Why DOE’s Plan Won’t Create a Resilient Grid. But What Might…

Nov. 3, 2017
A funny thing happened on the way to creating a more resilient grid in the United States. Rather than promoting technologies that actually do this – like microgrids – the Department of Energy (DOE) is pushing old-style generators that are part of the problem.

A funny thing happened on the way to creating a more resilient grid in the United States. Rather than promoting technologies that actually do this – like microgrids – the Department of Energy (DOE) is pushing old-style generators that are part of the problem.

Energy Secretary Rick Perry in September asked the Federal Energy Regulatory Commission (FERC) to consider a rule that subsidizes baseload generation – coal and nuclear power plants — in the name of making the grid more resilient.

In era of intelligent, fast-reacting distributed energy, elevating slower, dumber resources, largely built before the Internet age, is, well, we won’t tell you what we think. Instead, let us highlight some comments others recently filed before FERC. Not surprisingly, there was a flood of them.

(Also take note: No one is rushing to Puerto Rico to build coal or nuclear plants to get the power restored, following massive grid destruction from Hurricane Maria. However, several companies are installing microgrids. Tesla already has one up and running at a children’s hospital.)

The Microgrid Resources Coalition (MRC)

True, well-maintained and operated base-load plants can contribute to system capacity, says MRC. But capacity and resiliency are not the same thing.

MRC defines resiliency as “the ability to preserve critical infrastructure and functions for communities and customers, adapt the grid rapidly to disruptions, and promptly restore service that is lost.”

Baseload coal and nuclear plants “make little contribution to resilience – they are large, dangerous to lose, and inflexible,” says MRC.

Microgrids, on the other hand, “are inherently resilient.”

During an outage, microgrids can island from the grid and serve nearby customers. By way of example, MRC points to Princeton University, whose microgrid kept electricity flowing on the campus during Superstorm Sandy. The college then provided responders with hot meals, hot showers and cell phone charging.

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Hospitals with microgrids continued to serve patients during the storm, while NYU Langone Medical Center in midtown Manhattan had to close its doors. It has since installed a microgrid.

“It is disappointing that DOE has made a regulatory priority of an action that will have limited effect on grid resiliency and will, if implemented as apparently intended, substantially raise customer costs,” MRC says in the filing. “Indeed, in most instances, the operability of large generation during a transmission outage is of little value until power can be delivered. If such generators do trip off in an outage, they take by far the longest to resume operation.”

The MRC calls for prudent investments to create a resilient grid, not “band-aids on the past.”

[clickToTweet tweet=”MRC: We can’t create a resilient grid with Band-aids on the past” quote=”MRC: We can’t create a resilient grid with Band-aids on the past”]

Specifically, the organization recommended FERC institute a resiliency tariff using technology-neutral performance metrics.

The metrics would be based on such factors as:

  • The proximity of the energy resource to critical infrastructure
  • The resource’s ability to combine multiple generation and energy storage units to avoid a single point of failure
  • Fast-start and black-start capabilities to restore power
  • Islanding capability

“Achieving local resiliency incrementally strengthens the grid by giving operators more flexibility – acting locally is the most effective way to achieve a global effect,” MRC says.

International District Energy Association (IDEA)

Robert Thornton, IDEA

IDEA urged FERC to be non-discriminatory in its identification of grid resilient resources.

The DOE’s proposal “appears to reward only merchant coal and nuclear generators for their contributions to grid resiliency, to the exclusion of all other resources. It is unduly discriminatory on its face and should be rejected,” IDEA says.

If the commission chooses to move forward with a grid resiliency rule, it should develop guidance for grid operators “to measure, value, and ultimately internalize the costs of resiliency and reliability attributes within their competitive wholesale electric market price formation mechanisms in a way that benefits, rather than imposes additional burdens on electric customers, such as IDEA members,” the organization says.

IDEA noted that microgrids and district energy systems contribute to a diverse energy resource portfolio. Many use baseload combined heat and power (CHP) with a proven ability to withstand extreme events. Such plants also can offer ancillary and restoration services to the larger grid, and are located close to load (thereby reducing the need for reinforcement of the transmission system), IDEA says.

In addition, power plants aren’t the only resources that can bolster the grid. Demand response, for example, does so. Microgrids connected to district energy systems use both thermal and electric energy to reduce stress on the grid during system emergencies and outages. These systems also improve reliability during normal grid operations “by supporting local voltage levels, reducing congestion, managing peak demand, and addressing other operational contingencies.”

Microgrid depiction courtesy of IDEA

[clickToTweet tweet=”DOE grid resiliency plan is discriminatory; should be rejected: IDEA” quote=”DOE grid resiliency plan is discriminatory; should be rejected: IDEA”]

Amory Lovins, Rocky Mountain Institute (RMI)

Amory Lovins, RMI (Flickr)

The DOE proposal would “reverse the Nation’s bedrock electricity policy of open wholesale competition, painstakingly evolved over four decades,” says Lovins, RMI cofounder and chief scientist.

In its place the federal government would create a system that rewards “deregulated coal and nuclear plants over all other resources—giving uncompetitive merchant plants using those two fuels, and no others, the advantages of ratebasing regardless of need, cost, prudency, or actual use,” Lovins says.

“To my knowledge, no electrical resource anywhere has ever been afforded any such subsidy by FERC, let alone resources whose owners chose and failed to compete them in open markets,” he says.

Lovins charges that Perry has conjured an “imaginary emergency, a fanciful rationale, and nonexistent authorities. I cannot recall any regulatory proposal so unhinged from markets, facts, logic, and legal and policy norms”

 I cannot recall any regulatory proposal so unhinged from markets, facts, logic, and legal and policy norms

By calling for a 90-day supply of on-site fuel to create a resilient grid, the DOE proposal dismisses renewable energy, which is reliable precisely because it needs no fuel, according to Lovins.

The DOE is trying to shield coal and nuclear plants from the market competition “their owners chose, bet on, but lost,” he says. “This destruction of competitive markets would disadvantage precisely the cheapest and most resilient competitors that are beating coal and nuclear plants in markets nationwide.”

Competitors to coal and nuclear include efficiency, flexible demand CHP,  renewables that added 62 percent of  U.S. electric capacity last year, according to Lovins.

Renewables, especially when combined with microgrids, are more resilient than generators that require fuel, Lovins says. Microgrids manage wind and solar power through forecasting, diversification, integration, demand flexibility, thermal storage, and electricity storage, including electric vehicles.

One important fact to note, he says, the average electron now moves several hundred miles through the transmission and distribution grids before it reaches your meter. “No faraway power plant can serve you if that grid fails. Grid failures, not generator shortfalls, cause roughly 98–99 percent of US power failures.”

Because they are located near their customers, microgrids minimize the distance electrons must travel to customers.

So to create a resilient grid, the U.S. should look to the military’s strategy of organizing distributed renewables into local microgrids that normally interconnect but can “split apart fractally” as needed. On a stand-alone basis, the microgrids then serve local customers until they “detect grid restoration (after a pause to ensure it’s real and not a recloser transient), resynchronize, and reconnect seamlessly,” Lovins says.

“That’s the Pentagon’s strategy for military power supplies. It’s how my own house works. It’s how Denmark is reorganizing its grid in a ‘cellular’ architecture that makes cascading blackouts impossible,” he says.


Tesla was blunt: Throw out the DOE proposal. Start over with a focus creating fair markets where microgrids, distributed energy and energy storage can complete

The DOE approach “goes against good market design,” says Tesla, because it pre-supposes  that a resilient grid must  be made up of coal and nuclear power and prevents others from proving their worth.

For example, the proposal calls for resources that have 90 days of fuel stored on site. Neither solar nor storage have 90 days worth of electrons stored on site, yet both would contribute “significantly to reliability and resiliency.”

Tesla points to Hurricane Irma as an example. Several Tesla home solar and storage microgrids kept the power flowing for customers when large swaths of Florida lost power.

FERC already has proceedings under way that would foster a resilient grid. Tesla recommended that the federal agency focus on them, and in doing so define resilient resources as those that offer:

  • Co-location with load and the ability to serve load when transmission and distribution service is not available
  • Islanding and the ability to serve additional loads when some portion of transmission or distribution service is not available
  • Fuel sources that require no transportation
NRG Energy

NRG concurs with the DOE that “wholesale market reforms are urgently needed.” But it disagrees with the proposal’s approach, which it says urges a retreat from markets in favor of federal subsidies that “would needlessly cost consumers billions.”

The independent power generation company called for creation of a fuel-neutral forward resiliency market. Regional transmission organizations (RTOs) and Independent System Operators would administer the market.

The RTOs/ISOs would identify the total megawatt-hours of electricity that it expects its customers to consume over an upcoming quarter. Market participants would bid to fulfill the market need. Participants would be allowed to bid the amount of energy they could generate using on-site fuel supplies, while acting within environmental regulations.

The Energy Storage Association (ESA)

ESA calls for FERC to open a proceeding on resiliency pricing, rather than accept the DOE proposal.

As a first step, this would require defining and quantifying resilience. Such an effort would require that FERC look at a full range of resilience attributes, as they correspond to the actual sources of vulnerability in the electric system. That means not just focusing supply, but also infrastructure, ESA says.

Next, ESA recommends that FERC convene a technical conference for identifying and valuing resilience attributes. The proceeding would focus on technology-neutral market rules and products that could provide effective price or compensation signals.

As part of this technical conference, FERC should consider whether existing market mechanisms are sufficient for ensuring the provision of needed resilience attributes—that is, whether an additional payment for a specific resilience attribute is even needed, ESA says.

What’s your take on the DOE proposal to create a more resilient grid? Post your thoughts on our LinkedIn Group, Distributed Energy Resources.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded RealEnergyWriters.com, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

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