Public Power Decarbonization Series - Part 3: Public Power Decarbonization Requires Distributed Energy Resource (DER) Integration

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image credit: Horizon Power, Western Australia
Stuart McCafferty's picture
Lead Architect, eaaS Siemens Smart Infrastructure CTO

2021 Cleanie Award winner. Siemens Smart Infrastructure CTO Office, technologist, distributed energy expert, researcher, author, and climate change warrior. Genuinely focused on doing good for...

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  • Sep 1, 2021

Public Power Decarbonization Series 

By Stuart McCafferty, John Cooper, and Eamonn McCormick

This article is Part 3 of a three-part series on the role of Public Power in decarbonizing and electrifying our society and economy. The first article discussed the imperative to decarbonize and what it means for Public Power. The second article reviewed the Crisis of Slow Public Power Decarbonization, and the confusing narrative and lack of leadership from various government agencies.  In Part 3, we connect the dots between decarbonization and distributed energy resources (DER), showing a second imperative for public power: integrating DER into utility grid modernization. No decision yet, but we identified 3 use cases for Public Power decarbonization that may become Part 4 in the series of articles.  Throughout this series, we have explored a wide variety of impacts, constraints, risks, costs and benefits, the broad impact of decarbonization on our society and economy, and the upsides of an Electrify Everything Economy.

Public Power Decarbonization Requires Distributed Energy Resource (DER) Integration

Grid Decarbonization = Integrated DER.

In the most simplistic terms, decarbonization is fast evolving to become Distributed Energy Resource (DER) deployment and integration with utility systems, including a predominance of utility-scale wind and solar generation.

There are many forms of DER, but they fall under three primary categories; distributed generation (DG), energy storage, and controllable loads (sometimes referred to as Demand Response Assets or Flexible Loads).  The table below provides some examples of different DER.

Table 1: Typical DER Types
DER Category Comment
Renewables - Solar Photovoltaics (PV), Wind Distributed Generation Grid-scale or customer-owned
Customer-Owned Fossil Generators Distributed Generation More of a customer backup system when utility or renewable energy is insufficient
Batteries, Pumped Storage, Compressed Air, Flywheels Energy Storage Devices that can consume, supply, and store energy
Thermostats, Pool Pumps, Water Heaters, Appliances, Other Smart Loads Controllable Loads Used for load flexibility and demand response applications
Electric Vehicles Distributed Generation, Controllable Loads, Energy Storage Special kind of DER will require new integration needs for the utility
Microgrids Distributed Generation, Controllable Loads, Energy Storage Special kind of DER with large capacities and grid service capabilities

Note: Some people believe that energy efficiency should also be considered as a DER.  We do not support that belief. While energy efficiency is definitely the first thing to do when decarbonizing, it remains a static resource that cannot be controlled, and we consider control a fundamental aspect of DER.  Again, this is our opinion, and the reader is welcome to formulate their own opinion on the subject.

Figure 1:  EV loads will create new challenges for utilities (Source: CharIn)

Special forms of DER such as EVs, microgrids, and energy storage devices can provide a wide variety of grid services (e.g., frequency response, voltage/VAr, peak shaving, etc.). These distributed assets can be problematic for Public Power utilities to accommodate, as smaller utilities do not normally integrate or coordinate such assets.  DER is evolving, however, changing and creating new capabilities and services, so that even the smaller utility companies will be able to integrate DER in the near term.  

Given the falling cost, maturing technology and zero to low carbon nature of DER, integration of renewables, flexible loads, electric vehicles, and energy storage comprise the only rational path to decarbonized electricity.  This section explores the possibilities of utility DER Integration and shows why the utility’s role in DER may be considered as the keystone to continued reliability, power quality, resilience, and decarbonization success.

Staying Competitive with Customer Engagement & Grid Modernization 

Now is the time for Public Power companies to get creative and develop aggressive decarbonization strategies and roadmaps to implement DER solutions before someone else does.

Resilience is the new electricity service that is sweeping the US.  Commercial vendors are developing microgrid and other resilience services to entice utility customers away from their electricity service provider. Events such as those in Texas last winter, where 70% of ERCOT customers lost power, have spawned an industry for vendors to “cherry pick” the utility’s best customers. Most of the traditional multi-national utility vendors (e.g., Schneider Electric, Siemens, ABB, GE, etc.) have microgrid solutions in their portfolios.  And many others, including AlphaStruxure, AZZO, Eaton, Enchanted Rock, Schweitzer, S&C, OATI, PowerSecure, Bloom Energy, CleanSpark, and BoxPower – just to name a few – are actively engaging with commercial and industrial (C&I) customers to win their business away from utilities.  

The appeal of microgrid solutions for commercial and industrial businesses is growing in leaps and bounds, and long-term Power Purchase Agreements (PPA) not only remove these customers from utility portfolios, but also offer the customer highly competitive pricing along with the opportunity for enhanced energy resilience.  Increasingly, Public Power utilities will need to provide reliable, resilient power to their customers or risk losing the best of them.  To rise to this competitive threat, Public Power companies MUST first learn how to integrate and manage DERs. A timely piece of good news is that the stimulus packages making their way through Congress afford Public Utility companies an incredible opportunity to team up to apply for grants to create these capabilities.  

In summary, scaling EVs, PV solar, and energy storage creates new challenges for conventional utilities, and the competitive playing field is getting crowded, as commercial companies ramp up to cherry pick the best customers away from utilities with cost-effective and versatile solar plus storage and competitive/resilient microgrids.  

Focus: Learning from Our Friends Down Under – Australia’s Decarbonization Path

US Public Power companies can become “fast followers” of successful DER integration in Australia.

Australia has been on the path to decarbonization at a rate faster than anywhere in the world.  We estimate the Australian market is at least three years ahead of the US market in integrating solar photovoltaics (PV), batteries, and managing flexible loads. 

Horizon Power, a Western Australian utility serving remote communities in the western Outback, is an excellent case study for US Public Power companies.  Due to the low customer populations and remoteness of the communities it serves, Horizon Power lacks a regional transmission grid to provide high voltage bulk power to its customers.  Providing power to these remote communities is extremely challenging and requires a separate grid for each – in other words, always-islanded microgrids.  Horizon Power services 2.3m square kilometers (888k square miles – or about ¼ the size of the entire US – imagine four Texas grids) and only 100k customers, making it the utility that services the least number of customers per square kilometer in the world.  Each community’s microgrid operations are remotely managed from their headquarters in Perth.  

Figure 2:  Western Australia's Horizon Power Service Territory and the Onslow Microgrid Installation

Providing power to its customers is also expensive and dirty:  for most of Horizon Power’s microgrids, diesel generators are the primary source of power, requiring diesel fuel to be shipped over water and land for vast distances, making this power system one of the worst offenders in terms of greenhouse gas (GHG) emissions…and making Horizon Power one of the best test beds for DER integration in the world!

Three Enabling Technologies: PXiSE, SwitchDin, and AZZO

Australia’s use of decentralized DER management technologies is the poster child for US decarbonization efforts.

PXiSE. This US-based company, headquartered in San Diego, is a subsidiary of energy giant Sempra that provides sophisticated microgrid control software. Since its launch a few years ago, it has gone on to deliver more than 1 GW of projects across 3 continents and 7 countries, helping its clients reach their grid management and climate goals.

SwitchDin. This Australian-based company with years of local market experience for its Virtual Power Plant (VPP) platform, is looking to expand to the US, where its head start puts it years ahead of US companies in its sector. It’s no small task implementing standards-based DER solutions for a wide variety of use cases (behind the meter DER integration, DER aggregator, EV fleet charging, grid scale energy storage, etc.). Their Energy as a Service (EaaS) DER integration and management capabilities make their solution ideal for smaller Public Power utilities that can’t afford sophisticated distribution operations systems to provide them such capabilities as real time situational DER awareness and load/generation flexibility.

AZZO. Although not part of the Horizon Power demonstration, this fascinating “Down Under” company provides microgrid services including balance of plant SCADA, secure networks, and control systems which integrate clean energy DERs and provide resilient power. AZZO also provides Network Operations Center (NOC) microgrid monitoring and centralized control capabilities. Microgrid project development companies like AlphaStruxure are working with Capgemini to leverage AZZO’s technology to create these same capabilities in the US.  AZZO is headquartered in Australia, but also has a US subsidiary.  It is working closely with AlphaStruxure and Schneider Electric to provide microgrid on-site SCADA control and cloud-based microgrid fleet coordination, optimization, and NOC remote management capabilities.

The Horizon Power DER Integration Experiment. With the aid of government funding, Horizon Power set out to increase hosting capacity for customer solar PV at their Onslow microgrid on the western coast in the Pilbara region.  Some brilliant, foresighted engineers, project managers, and executives at Horizon Power recognized the need to standardize the communications with the customer DER and selected IEEE 2030.5 as the primary communication protocol.  They selected PXiSE for its DER Management System (DERMS) and SwitchDin to provide a secure gateway to the customer site and to aggregate and control the DER assets.

The experiment has been a smashing success.  SwitchDin’s secure gateway device, called a Droplet, provides flexible services to manage controllable loads (primarily air conditioning compressors), solar PV generation, and EV charging.  Each Droplet can aggregate other Droplets, so Horizon Power was able to use a Droplet at its Onslow substation to help manage a grid-scale battery and PV system and provide real time aggregate data (over cellular LTE) for the entire microgrid.

Just a few weeks ago, in July 2021, Horizon Power performed a landmark, historic test of a 100 percent renewable, hydrocarbon-free microgrid.  For 80 minutes the system operated flawlessly without fossil fuel generation, incorporating only grid-scale battery and solar, along with customer solar and flexible load management.  With this case study, this system has become the poster child of decarbonized grid operations, and much can be learned from that amazing little utility Down Under. Based on its lessons learned, Horizon Power is now in the process of expanding these capabilities to its other microgrids.  

Decarbonization Leadership Opportunity: The Case for APPA, NRECA, and TVPPA 

Now is the time for Public Power organizations to aggressively seek funding and actively pursue electrification and decarbonization solutions to meet the needs of the environment and customers.

The American Public Power Association (APPA), National Rural Electric Cooperative Association (NRECA), and Tennessee Valley Public Power Association (TVPPA) represent Public Power utility members and are each in a unique position to provide true leadership in the race to decarbonize the grid. 

As decentralization progresses, the role for Public Power utilities expands well beyond a central generation and transmission focus. Stepping into a leadership role, Public Power utilities can set the change agenda and drive innovation at the local level.  With new funding opportunities on the near-term horizon, these utilities face the best opportunity in decades to modernize as they decarbonize and decentralize.

Public Power utilities have an opportunity to seize the narrative and incorporate new DER integration technologies by learning from their Australian utility brethren.  Our federal government should recognize the enormous opportunity to create the next generation decarbonized grid infrastructure by targeting Public Power utilities in its grant funding, allowing smaller scale trials that we can learn from and scale to larger utilities.  The Public Power utilities must have internal discussions to determine what decarbonization opportunities are the best fit for them and to find partners that can help pursue the federal infrastructure grants through the US government stimulus bills.

Public Power utilities must rise to the occasion to take climate change seriously and secure a leadership position in actively working to decarbonize as quickly as possible.  The opportunity has never been greater and the benefits to the grid, the utility, its customers, and the environment are enormous.    

A Reminder:  Please Sign Our Petition to Eliminate US Federal Funding of Coal Research

Now is the time to do our part in taking climate change very seriously, immediately planning for individual and organizational participation in aggressive actions to reduce our GHG footprint.

Click on this link to sign and share the petition below:

Petition to the House Committee on Energy and Commerce, Energy Secretary Jennifer Granholm, 
and the U.S. Senate Committee on Energy and Natural Resources

Coal combustion produces more greenhouse gases (GHG) than the combustion of any other fossil fuel.  Although natural gas is also a big contributor to GHG, it produces about half the emissions of coal.  Yet our federal government spends over a billion dollars annually on coal research.  In fact, there is a Department of Energy (DOE) national laboratory, National Energy Technology Laboratory (NETL) that is almost completely dedicated to coal research.  The DOE funds a "Coal FIRST" initiative at over $80M per year.  DOE's Fossil Energy Research and Development Program (FER&D) FY2021 budget request is $931M with $546M targeted for Advanced Coal Energy Systems. 

Even if climate change was not an issue, coal is expensive when compared to other power generation sources.  Solar photovoltaics and wind are now the cheapest form of energy generation with natural gas and geothermal a distant third and fourth cheapest.  Both solar and wind costs are rapidly decreasing, making the argument for funding any fossil fuel, but especially coal, a ridiculous waste of taxpayer money. 

This petition recommends the immediate defunding of all coal research.  It further recommends the elimination of DOE's Fossil Energy Research and Development Program (FER&D) and repurposing of NETL to support retraining of coal industry workers with renewable energy and energy storage technologies.  We recommend that NETL leads Public-Private partnerships to establish factories in historic coal producing regions to supply US manufacturers with parts and raw materials to make America the world leader in producing clean energy products and services.

This is a win-win for the American taxpayer, coal producing regions, the environment, and American industry.  Please sign the petition if you agree.








Matt Chester's picture
Matt Chester on Sep 1, 2021

Australia has been on the path to decarbonization at a rate faster than anywhere in the world.  We estimate the Australian market is at least three years ahead of the US market in integrating solar photovoltaics (PV), batteries, and managing flexible loads. 

I've seen this mentioned elsewhere, and they definitely have a case. What's the differentiator that made them put need into action better/faster than the rest of the world? Is it the resources of land/sun? A greater political appetite for it? Energy markets more well suited? 

Stuart McCafferty's picture
Stuart McCafferty on Sep 7, 2021

Hi Matt, Australia has very favorable policy for rooftop solar installation - with about 1/3 of the upfront costs for consumers covered and also other tariffs that reward rooftop installations.  Australia's Energy Minister, Angus Taylor, says that Australia has the highest uptake of solar in the world with one in four homes using it and the highest wind and solar capacity of any non-European country.  He also claims that Australians deployed solar at 10x the average of the rest of the world and 4x China, Europe, and the US. Electricity prices in Australia tend to be more expensive than those seen in the US.  Of course, Australia also has a large amount of sunshine, which makes investments for customers even more economically beneficial.  Maybe even the most favorable reason for massive adoption is the lack of red tape in local building codes and interconnect agreements.  It just moves a lot faster. 

So, as a result, the Australian electric power operators and markets have become an incredible "test ground" for the rest of the world in introducing new technologies, processes, and policy.  Lots to learn from.

Stuart McCafferty's picture
Thank Stuart for the Post!
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