The Smart Grid is all about grid modernization and transformation. When we modernize the grid, we update technologies, but leave in place existing energy sources, existing business models, and existing policies. When we transform the grid, we exchange old energy sources for new ones, reinvent business models, and revise policies to support the transformations. Of the two, transformation is ultimately a much more difficult objective but it also holds the greatest rewards. Why? Simply put, transformation delivers energy and economic security.
The current grid has taken modern society as far as it can, but we’ve seen its shortcomings magnified on a global scale over the past few years. Reliance on fossil fuels for electricity generation and transportation has real downsides to the health of the citizens of Beijing. Their ongoing “airpocalypse” of hazardous air quality is a public health emergency. In the USA, reliance on centralized, just in time generation has expensive downsides to our economic vitality as witnessed in prolonged outages caused by derechos and hurricanes. A grid that is built to meet performance expectations based solely on reliability and not on resiliency cannot adequately support an electron-based economy.
Development of alternative energy sources that replace fossil fuels has been a top priority for electric grid transformation. For example, the US military is concentrating on buildouts of microgrids into their fixed and mobile bases that integrate renewables as energy sources. The prime mover, as noted by Vice Admiral Dennis McGinn (USN, ret.), president of ACORE (American Council on Renewable Energy), is that renewable energy is essentially free. That’s real economic security.
We are enjoying the results of several years of advances in solar technologies and services. The costs of panels are doing down as the harvestability ratios go up. We’ll continue to see exciting innovations in technologies and services. The recently announced peel and stick solar cells can make more devices self-generating. Companies like Geostellar create online solar marketplaces that connect potential solar customers with information, suppliers, and services.
Energy storage is a critical technology to aid the transformation to the Smart Grid, and serves two purposes. First, it helps firm the intermittency of renewable energy sources like wind and solar. Second, it can deliver much-needed resiliency to grid operations when it is deployed in distribution grids at points of consumption. Like renewables, energy storage technologies will benefit from enlightened federal and state policies that encourage R&D and pilot deployments that stimulate innovation and build practical knowledge applied to further technological, policy, and market improvements.
The recent history of renewable energy illustrates how policy can accelerate grid transformations. California’s Solar Initiative has 1 gigawatt of rooftop solar in production already, and New York’s recently announced NY-Sun program calls for an annual investment of $150 million for 10 years to stimulate solar deployments. The introductions of Green Banks like those forming in Connecticut or announced in New York use public and private funds for energy efficiency and energy generation projects. California may allocate all the revenue from a tax loophole closure to fund energy efficiency and renewable energy projects at primary, secondary, and community colleges, and reduce energy bills.
California took a first step on a similar trajectory for energy storage in 2010, directing the state Public Utilities Commission (CPUC) to study the feasibility of energy storage on a widely distributed scale. The CPUC could set mandates for each state Investor Owned Utility (IOU) to procure energy storage, and the final report is due soon. What remains to be seen is if other states move to consider similar policies, and the forms that financing takes for energy storage as standalone or integrated components in renewable energy projects.
Technology and policy are relatively easy challenges compared to the changes needed to business models and operations. These challenges will get more detailed exploration in future articles.