While “The Future Electric Grid” online session was in progress at the 2021 ARC Industry Forum, Texas was being plunged into outages caused by unusually cold conditions and heavy snow. With this catastrophe fresh in mind, this is a good time to review some of the politics, economics, and technology driving the future electric grid in Texas and elsewhere.
The electric grid is the most complex machine invented by mankind. It has transformed our way of life and rests on the three pillars of high reliability, low cost, and environmental responsibility. Yet, in the case of the recent Texas outages and the damage done, we clearly see the Texas grid is still vulnerable when it comes to reliability. Necessity is the mother of invention and the Texas power outage could very well motivate Texas to become the leader in how to shape our future electric grid. Texas already ranks as the number one state for wind power and Texans have plenty of sunshine as well as experience with fossil fuels, aerospace, and a new Tesla giga-factory, so (willing or not) they will be a big part of the transition to electric-powered transportation.
Government in The Power Business
Governments have always been in the middle of the energy industry, particularly electric power. There are hundreds of three-letter and four-letter acronyms for government agencies related to utilities in the US at the federal, state, and local level. North America has two major (Eastern and Western Interconnections), and three minor, synchronous (60Hz) electric grids. The latter include the Texas, Quebec, and Alaska Interconnections. Additionally, the smaller, federally owned Mexican grid has some connections to the US. Europe has a large highly interconnected electricity grid (50Hz) that supplies over 400 million customers in 24 countries.
Many people are surprised to see the extent to which China and India have both expanded their grids to reach their populations. With all the recent experience building new grids in Asia, India and China appear to be competing in a much larger political and economic arena. More than two years ago, India’s Prime Minister, Narendra Modi, said: “We have a dream: One World, One Sun, One Grid. We can generate around the clock electricity from the Sun as it sets in one part of the world but rises in another part.” A compelling idea, and one certainly motivated by India’s confidence based on the nation’s own grid expansion. India has been building new generation, transmission, and distribution. India achieved its target of 20 GW of solar PV capacity for 2022 four years ahead of schedule. India would love to become a regional hub for electric power as many nearby countries struggle to bring reliable electric power to their own populations.
Meanwhile, China has created the most modern grid on the planet that produces more power than the US and EU 24 countries combined with state-of-the-art, one-million-volt HVDC transmission lines. While China built out its grid with coal-fired power plants, it also generates more renewable power than the next five leading countries combined. Chinese leadership would very much like to expand regional political and economic influence as part of its wider Belt and Road Initiative (BRI) by becoming the center point of a regional electric grid. China looks to develop regional infrastructure networks with attractive financing and many new Chinese suppliers have developed the products and skills needed to build new electric grids. Concerns have certainly been raised about debt traps and dependency on China but bringing reliable power to a country provides many tempting economic advantages. Building grids to international standards with smart grid technology has implications for energy security, cybersecurity, and technology supply chains.
The Architecture of the Electric Grid
There are many ways to achieve the goals of reliable, low cost, and environmentally responsible power, and many experts disagree about the best approach. In our Future Electric Grid forum session, we asked our largely industrial audience to vote on generation options that are likely by 2050. As expected, there was not complete agreement.
Although this was a small non-scientific survey, it is interesting to see that participants deemed wind, solar, various grid storage technologies, and demand response as the most important generation options, natural gas with CCS least important, and that a highly connected North American grid was not a leading result. Even with a 2050 timeline, nuclear power was not particularly popular. While there were some strong supporters, many others were unconvinced of a nuclear renaissance.
One of the more surprising results was the lack of support for combining the currently separate North American grids. It could be that many people do not see the stability benefits of a large electric grid, particularly one with growing non-dispatchable renewables. While previous grid management issues have led to cascading blackouts of large grids in general, large grids add stability when power can flow from areas with reserve capacity or low power cost to areas struggling to meet demand or have a higher cost. However, when grids are interconnected there is also more competition for supplying power. While the consumer may benefit from improved reliability and lower cost, some suppliers don’t welcome competition.
There have been several proposals to tie our North American grids together and to add new transmission lines. This includes improving the connection of Quebec Hydro to New England with HVDC lines. This is where the political, economic, technical, and environmental issues can come into play. For example, the “Tres Amigas SuperStation” proposal fizzled in 2009 and, in 2018, NREL evaluated the benefits of combining the three North American grids with the “Seams” project. A brief summary of the technical report can be found at https://www.nrel.gov/analysis/seams.html. On August 14, 2018, 30-year-old research engineer, Joshua Novacheck, working for the U.S. National Renewable Energy Laboratory, started presenting the results of the Seams study. But before he even had a chance to finish with the presentation, political forces conspired to prohibit the authors from presenting the Seams results or even discussing the study outside NREL. Some of the political background on this issue can be found at: https://www.theatlantic.com/politics/archive/2020/08/how-trump-appointees-short-circuited-grid-modernization/615433/
How Markets Control the Grid
Grid operators in Europe and North America now use various ancillary service markets to help balance supply and demand, but grid frequency is still a primary control mechanism and defines a grid. You might think the grid frequency is kept at 60 Hz in the US and 50 Hz in Europe but, in fact, small deviations are used to balance supply and demand, with all the rotating generators in the grid acting together in unison to handle the load. If the frequency drops slightly, the controls in all those steam and gas turbines, wind turbines, and participating batteries act to bring that frequency back to exactly 60Hz or 50Hz. The region where all generators are synchronized to the same frequency defines a grid. You can see this dynamic in action for the North American grids at:
Service markets created by grid operators have helped make grids stable and allocate costs fairly. The idea stems from a major advance in electricity pricing theory that occurred in 1988 when four professors at MIT and Boston University (Fred C. Schweppe, Michael C. Caramanis, Richard D. Tabors, and Roger E. Bohn) published a book entitled, "Spot Pricing of Electricity." It presented the concept that prices at each location on a transmission system should reflect the marginal cost of serving one additional unit of demand at that location. The idea is that high prices will encourage higher-cost generators to produce more power and encourage large users to cut back on power consumption. In Texas, some utilities offered such real-time pricing plans directly to customers. While this helped keep prices very low for consumers during times of low demand, generation failures mounted, and then the algorithm-integrated prices to astronomical levels during the recent weather event, as no generation was available at any price. Obviously, many customers did not have proper smartphone alerts or monitoring know-how to cut back power as charges quickly ratcheted up to thousands of dollars. At such high prices, homeowners would have been better off to shut off the water and power and spend the night at the Ritz Carlton or other swanky hotel (assuming the hotel still had power). These same markets occasionally have driven the cost of power negative when there is too much generation. In this case, consumers would be paid for consuming power, and generators like nuclear plants that cannot easily shut down would ride through the short event and pay fines for making power.
Residential users represent the largest utility load, but it is rare they can participate or compete in these markets. FERC Order 2222 issued in Sept 2020 may change this. FERC Order No. 2222 will help usher in the “electric grid of the future” and promote competition in electric markets by removing the barriers preventing distributed energy resources (DERs) from competing on a level playing field in the organized capacity, energy, and ancillary services markets run by regional grid operators. Homeowners with generators, solar PV systems with batteries, or EV owners may eventually be able to participate in these markets. Some companies have gamified this to make it more fun. OhmConnect https://www.ohmconnect.com/, for example, is already doing this in California. Developers are building out applications in anticipation of helping homeowners adapt and learn how to operate a grid-interactive home. If interested, you can check out his idea for sustainability games: https://www.power-grid.com/executive-insight/sustainability-games-a-solution-for-residential-demand-response/
Of course, one option is for utilities to build out more peaking units and the transmission to meet these new loads and simply pass on those costs to the consumer. As natural gas peaking units add to cost and emit CO2, utilities need to optimize their three basic objectives of cost, reliability, and environmental responsibility. With wind and solar emerging as the lowest cost new generation, it is unavoidable that more renewables will be part of the solution and those renewables will be more susceptible to many extreme weather events than gas or nuclear generation. It can be complicated to think about the associated long-term politics, economics, and technology. There are many ways to solve this problem. New technology is making many new options available at reduced costs. As a result, politics, economics, and technology all influence high reliability, low cost, and environmental responsibility in some manner. If we think long term, it’s clear that we have one sun and one planet. But getting to one grid will be a long journey with many steps.