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The Utility Industry: Predictions and Trends

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Rudy Shankar's picture
Director Energy Systems Engineering, Lehigh University

Summary Entire career experience has been devoted to technology development and implementation support for public and non-profit companies, mainly the energy/power industry, including change...

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This item is part of the Special Issue - 2021-01 - State of the Industry, click here for more

Decarbonization of industries, customer engagement and how utilities adapt to post-pandemic requirements will be the dominant activities as the world steps forward gingerly into the new year. The seminal threat of climate change and the impact it will have is no doubt strongly underlining these trends. Decarbonization will take on an urgency on the supply and demand side. The customer is more and more integrated with the modern grid in not only directing the “quality” of energy they wish to use but also in bringing new technologies in their homes and work facilities to charge their electric vehicle and store energy to arbitrage favorable prices. This engagement has led to customers more intimately involved with supply-demand decisions that electricity providers usually do in isolation. The pandemic has caused broad disruption in how work is conducted, how education is delivered, and has revealed enormous gulfs in capabilities around the world. These very skills needed today to combat the pandemic will be required for the larger problem of climate change. This paper will describe how these areas are expected to evolve and the impact they will have.

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Decarbonization The impact of climate change has been felt strongly in every continent over the past decade with more extreme weather impacting the Americas, threats of floods in low-lying areas in Africa and Asia and hotter temperatures in Europe. The utilities worldwide have responded: solar- and wind energy has risen dramatically with new technologies driving unit costs lower—by an order of magnitude. Simultaneously over the same period many coal-burning power plants were shut-down or decommissioned, mainly in the western world. Climate change will become a more important focus to the new administration and efforts to manage rise in global temperatures to within limits prescribed under various accords: scientific consensus recommends that greenhouse gas (GHG) emissions be net zero by 2050 or so, or no more than 1.50 C above pre-industrial levels[1] . This has driven governments in some key countries—China and India as well as in Western Europe—to enact environmentally-friendly policies. Many cities, municipalities and companies are embracing the goal of deep-carbon emission reductions to improve air quality and address growing concerns around climate change.

The contributors to GHG emissions are approximately split evenly among electricity generation, transportation, industrial processes and facilities & agriculture. It was very quickly realized that as much as replacing fossil fuels for electricity generation by cleaner alternatives—the supply side—was important, there was also immediate need to decarbonize the other three contributors. Hydrogen has emerged as a candidate 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.

There is a discomforting aspect in the ability of renewable energy to be able to reliably and competitively replace all central generation. Renewable energy have very low “capacity factors”—energy is generated intermittently when the sun shines or when the wind blows—unlike traditional fossil and nuclear generators. To have equivalent impact, renewable energy would require vast land areas, and produce intermittency in supply that could be difficult to manage. Nuclear power has been offered as the “white knight” in being the bridge, as we continue to replace existing fossil plants.

The technology and economic feasibility of decarbonizing industries in Pennsylvania by supplying clean electricity or hydrogen as a fuel to replace fossil fuels was examined by a graduate student in the Lehigh University Energy Systems Engineering (https://ese.lehigh.edu) group[2]. Small Modular Reactors were chosen to provide the alternative fuels-either electricity or hydrogen. It was shown that a few strategically located SMRs could replace all the remaining coal fired plants, and a larger number the entire fossil fleet (coal & natural gas-fueled). Of course the costs and policies needed to make it attractive are the wild cards. The report further projects what the price of carbon/nuclear subsidy would have to be to assure the economic feasibility of nuclear power as a clean energy source.

 

Figure 1: Discount Rate vs Carbon Pricing to Incent Replacement CCGT with Nuclear Power[3]

The graph in Figure 1 shows along the horizontal axis the discount rate for NuScale’s SMR construction costs vs the nuclear subsidy /required carbon price to make it an attractive alternative to combined cycle gas turbines. The various curves are depicted for different gas supply scenarios. The capital costs for construction of SMRs under public funding at 6% discount rate indicates that the carbon pricing can be as low as $10/ton, a figure that was considered by Congress in 2009 when it last attempted carbon legislation.

The state of Pennsylvania was used as an example to consider advanced nuclear reactors to replace fossil fuel generation because of the diversity of generation existent. This will of course not apply to all the states, but this example can be extrapolated across the nation where key states can implement this strategy for the neighboring states (Of course, transmission line construction costs need to be considered.).

Customer Engagement With the rise of new distributed generation technologies and economic attractiveness, consumers can be “prosumers” and will assert their rights in being fairly compensated in a net-metering regime. Customers will start playing a decisive role in meeting utility requirements for providing peak demand as well as cleaner generation alternatives. Currently utilities consider options to meet peak demands from costly generators from whom they negotiate a price to have capacity available on demand. The wholesale price during peak demand times is so enormously different and not reflected under current retail pricing schemes. Solar on the roof or community solar farms are becoming very popular and utilities have implemented net-metering policies to accommodate clean energy generation and consumption. Unfortunately, the policies are sometimes antithetical to clean energy incentives and frankly difficult for utilities to operate under their mandate by their public utility commission. The states of Hawaii, New Mexico have experienced this asymmetry much to the detriment of their public image. This patchwork of net-metering rules must be unified/consolidated in all states.

A more uniform and environment-friendly net metering policy will encourage consumers to be a part of the modern grid to be able to meet community climate action plan goals, and provide demand-side alternatives to manage the grid. Virtual power plants have arrived on the scene to work collaboratively with utilities. Con Ed has implemented this as a cheaper option than adding new supply line at one of their substations in a dense urban environment

Figure 2: Conceptual View of a Virtual Power Plant (courtesy ABB)

In a previous article[4] in this publication, the author described the work at Lehigh University on virtual power plant which is a cloud-based distributed power system that aggregate the capacity of heterogeneous distributed energy resources. The VPP can relieve the load on the grid by intelligently distributing the power generated by each unit during peak load periods.

The students developed ranking methodology to assess value of distributed energy resources related to capacity, proximity to existing infrastructure, environmental impact of the resource as an alternate, financial impact, and reduction of peak demand. The ranking basis had several, sometimes conflicting goals. It could be to reduce the carbon footprint of the community, reduce peak demand, or reduce overall electricity consumption. When electric vehicle charging assets were introduced in the mix, the ranking included accessibility and capacity of these resources. An aggregation of these assets could then be deployed in an intelligent manner and be considered as a more suitable alternative to new build.

The global virtual power plant market size was valued at $1.3B in 2019 and is projected to reach $ 5.9 B by 2027.

Remote Operations Automation and remote operations and maintenance capabilities were always a need for utility assets, but emphasized more dramatically during the pandemic. Traditional manual methods for routine surveillance of servicing assets were already being replaced by automation—meter reading is a prominent example—mainly for economic reasons but also importantly as part of utilities transformation to “digital enterprises”. With the proliferation of new inexpensive sensors, wireless communication and ability to monitor assets continuously, utilities were embracing automation. Security remains a threat and we witness much of this digital transformation is confined to remotely “monitoring” rather than “controlling” assets. Most utilities are mandated to supply energy under the rules and regulations of the state’s public utility commission which prescribes the rate of return as well as the unit cost ($/kWh). There was always a need to maximize asset availability and reduced O&M costs to operate under these guidelines. The utilities had made significant progress in leveraging advanced technologies to optimize asset availability and reduce operations and maintenance costs[5] over the years. These included condition-based maintenance replacing conventional time-based techniques, advanced pattern recognition to detect anomalies in equipment performance and detect incipient failures. There may be a bigger push to adopt these automated methods more widely to cope with pandemic conditions that discourage unnecessary human intervention.

One of the more human-intensive activities is storm management. It is at once the most vast, the most extensive, and the most vital operation to maintain reliability and resilience. It requires immediate assessment of the potential for damage, marshalling resources, having mobile assets at-ready for deployment. According to an article in Utility Dive[6] the pandemic has forced adoption of new utility protocols across entire workflows, ranging from changes to seating charts to new ways of utilizing drone reconnaissance. One utility created three additional satellite centers around the state to decentralize its operations. Utility innovations extend to uses of of drones for damage assessment. FPL, for example, has installed two unmanned aircraft in structures designed to withstand winds of up to 150 mph. The drones are pre-programmed to capture images of certain equipment two miles past an operator's line of sight. Innovations in remote operations put in place to manage assets during extreme weather conditions will surely be expanded and refined for the larger challenges further down the road in combatting climate change.

Over the last decade forest fires have become more intense due to climate change. This has affected the Western USA, Canada, parts of Europe, countries in the Arctic circle as well as Australia. With transmission and distribution facilities spread so far and wide, it would be difficult to predict forest fire events that may be triggered by minor mishaps: improper vegetation management along the transmission right of ways, broken strands on conductors, overheating of conductors, etc. Early fault detection technology developed in Australia has been demonstrated to detect incipient problems before they become raging forest fires. EFD[7] is an internet of things-based system that uses a form of edge processing. Networked data collection units are installed every few miles on poles, and they also can be installed underground. The resulting data is sent by radio signals, and the sensors triangulate the location of the fault. 

These methods will be increasingly deployed as utilities depend on remote monitoring under the threat of a pandemic and are likely to result in increased reliability and resilience.

Acknowledgements

The author thanks Thomas Agate, Jasper Chumba and Dylan Ammerman, Lehigh University graduate students, for their contributions, as well as past students, Vinicius Aguiar, Emma Tillman, Erich Hlawaty, Gavin Hatfield and John Rogers, for their work on developing ranking methodologies to assess the value of DER assets.

 


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

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

[3] “Can NuScale SMR compete with CCGTs?”, https://thebreakthrough.org/issues/energy/nuscale-vs-gas

[4] “The Virtual Power Plant”, Special Issue of Energy Central, October 2020. https://energycentral.com/c/pip/virtual-power-plant

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

[6] “When storms collide: Utilities' new approach to hurricane restoration in the age of COVID-19”. Utility Dive. June 4, 2020. https://www.utilitydive.com/news/when-storms-collide-utilities-new-approach-to-hurricane-restoration-in-th/578976/

[7] “US Utilities Apply Wildfire Technologies Tested in Australia”, T&D World, January 6, 2021.

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