Power Generation Trends in “3D”

Background

The electric power infrastructure has been the workhorse of the US economy for over a century. It has caused the steady growth of the standard of living from the early 1920’s, post-Depression, and from the 1950’s through the rest of the century. The growth of electricity nationwide has slowed over the past decades for various reasons; it is not that electricity is less important, it is more due to consumption patterns being more efficient. That infrastructure has evolved over the years to exploit technology for converting fuels to electricity, a transmission and distribution network  that can reach into every corner of the United States—from the frozen parts of Alaska to the hottest regions in Nevada. Reliability and resilience has been the mission of the power suppliers: “keeping the lights on” has been a promise that utilities have been able to live up to in admirable ways through the decades. The US economy has prospered immensely through these times with economic growth being tied very closely to electricity consumption. From the beginning of this millennium that equation is changing in many ways. More electricity use is not necessarily tied to economic progress although that relationship may still be appropriate for developing countries.

Figure 1: GDP increase in select countries and the impact of electricity growth

Figure 1 shows the gross domestic product per capita for the US and Western Europe as compared to China and India. The latter two have advanced economically more rapidly than the former two during the past 3 or 4 decades; in that same period both China and India have more than tripled their electricity generating capacity.

Climate change has forced many countries to look at their own carbon footprint and decide on a future course of action. Some have minimized the effect of climate change or have assumed they may be less affected; many are witnessing the incoming effects of climate change in more severe weather events. Climate change will become a more important focus to utilities. The new administration has promptly returned to the Paris climate accords which has postulated  that greenhouse gas (GHG) emissions be net zero by 2050, and rise in global temperatures be no more than 1.5⁰ C above pre-industrial levels[1]. No doubt, the US rejoining the accords is a strong statement that the  effort will have to be collaborative to achieve the goals.

Digitization

It will be the enabler of the “contact-less”, data-driven utility, where data analytics can be utilized for applications from inventory management to asset management to predictive maintenance for ubiquitous, 360-degree view of the system state. The recent Texas grid emergency may have brought an important focus: while low-cost electricity is a consumer plus, assuring reliability and resilience under climate change conditions may require more diligence to assure assets are ready to meet customer demands. Remote operations and remote monitoring have been driven to the forefront, not only because of the exigencies of the recent pandemic but also in the rapid growth of digital methods to store, retrieve and process data. Turbine experts, for example, need not be present physically at each thermal generation site but could be available virtually anywhere, anytime. As digitization spreads from the utility end to the consumer end, mobile and virtual solutions are essential pathways.

The utility business is undergoing rapid transformation with digitization because of three major disruptors which will change how utilities will manage their assets:

• Increase in automation of system and asset operation is vastly changing the profile of the needed skill sets for performing job tasks. The ability to understand digital data and utilize specific tools for on-the-spot evaluation of equipment/process condition will be paramount.
• Machine learning, artificial intelligence and predictive analytics will rise to unprecedented levels. The experience of Luminant in their operation of the Power Optimization Center [2] and use of digital methods for operations and maintenance over the past decade is a testament to this trend. The author presented in a keynote address to the Utility Analytics Institute in 2019 [3] the steady acceptance of predictive analytics as a replacement to conventional time-based methods that were practiced earlier, saving enormous amounts of O&M expense and keeping plants competitive [4].
• The growing access to information through Big Data and IoT has made an interesting transition in how utilities are dealing with their data. While before the data was kept strictly within the purview of their own IT department, the growing use of cloud computing has brought in other players like Amazon, Microsoft and Cisco firmly in the utility business. This has introduced a vast capability to utilities: vast amount of data with their time stamps can be processed at very high speeds to be able to overcome latency issues that are common to traditional ways of processing data.

Use cases for increased digitization are spread across the spectrum, from generation source to transmission and distribution, to the consumer end.  Some examples are Electricity Production yield Improvement, Demand Management and Response, Predictive and Condition-based Maintenance, Load and Frequency Balancing, Renewable Energy forecasting, Data Monetization, Dynamic Tariffing, e-Mobility and EV solutions [5].

Figure 2: Power Optimization Center at Luminant, Inc.(courtesy: Luminant, Inc.)

Decentralization

The steady drop in the levelized cost of electricity (LCOE) of solar and wind has made it possible to consider supply sources close to the load. In addition, diversity of sources may avoid common mode failures. Small modular reactors (SMRs) are emerging as viable “distributed” nuclear sources that could aid enormously in reducing GHG emissions to meet IPCC goals by 2050 by replacing fossil-fueled generation. In a recent paper, the author showed how public-private partnerships could be leveraged to systematically replace fossil fleets for carbon pricing  pegged as low as  ~$10/ton [6]. Included in this category are Electric Vehicles that are expected to get a big boost from the present administration. Not only can they assure GHG emissions reduction from tail pipes but also as distributed assets that could augment grid supply during peak demand.

Solar + Storage

While rooftop solar has been adding capacity steadily for over a decade, community solar has become popular in some states to provide access to all, even those that may not receive the necessary insolation to justify installation on their roof. Community solar state rules are now making it accessible to a larger cross section of the demographics, preventing “squatters” from claiming a large share of capacity. Distributed solar is expected to grow from 80 TWh in 2020 to 350 TWh in 2040, a 20-year CAGR of 7.5% [4]. But what makes it attractive is the concomitant growth of storage technology and products in the market. The storage capacity is expected to grow an order of magnitude in the next decade, from 800 MW installed capacity today to nearly 8,000 MW. This growth is likely to influence more use of virtual power plants (VPPs) to augment grid resources to meet peak demands as well as demand response [7]

Electric Vehicles + Charging Infrastructure

Electric vehicles form a very small percentage of the total number which are fossil fueled; there are slightly more than 1.5 million on the road today (total: 280 million). The number of EVs on the road is expected to grow nearly 40-fold by 2040. This extraordinary growth will be no doubt due to falling costs and to policy measures: the current administration is pushing government fleets to be electric, and major car manufacturers like GM are planning to produce only EVs by 2035. This major shift to EVs is reflected world-wide, as shown in Figure 3. These projections are staggering: China and India are projecting that all vehicles on the road will reach near 100% by 2050.  The US and Europe appear to have less ambitious but still impressive goals. These will be driven by more stringent environmental standards, decarbonization targets driven by individual cities and municipalities. Technology advancements in improved battery technology to reflect higher energy densities and  the robustness of the EV charging network are expected to be contributing factors.

Figure 3: Growth of EVs Worldwide (courtesy: Ernst & Young)

Decarbonization

Many states are setting goals to achieve carbon neutrality by 2050. The Biden administration has stated: “At this moment of profound crisis, we have the opportunity to build a more resilient, sustainable economy – one that will put the United States on an irreversible path to achieve net-zero emissions, economy-wide, by no later than 2050.” Utilities are under pressure from their rate payers to update frequently their long-term investment strategies that address Environmental, Social and Governance (ESG) issues.

The table below shows sample major utilities and their clean energy plans:

The contributors to GHG emissions are approximately split evenly among electricity generation, transportation, industrial processes and facilities & agriculture. Replacing fossil fuels for electricity generation by cleaner alternatives—the supply side—was important, but there also is an immediate need to decarbonize the other three contributors on the demand side. Hydrogen has emerged as a clean alternative to conventional fossil fuels. There is consensus that these changes will come with a cost and more likely an agreement on levying a cost on carbon. This will not be easy, with less-developed and developing countries wanting relaxation in their emission curtailment.

Summary

The “3Ds”—digitization, decentralization and decarbonization—will define how utilities supply/deliver reliable, resilient and affordable services to the customers and satisfy their stakeholders. This task is not going to be easy as the workforce needs to adapt to operational skill sets which increasingly require data analytics. Extreme weather events will push to the limits grid reliability and consequent customer satisfaction.

Acknowledgements

The author would like to thank students at the Energy Systems Engineering department at Lehigh University (https://ese.lehigh.edu ) for their contributions to this paper. Clint Carter, Director, Luminant Inc., and the developer of the Luminant Power Optimization Center, Dallas, TX, contributed to many past discussions and suggestions.

References

[1] “Deep Decarbonization Pathways”, S Naimoli & S Ladislaw, Center for Strategic & International Studies. March 2020

[2] The Luminant Power Optimization Center. https://www.luminant.com/poc/

[3] “Application of Data Analytics to Power Industry Assets”, Keynote Address,  Utility Analytics Summit, May 2019, Charlotte, NC.

[4] “Correlation Processing- Big Data at Work”, Public Utilities Fortnightly. February 2014.

[5] “Power & Utilities- Our Latest Thinking- EY USA”. https://www.ey.com/en_us/power-utilities

[6] “Power Industry- Prediction and Trends.” Special Issue on the Power Industry, Energy Central. February 2021. https://energycentral.com/c/um/utility-industry-predictions-and-trends

[7] “Virtual Power Plant”. Energy Central.  October 2020. https://energycentral.com/c/pip/virtual-power-plant

[2] “Advanced Nuclear Power in a Clean Energy System”. Agate, Thomas. Interim Report, M. Eng. in Energy, Lehigh University. December 2020