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Thoughts toward the future of the grid

September 25, 2013

By Drs. Robert & Sonia Vogl
President and Vice President, Illinois Renewable Energy Association

A spate of recent pronouncements have suggested the electric grid is falling victim to obsolescence. Just as cell phones are displacing landline service, utilities are losing market share to customers producing some of their own power.

A combination of renewable energy sources, cheap natural gas, deregulation, computer technology and political pressure is cited by David Crane, chief executive officer of energy wholesaler NRG, as factors contributing to making the grid irrelevant to an increasing number of customers.

As homeowners, small businesses and large box stores expand their investments in efficiency and renewable energy sources, they have less need for grid electricity. Solar units are being installed on roofs and parking lots. Some are developing microgrids that combine solar and wind units with backup gas generators, providing continuous power and eliminating any need for grid service.

Even the cumulative effects of small applications reduce the need for grid service. For example, Illinois Renewable Energy Association Board member Jeff Green recently designed and built portable solar-powered ATM machines with battery backup to meet the cash needs of customers at large community events.

Jon Wellinghoff, chairman of the Federal Regulatory Commission, acknowledges that electricity markets are undergoing profound changes. Existing markets are based on a centralized system with very large plants distant from the sources of demand. With more consumers producing some of their own electricity at the point of use, a new business model is needed to accommodate increases in distributed power.

According to Jerome Paris, the need for a new business model is pronounced in Germany. Production from renewable energy installations has reached a point where its impact on power systems is irreversible and has damaged the economic model of existing utilities. In the past, in times of peak demand, utility profits were highest and helped to cover the cost of operating the entire system.

With substantial solar capacity, the time of peak demand is flooded by cheap solar energy, which undermines profits. However, since renewables are not available on demand, the existing grid remains essential for reliable service and must be paid for. Paris believes the economics of the sector cannot recover with the existing renewable capacity, so a new business model is needed. The politics involved in creating it could be contentious.

One possible solution is that plants such as natural gas units that can produce power quickly are available on a standby basis, with their full costs paid for.

In the United States, former Energy Secretary Steven Chu believes a new business model centered around solar electricity and energy storage is essential as their costs continue to fall and electrical demand remains flat as a result of continued improvements in energy efficiency.

According to Soul of Wisconsin, there are 11 utility-proposed high-capacity transmission projects under consideration in the Midwest. The proposals are seen as efforts to move much higher volumes of power from the Midwest to eastern markets.

With the future of the electric grid looking less secure, one wonders what impact the uncertainties will have on plans to expand it.

Drs. Robert and Sonia Vogl are founders and officers of the Illinois Renewable Energy Association (IREA) and coordinate the annual Renewable Energy and Sustainable Lifestyle Fair. E-mail sonia@essex1.com.

From the Sept. 25-Oct. 1, 2013, issue

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