Tim Qualheim, of S&C Electric, sees demand heightening for smart grid systems, as disruption grows on the electrical grid.
With 2014 now behind us, recent energy trends portend a future where utilities must react to stay in stride with changing market demands. These pressures, however, will not affect all utilities similarly, and certainly not all at once.
Indeed, as distributed power generation grows, the subsequent disruption to the electrical grid will lead to a demand for increasingly sophisticated smart grid systems. Some of that disruption will occur quickly and, in fact, is happening today in some regions, while other phases will evolve over time.
Distributed photovoltaic (PV) cells on houses, for example, still represent less than 1 percent of our overall energy generation. However, use of the technology is growing fast in some geographies, and it is already causing disruption in some areas. In some places, such as the Southwest, for example, PV use could grow to generate 10 percent of capacity within five to 10 years, and may be greater than the load on some feeders.
This all illustrates major change occurring in the market, putting growing pressure on utilities to adapt. Besides the strengthening of distribution generation and the subsequent disruption it already is causing in some areas, I predict other issues also will both create utility grid challenges and opportunities. Here are a few thoughts as we begin the New Year:
- We will see more people go off grid with their own PV installations. There will be some individuals who won’t want to be on the grid anymore. However, the vast majority of folks installing PV systems will want to stay connected for peace of mind or other reasons. This will create an interesting dichotomy because the consumers who install PV systems will pay smaller power bills, while the utility system costs remain steady. The people who can’t afford PV systems will effectively be subsidizing the grid for folks who can. In response, regulations will need to change to address this issue.
- Energy storage will play an increasing role for utility grids. This will become especially true as battery costs continue to fall. The cost of certain batteries, which represent up to 80% of energy-storage cost, has dropped in half in the past 18 months, and the trend is expected to continue over the next five years. As that occurs, utility systems will begin to use energy storage out on the feeders as the most cost-effective way to deal with a multitude of system issues. Energy storage will stabilize the system from the disturbances caused by PV power generation. It will help shave peak load and level daily loads on feeders, thus providing significant capital-deferment savings from avoided feeder upgrades. It will even eliminate the need for some costly peaking generation plants. I predict that in 2015, some states will change regulations to allow regulated distribution utilities to install energy storage and recover its cost in their rate base.
- Reliability improvement will finally address momentary outages. Momentary outages have always caused problems for electricity customers, and consumers are getting less tolerant of them. Some utilities are finally taking this seriously and are working to significantly reduce momentary outages. Florida Power & Light, a very large utility, for example, took the bold step to acknowledge that momentary outages are very important to its customers and is making a systemwide change to significantly reduce them, thus increasing reliability and customer satisfaction. In 2015, I believe other utilities will take note and follow suit.
- The Smart Cities movement will gain steam. This will occur gradually as more cities realize that smart, robust electrical and communication grids attract new businesses and residents. Cities that have made their grids smarter, such as Chattanooga, Tenn., already are attracting innovative technology companies, such as data centers and high-tech startups. Other cities are seeing these results, and many are realizing they, too, will have to make similar grid upgrades to compete, grow and thrive in tomorrow’s high-tech society.