometimes called load flexibility) is about shifting loads around the grid and optimizing the best times to use that energy accordingly.

Several forward-thinking utilities, such as Green Mountain Power, Rocky Mountain Power, and Liberty Utilities, have made strategic investments in battery specific grid flexibility as a better alternative. Grid flexibility is not a new concept, although with a host of cleantech startups and clean energy incubators and accelerators now in the ecosystem, utilities now have more options than ever to invest in grid efficiency and resilience while improving integration with renewable energy resources.

Grid flexibility represents an optimized aggregation, integration, and orchestration of distributed energy resources (DERs) in concert with each other. One study suggests that flexible load capability could equate to 20% of estimated U.S. peak load by 2030, or more than triple the existing demand response capability while saving an eye-popping $15 billion annually in avoided system costs.

The Tech-Enabled Path Forward

Moving to a more distributed, web-like grid enables both the utility and the customer to interact with the grid more efficiently and affordably.

Devices like smart thermostats can be aggregated into a controllable network that can plug into demand response programs. In this system-of-systems, the flow of data will create new opportunities to optimize energy systems management and can promote further investments in low-carbon energy resources.

Hardware and software solutions exist today to optimize the grid. Remember, it’s not changing the way people use energy; it’s simply doing so in a newer, data-driven way. As distributed energy information technology becomes more available and cost effective, it will provide solutions to systems in need of optimization.

With more and more customers producing and storing their own electricity, demand response must advance beyond simple calls from the utility to reduce demand at certain times.

However, a greater system shift is occurring through the amount of data produced from batteries, smart meters, thermostats and other smart-enabled devices that allow for greater synchrony between demand and supply. As new solutions are deployed appropriately, understanding technology curves, applying big data insights and incorporating artificial intelligence can all help optimize a more flexible grid far beyond simple financial incentives currently offered.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Eric Lustgarten is the director of growth and strategy at Hygge Power, a Boulder, Colo.-based energy startup working on the future of energy generation, distribution and storage.

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