The Irony of 2020
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- Jun 19, 2020 11:45 pm GMTJun 19, 2020 9:08 pm GMT
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This item is part of the Special Issue - 06/2020 - Grid Modernization, click here for more
When it comes to 2020, I can’t help but wonder what new “AHAs,” “if onlys” and “what ifs” we’ll take with us into 2021 as we look back at this year, shake our heads and think “well, hindsight is always 20/20.” I look forward to being able to look back on 2020 with hindsight — the 20/20 of 2020 — all the while wishing I had entered 2020 with the foresight or prescience to predict our current reality. Who would have imagined the world as it is today? Not me.
While the year has not gone like any of us had predicted (or hoped), there are nevertheless important observations and lessons to be learned that will help us make more-informed decisions and prepare for a brighter tomorrow. This applies to all aspects of our lives — including grid modernization — and to the role of distributed energy resources in creating a more sustainable future.
As an overarching statement, it’s important to acknowledge three important factors driving the move to a more distributed energy future. One, the power grid is here to stay; it’s not going anywhere anytime soon. Two, clean energy is critical to the continued sustainability of our world and future generations. Three, when it comes to the power grid and clean energy, it’s a “both/and” situation, not “either/or.” We must manage the transition to clean energy and keep the grid operating, all the while dealing with any disruptions that may occur.
The unanticipated increase in residential loads and decrease in commercial loads caused by the pandemic has overturned the utility industry’s knowledge about energy consumption and highlighted the need for a more flexible approach to grid operations — an approach more adept at going with the flow, so to speak.
Distributed energy resources can, and should, play a big role in our energy future, and the current crisis presents an opportunity to rethink how our energy needs are met and to rebound with an approach to grid modernization that has a large, positive impact on our planet and on our local, regional and global economies. The inherent flexibility in everything from renewables, to EVs, to industrial processes is transforming how electricity is produced, controlled and balanced. It is also enabling rapid and profoundly beneficial changes in our energy markets.
Lesson One: Distributed Energy and Grid Reliability
If COVID-19 has taught us anything, it’s that one thing utilities do very well is disaster planning and execution aimed at ensuring the reliability of the grid. Utilities have made Herculean efforts to keep the lights on, hospitals functioning and communications systems operational. Working around the clock and literally living in control centers to keep our power grids up and balanced amidst dramatic supply and demand uncertainty, utility personnel are, without question, some of the unsung heroes of the pandemic.
At the same time, it’s important to note that as the impact of the virus extends into the summer high demand season, the specter of reliability fears is looming, as verified by a recent assessment from the North American Electric Reliability Corporation (NERC). The mixed dynamic of on-again, off-again stay-at-home orders and a gradual return of industry, combined with warmer weather and economic instability makes it very difficult to predict what might occur and the impact on our power grids.
What we do know – even without the benefit of hindsight or historic precedence – is that 2020 is a very abnormal year, with forces at work that are testing the flexibility of our grids and sparking very real grid readiness concerns.
When it comes to grid modernization efforts aimed at mitigating supply-demand imbalances on our power grids, distributed energy resources like customer-sited solar, flexible C&I and residential loads, electric vehicle charging stations and battery storage are becoming increasingly important. Such distributed energy resources are relatively immune to potential grid disruptions compared to conventional generators, and rapidly deployable distributed energy resources in the form of virtual power plants (VPPs) can continuously shift and adjust flexibility from vast networks of distributed energy assets to respond to the real-time balancing needs of the power system, making it more robust, reliable and resilient.
With the eventuality of demand spikes imminent, virtual power plants can maintain grid balance by dispatching aggregated fleets of mixed-asset, multi-vendor distributed energy assets in real time to immediately shave peak demand, while also providing system operators with a real-time view of system activity and continuously adjusting for variations at the asset level. Taking distributed energy control another step on the evolutionary ladder, advanced DERMS platforms bring grid operators advanced services like distribution system control, power flow management and voltage control.
Lesson Two: Managing the Cost of Grid Balancing
Balancing supply and demand isn’t just a control center problem, of course. There are big cost ramifications that come with under- or over-estimating just how much energy is needed to maintain a state of reliable grid balance. And these costs impact both utilities and their customers.
An approach to grid modernization that relies more heavily on distributed energy resources can help minimize the cost of balancing the electricity system during high-demand periods. VPPs and DERMS platforms which incorporate machine learning and artificial intelligence-based forecasting can also help grid operators achieve more accurate short-term demand forecasts, while also improving medium- to long-term demand forecasting for energy traders and system planners.
For example, in Australia, one of the major utilities is leveraging a fleet of residential battery systems in a VPP that’s participating in the wholesale electricity market as a hedge against high energy prices. The utility will offer services with those same assets in the FCAS (frequency control) markets, while also using the VPP for peak shedding, power factor control and voltage management use cases. The VPP software continuously tracks asset status, connectivity, available flexibility and constraints to calculate the available flexibility of the fleet of assets at any moment in time, ensuring that utility operators have access to the most accurate estimate of available capacity. The VPP’s asset forecasting system uses machine learning tools to combine asset data with external data sets such as local weather forecasts, giving grid operators a higher level of certainty that the required flexibility needed will be delivered when and where it is needed.
At the prosumer level, a modern VPP can help energy customers manage the solar and storage devices in their homes. The VPP can automatically manage the charging and dispatch of energy while simultaneously leveraging the assets for grid services so that customers can effortlessly consume energy when it’s least expensive and then supply energy back to the grid when it’s most needed.
Lesson Three: Marching Down the Road to Sustainability
On the positive side of the COVID-19 story, electricity demand reductions worldwide have resulted in falling carbon emissions, smoothing the road to cleaner energy — but only if there is an accompanying commitment and plan. A grid modernization plan focused on continued withdrawal from coal-fired generation and a stronger reliance on distributed energy resources will take us far in achieving the world’s carbon reduction goals.
There are two schools of thought on what the long-term effect of the pandemic will be on the renewable energy industry. Some argue that the economic downturn will slow the adoption of renewable energy for years to come. Others argue that a new focus on increased resilience and energy self-reliance will accelerate the adoption of renewables. There are signs that although solar installations will fall in 2020 compared to 2019,the sector will nevertheless continue to grow, and EIA forecasts that solar and wind energy will be the "fastest-growing source of electricity generation in 2020.”
It’s likely that the short-term impact of the virus on solar and solar+storage will be driven by regional dynamics and the decisions made about the role that distributed energy resources will play in economic recovery. In the long term, especially with compounding risks created by the current pandemic, it is important for grid operators to use all the tools available to them, including distributed energy resources, to lessen grid reliability and resilience concerns.
I agree with the Guidehouse assessment that says, “From a scale perspective, although distributed solar has largely been affected by lockdown restrictions, utility scale renewables (both solar and wind) are likely to witness limited long-term effects due to cost declines. As the economies start shifting back to normalcy, rapid development of distributed energy resource technologies is likely to be an enabler driving the growing need for flexible capacity and meeting resiliency demands across key global economies.”
Lesson Four: Distributed Energy and Economic Recovery
Though there have been many jobs lost in the advanced energy sector due to the pandemic, as economies around the world begin to recover, the importance of climate change should not be minimized as the world gets back on its proverbial feet. We have an opportunity to use clean distributed energy alternatives as a way to deal with climate change while also stimulating economic recovery and modernizing the world’s grids.
This is already happening in many places. In the UK, a “Race to Zero” campaign promotes clean energy to help with the economic recovery from COVID, and across the EU a coalition of businesses are calling on country leaders to build the business sourcing of renewables into the bloc's COVID-19 stimulus package. In the U.S., RMI has outlined a pandemic recovery proposal focused on clean energy, and progressive states are making distributed energy a priority as they prepare for sweeping changes to their grids. NYISO, for example, has big plans for increased reliance of electric vehicles, is implementing rules to allow energy storage to participate in wholesale markets, and is exploring market participation options for resources that combine storage with renewable generation.
The Opportunity for a New and Better Normal
We have an unprecedented opportunity before us to make our energy grids more efficient, resilient and economical by expanding our reliance on clean, distributed energy resources — resources that can be quickly and accurately dispatched down or up to continuously balance supply and demand, while also quickly and accurately regulating power system voltage. We have a moral imperative and the economic incentive to hasten the growth of the clean energy, while also ensuring energy reliability and enabling job growth. This is an opportunity we shouldn’t miss.