Last week I attended the International Energy Program Evaluation Conference, IEPEC, which I had affectionately dubbed the Energy Program Evaluation Asylum, EPEA, six years ago. Back then, I called it the Asylum because it included annual scrums over subjects such as net-to-gross (NTG) studies, free ridership, and so on.
The Family Feud is Dead
You’ll never believe this, but the industry seems to have moved on. The only time I heard “NTG” was during the opening-night entertainment exercise – a gameshow wannabee modeled after the Family Feud. “One hundred evaluators were surveyed. The top six answers are on the board. Name the most ubiquitous acronym used in program evaluation.” “NTG!” “Survey says?! Net to gross! Number 1!” Yaaaaaay!
On that note, the content of the conference was excellent. Kudos to IEPEC, the conference committee, and host utility Xcel Energy, which shared great insights.
But first, why did the NTG football disappear faster than the Russian-collusion story? Answer: our industry is scrambling to remain relevant. You see, with little or no perceived external threat, people bicker about little things, create problems in their mind, or turn on one another. This has happened in the last 30 years while the universal threat of nuclear annihilation (pun alert) vaporized. Threats, disasters, and hardships bring people together.
Our industry responds similarly. Ten years ago, efficiency was booming everywhere, and lighting was evolving rapidly. With no threats and a growing pie, we manufactured issues and kicked them around endlessly. Today we have the threat of shrinking avoided cost, namely no or low avoided fuel cost. The result: our industry has turned on a dime. NTG? What is NTG? Not today, guys?
Alive and Broke
Low avoided cost, as you might guess, is mainly a result of low natural gas prices and fuel-free renewable generation. In fact, the conference opening speaker, Hunter Lovins, noted the competition for renewable plus storage, on a distributed scale, will soon be three cents per kWh. In that case, utilities and everyone who serves them will be out of work. Indeed, you can see a short version of her vision in this video. Natural gas, petroleum, coal, nuclear power, including the utility industry, will be gone by 2030. I wonder if she realizes petroleum and natural gas are feedstocks for the packaging used for the food we haul home from the grocery store every week – and half the clothes we wear?
It was also interesting that in the same speech, the message I heard was, we’re going to burn to a crisp, but the transition to 100% renewable by 2030 is unstoppable. It seemed like a far-out combination of doom, overconfidence, and Hillary Clinton’s promise to put coal miners (that’d be us in this case) out of work, all in one presentation.
At this point, I can’t resist listing some groupthought over my lifetime:
- We’re going to freeze
- We’re going to burn
- We’re going to starve
- We’re going to drown
- We’re going to run out of water
- We’re going to overpopulate
- Electricity will be too cheap to meter
Fly Meets Ointment
I asked one person from a utility as we chatted over breakfast, at what point are renewable resources over generating? The answer is not, “when renewable resources produce more energy than customers can soak up.” I didn’t get an answer, but this is where fly and ointment collide.
The California Independent System Operator recently concluded that the maximum renewable penetration their grid can handle is 60%. Why is this? Because our grid and every other grid in the world operates with alternating current with a very tight band around frequency regulation. In North America, the frequency is 60 Hz, and the low range is 59.5 Hz per my readings. Critical electronic equipment has very little tolerance for anything but a smooth 60 Hz sine wave.
Why do we have an electrical grid with alternating current? Because alternating current efficiently steps up voltage for electricity superhighways known as transmission systems to transmit power over long distances. We don’t all live on a sheep ranch in Montana with a million times the space needed to power our home and sheep shears. Long-distance transmission and distribution systems (utilities) used to power little patches of real estate shown nearby aren’t going away soon.
Furthermore, most major loads on the grid require AC power – motors for fans, pumps, refrigerators, air conditioners, manufacturing and on and on all use AC power and require AC power.
Renewable generation provides no frequency response or management. It simply jams electrons onto the grid at its full capacity at any given moment per the incident solar energy or wind speed. There is no reserve for responding to faults such as failed circuits or tripped generators. Not even batteries are fast enough to respond for frequency droop. Kinetic energy in the form of massive spinning turbines is required to instantly maintain frequency. This buys a few seconds while governors (think gas pedal) can respond to maintain frequency in a very tight band. These turbines are powered by steam produced by coal, natural gas, or nuclear fuel. Oops! Goodbye 100% renewable, or anything close to it, for the foreseeable future.
So fear not, investors, the $25 trillion in stranded assets won’t be stranded. However, as noted in Breakpoints, Tipping Points and Imagination, the future is anything but certain – except that by 2030, we certainly will not be anywhere close to 100% renewable.