Utilities are making progress with renewable and distributed energy. Early adopters are seeing tangible results from their investments. While hurdles exist, utilities are starting to see the advantages and potential that these technologies can yield. Change is coming, and today’s utilities are experiencing the leading edge of an electricity transformation, whether they are ready or not.
The communications industry is a good example of how disruptive technology has created a new market and displaced an existing one. In 2003, 95 percent of households in America had a landline telephone; today, less than half do, and that number is expected to approach zero by 2025. Will the electric industry face something similar in the next decade?
When it began in the 1800s, the electricity industry was disruptive to other industries, starting a wave of industrialization and innovation. As the industry continues to mature, new technologies such as rooftop solar and electric vehicles are expected to continue to decrease significantly in cost, with the potential to disrupt industry players which operate in traditional markets.
Transformation in states like California and Hawaii is occurring more rapidly than in other markets. For example, Hawaii passed in 2015, a 100-percent renewable energy requirement by 2045 and has since been making steady progress towards this goal. In 2007, over 94 percent of Kauai’s electricity was generated from imported fossil fuels; today, the island generates 38 percent of its power on average from renewable energy sources (including hydroelectric power, biomass plants, and solar energy). California is considering adopting a similar goal, looking to build on the momentum spurred by efforts to achieve 50 percent renewable energy by 2030. California lawmakers recently decided to up the game by introducing SB 584, new legislation that would require “all electricity sold at retail to be generated by eligible renewable energy resources” by 2045.
But what would 100 percent renewables look like in California?
As one might expect, there are peaks and valleys when it comes to renewable energy output. In California, wind, solar and hydro all peak in the late spring/summer, but drop significantly in winter. If the state were to rely solely on in-state renewable resources to meet energy needs, a massive amount of seasonal storage would be needed to cover the gaps. High-level analyses suggest the storage needed to address these fluctuations while still meeting 100 percent of load could approach 20 million MWh of storage—about a month’s worth of electricity consumption. To put this number in perspective, GTM Research reports that 336 MWh of energy storage was installed in the U.S. in 2016.
Possible solutions to reduce the amount of storage needed in this scenario would be to diversify resources across the West, build more baseload renewables, potentially “over-build” California’s renewables supply mix, and better integrate electric vehicles and flexible demand-side technologies into the grid. For example, Wyoming winds are strong in winter, which could provide energy when California’s natural resources are slack, with adequate infrastructure such as new transmission lines.
However, even under this scenario, there are no commercial storage technologies that even approach 1 million MWh of capability. The world’s largest pumped storage hydro power plant, Bath County Pumped Storage Station in Virginia, has a capacity of 3,000 MW and storage volume of 24,000 MWh. A possible solution would be a power-to-gas transformation, creating either hydrogen or synthetic natural gas from electricity. Synthetic gas can then be stored, transported and burned using the state’s existing natural gas infrastructure. Emerging energy storage technologies like liquid air energy storage that are not site dependent can also help. While the development of these technologies are still in early stages, they offer some promise for the future.
Cost is also a concern. While the industry anticipates the cost of solar and wind technologies will continue to decline, there will be capital costs required to supplement existing infrastructure to efficiently store and transport electricity and ensure reliable retail service.
Decarbonization and Electrification
Another challenge for California is the electrification/decarbonization of other sectors, such as transportation, home heating and industrial use, which is anticipated to be necessary to meet the state’s greenhouse gas reduction goals. Professor Mark Jacobson at Stanford University modeled a complete conversion scenario that saw deep reductions in carbon, a fivefold increase in electric demand but required $1 trillion in investment. In this study, electrification across all sectors in California, including transportation, could increase the average electric load from 30 GW to 160 GW, and the state would need 400 GW of renewable generating capacity to meet those needs with 100% renewable energy sources. In comparison, the entire U.S. has about 1,000 GW of generating capacity of all types. This would stimulate a huge investment in renewable energy and trigger a massive build and expansion.
For electric utilities with near zero load growth that have been tentative in addressing decarbonization and the role of renewables, this problem could be viewed as an opportunity. Increased investments to decarbonize other sectors has the potential to create new opportunities– and that is a disruption that some might welcome.
Editor's Note: Ryan Pletka participated in The Brave New World of Electric Power at the Energy Times' Renewables Rush event in San Francisco on April 5.