Stuck in the Past: Old Models Stymie Clean Energy Transition

With the upcoming COP 24 session in Poland, I recently published a post that looks at the progress that has been made since COP 21. COP 21 is when we saw the drafting of the Paris Agreement. COP 24 is the opportunity to truly put together implementation strategies for countries to meet their greenhouse gas reduction goals. There are several market sectors that are impacted by the Paris Agreement. Here I want to take a quick look at the electric power sector and the slow transition to more clean energy power systems.

What’s the Hold Up?

One uncertainty ahead for renewable energy is how investors will take to the coming period in which project revenues have less government price support, and instead depend on private sector power purchase agreements or merchant power prices.

Why can’t this transition happen more quickly, particularly in regards to electric power generation and consumption. When countries submitted their INDCs in 2015, the energy world was a bit different than today. One of the most significant differences from then to today is the price of clean energy resources, particularly solar, wind and batteries.

With significantly lower costs for clean energy power generation since the Paris Agreement shouldn’t we be seeing a more rapid transition. A key  argument has been that the higher costs of renewable energy was a key barrier. It is very difficult to make the same argument today. As demonstrated by the most recent levelized cost of energy studies.

Economics are there for clean energy

According to the Lazard Levelized cost of energy report, in 2015 combined cycle gas plants and utility solar were pretty much event in cost per kWh. Solar was a bit cheaper at $64 and Gas combined cycle was $65. Wind was less expensive than both at $55. If we look at the most recent Lazard report for 2017, prices have continued to drop for all technologies, but solar and wind by considerably more. In 2017 wind was $15 less than gas at $45 and solar was $10 less than gas at $50. Solar made the largest gains in price reduction per square foot and closed the gap on wind. There is now only a $5 difference between wind and solar applications.

The other argument has been that renewable energy is intermittent and too much renewable energy on the grid would hurt grid reliability. This argument appears to be losing some of its validity. One would expect that with early deployment, there was not the diversity of resources, solar and wind, nor the geographic disbursement of these systems to ensure grid stability. However, as we see greater deployment of solar and wind, we see the complementary nature of these resources and how they are better able to support the overall grid when coupled together. Throw in batteries and you really solve the intermittency issue. Granted, solar and batteries is still a bit more expensive, than your base load combined cycle natural gas plants, but not by much.

Texas Not Showing the Way

A recent decision by the Texas Public Utility Commission (PUCT) on AEPs Wind Catcher facility is a good example of how developers may not be using the appropriate assumptions for their models and how the PUCT is slow to adjusting to the clean energy transition. What this means for both the developers and the regulators is that they have not been able to properly model the long-term benefits of clean energy resources and future risks of a fossil-fuel based power grid.

The AEP’s Wind Catcher would have been a 2 GW wind farm in the Oklahoma Panhandle. The largest wind farm in the United States. AEP argued that customers would receive significant benefit due to the expected fuel savings of the project. Because power would be provided to Texas, the PUCT had a say on whether the project was seen as beneficial to Texas customers. The PUCT denied the project on grounds that it placed too large a burden on rate payers.

What has changed in the market?

The clean energy market is tougher place to be than it was a year ago. Three key factors a lower federal tax rate, low natural gas prices and in Texas the fact that the renewable portfolio standard has long been met and provides no requirement for utilities to take on additional clean energy.

Because the renewable energy standard goals of Texas have been met, AEP had to demonstrate that the costs of the plant were competitive and provided cost savings to customers. Another strike against the project was when first conceived, the federal tax rate was higher. Higher tax rates provides a greater benefit to projects looking to participation in the federal production tax credit. When taxes go down, less tax burden and less benefit via this credit. AEP saw a $245 million decrease in tax benefit with reduction in federal taxes.

Old Way of Thinking Continues

Those are two valid concerns that have a material effect on the value of this project. There are two concerns expressed by the PUCT that are more difficult to accept. The first is that the PUCT does not feel there will be a carbon tax or any other climate regulation supporting clean energy investment in the near to mid-term. However, that is likely to be only as long as the current administration stays in power. Looking beyond 2020, we should anticipate a swing back toward carbon related regulations which would get the US back in line with the rest of the world.

Further, as we continue to see greater climate related extreme weather activity, it is increasingly likely that more interest will be paid in mitigating climate risk through the development of policies for more clean energy resources. This could be done through a “punctuated equilibrium” event such as an extreme long-term drought or the largest fire in California’s history, that would mobilize voters for more climate focused policies. Not only may a large event drive policy change, think Fukishima, but so would current state and local efforts. We are seeing a significant horizontal diffusion across states and communities of climate policies. As this builds, we could very well see a vertical diffusion, a snowball effect that drives action at the federal level. We see from COP 23 that a sizable portion of US cities and states are “still in.” To not take into account, the possibility of future climate regulations is short-sighted energy planning that goes against many of the indicators that would suggest otherwise.

Natural Gas Prices to Remain Flat for 30 years?

The second argument by the PUCT against the Wind Catcher project was that natural gas prices are low and will remain low for the foreseeable future.  With such low natural gas prices, wind is not believed to be competitive and would increase cost burden to customers.

The analysis by the PUCT does not take into account the ongoing decrease in wind energy prices. As mentioned earlier, according the most Lazard report, the LCOE of wind is less than natural gas combined cycle plants. A recent Rocky Mountain Institute (RMI) report finds that an “optimized clean energy portfolio” is cost competitive with natural gas at $5 MMBtu gas now and with $3 MMBtu gas in the next 15 years. The study also looks at a Texas case study.  When comparing a combined cycle plant with a clean energy portfolio which includes energy efficiency, solar, wind, demand response, etc., the clean energy portfolio has a 25% savings over the cap ex of a the combined cycle plant.

The Chairperson of the PUCT, DeAnn Walker, stated that one of the key problems with the project is that “the costs are known…the benefits are based on a lot of assumptions that are questionable.” However, looking at the decision of the PUCT, one should ask the same thing of the PUCT assumptions of low natural gas prices. Natural gas prices are historically volatile. To base the conclusions on the premise that natural gas prices are going to remain stable and flat over the next couple of decades indicates that the PUCT has not learned from history. By assuming that natural gas prices will follow a very stable, minor increase for the next thirty years does not reflect the reality of the last 30 years. This false assumption puts energy consumers at greater risk.

Here is the PUCT’s assumption – natural gas prices is the orange line.

Here is the historic reality of natural gas price volatility.

There were some other strikes against the Wind Catcher project, particularly the additional costs of transmission construction to interconnect the system. Further, AEP should have done a better job on how it presented its analysis and assumptions with the more recent changes in the natural gas market and regulatory environment.

That being said, AEP and other developers should learn from this project. One key area that has yet to be touched to the degree necessary is future climate risk and the increasing likelihood of climate regulations. Energy planning models are not properly taking into account either of these risks. By not doing so, models will not adequately value clean energy projects and limit opportunities for speeding up the energy transition. More to come on energy planning in the next post.

 

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The Key Reason Texas Power Grid is at Risk to Climate Change

Energy Planning

Are energy planners in Texas taking climate change seriously enough? The question pertains not to mitigation but rather to long-term resilience and adaptation of the state’s power generation portfolio. The state is doing OK in decarbonizing the grid through its record level wind investment and growing solar portfolio. Across the US, on a regular basis, new announcements are made of record-setting production and growth in the renewable energy sector. Just last week, Friday the 16th,  the Southwest Power Pool set a record with over 60% of its grid being powered by wind. We see solar installations going in at a record pace surpassing 2015 installations, with 10.6 billion watts of installed capacity. 2016 still remains the highest year for solar installations at 15.1 billion watts.

 

Decarbonizing is not enough

Further, like the rest of the country, the state is realizing ongoing coal power plant retirements, with 5 GW coming offline in the near term. All of this activity has lessened the carbon intensity of the Texas grid and helps reduce the risk of price hikes if there is ever a carbon tax or carbon fee and dividend passed.

So Texas is to some degree pulling its weight in decarbonizing its grid. It could be doing significantly more to reduce energy consumption. For example, we are dead last with our energy efficiency resource standard goals. We have the lowest goals in the nation, by a lot. Other than that and also the significant lack of incentives and rebates across most of ERCOT’s territory to deploy distributed energy resources, particularly rooftop solar, we are doing OK.

OK, but we could be doing better if not for the lack of action on implementing battery storage into the market. Although I do hear that we should expect the PUCT to be making battery storage a focus of theirs in the next few months. That is good news for all of our decarbonizing efforts, whether rooftop or utility scale.

Where we are lacking, and where much of the country is lacking, is moving our energy planning from climate mitigation efforts to climate adaptation. As I mentioned, the state is reducing its climate intensity to some degree, with greater deployment of renewables and coal-fired retirements. All market driven.

What we are not considering with our new and future generation assets is to what degree they are going to be impacted by a rapidly changing climate. It is true steps are being taken on the transmission and distribution side to harden the grid and improve grid resilience. Hurricane Harvey, although highlighting where we are in need of improvement, did not cause the damage that could have occurred if we had not already started to deploy smart grid and grid hardening assets throughout the transmission and distribution system.

The power development that is occurring now, primarily wind, solar and natural gas are being developed using weather models and market information that does not take into account the near and mid-term impact of climate change. Climate models are finding that in the next few decades there will be changes in cloud coverage and wind patterns. There is also a higher likelihood of long-term drought across the state. This does not include the increased probability of more intense hurricanes and other severe weather events.

Market is Short-sighted

Have our energy planners thought about what the grid would like if there is more cloud coverage or the wind becomes less predictable? The market is largely determining the generation portfolio for ERCOT. This is great in the short-term, we get the most economical generation built. Currently, in the ERCOT Generation Interconnection Status report, there are over 67 GW of power generation systems under study to potentially connect to the grid. 81% of this is solar or wind power generation, with the remainder natural gas. Of course, not all of this is going to come online but it demonstrates the direction we are going in the development of the future grid for Texas. This is great news for emissions. Having such a large proportion of the new generation systems being renewables will further reduce the carbon intensity of the Texas grid and reduce overall emissions. There is a very large assumption here in regards to our future grid. The assumption is that the weather is going to continue to be how it has been. It is anticipated the wind patterns will remain predictable and similar to what they are now, as well as cloud cover. It is also assumed that water will be available to cool the large proportion of our power that will continue to come from water-cooled natural gas power systems.

The question here is whether we are doing enough to mitigate future climate risks to our power generation systems. Specific to future water risks, there have been studies that demonstrate we would be in a bind if the state had another 2011 style drought. Which is true, but these studies do not seriously consider future climate scenarios to provide recommendations on how to mitigate this risk. Largely, our current energy planning process does not do enough to mitigate risk. Much of this lack of foresight is due to state leaders that do not see climate change as real. So there is no effort to mitigate something that they feel is not a risk. Also, as I said earlier, our generation portfolio development is largely market driven based on lowest cost generation resources. It does not take into account whether these plants will be able to operate as expected in the next 5, 10, 15, 20+ years.

Solutions for Energy Planning

What are some solutions to mitigate climate risk? First, we need to start using regional climate models in our energy planning. Further, with these climate models, we need to deploy new decision frameworks, possibly a robust decision-making framework that allows for improved decision making under deep uncertainty. Another approach would be a multi-criteria decision analysis framework which is already being deployed by some energy planners, mainly in Europe.  With these frameworks, we need to start looking at our technology options. For example, it is key that we look for ways to increase the opportunity for battery storage to participate as a generation resource, as well as support transmission and distribution. We should further support the deployment of combined heat and power or small natural gas gensets. (Enchanted Rock has an interesting model that should be considered).  We should also look to deploy and/or convert large natural gas plants to hybrid cooling or air-cooling. Finally, to reduce impacts of cloud coverage, we should facilitate greater adoption of distributed solar for residential and commercial rooftops. We see some interesting distributed solar options being supported by new blockchain technology facilitating peer-to-peer selling.

 

Solar + Battery Storage – A Better Option to Improve Power Resilience in Texas?

Florida is on to something that Texas may want to start looking into. There is current legislation (HB 1133) going through the Florida State House to create a pilot solar + battery storage program to improve the resilience of critical infrastructure. It’s a small pilot, only about $10 million dollars, but it is focused on determining the feasibility of providing solar + battery storage to provide backup power at hospitals, emergency shelters and emergency response units. The systems must provide at least 24 hours of backup power to the site’s electrical load or at least five hours of average daily use.

Florida is realizing, along with some other states on the east and west coast that more options must be solar battery storagemade available for emergency backup power. Diesel and gas generators are not a great option, due to fuel supply issues, air pollution and the uncertainty as to whether they will work when called upon. What this Floridian effort is doing is helping to identify better alternatives to standard practices that can improve the resilience of its power infrastructure, particularly critical assets.

Solar + Battery Storage Market

Florida is not alone. Several states are way ahead. California, Hawaii and New York have been the leaders in solar + battery storage deployment to improve resilience. Systems are largely being installed for back-up power, as well as to reduce demand charges and overall power costs.

The installation of solar  + battery storage is growing. A GTM research report finds that in Q2 2017 saw 443 systems installed, about 32 MW. The report shows a significant increase in deployment over the next several years. Approximately 7,000 MWh projected to be deployed in 2022.

The Old Way to Do Things…

Traditionally for commercial, as well as some residential buildings, the backup power option is for diesel or natural gas-fired generation. These systems typically only run when there is a power outage and sit idle at other times.

Some of the commercial users of these systems have become a bit more sophisticated and use these backup generators to provide ancillary services to the electric power market, but that is not common and takes a level of sophistication and effort that is typically not available. (The exception is Enchanted Rock. They are a good example of how to take advantage of price signals in the ERCOT power market to make backup generation profitable for the vendor and the end-user.)

There are several concerns for diesel and natural gas generators. Backup natural gas and diesel systems are reliant on an offsite fuel supply that may become vulnerable during a natural disaster event and not always available or easily supplied. Diesel systems must keep a significant amount of fuel on site which is very expensive and may not be easy to refill during or after a disaster. Diesel and natural gas delivery systems are known to shut down during major disasters, as well.  The reason is that both systems are highly reliant on power to operate pumps, compressor stations, etc. If those systems go down, there is a risk to delivery.  Flooding, wildfires, and earthquakes also can wreak havoc on the delivery infrastructure. Finally, air quality concerns limit the operation of these generators. Depending on your location, air permits may only allow these systems to run a certain number of hours a year.

Fuel prices have a tendency to spike and remain high during and after events until fuel supplies are back online. This is currently being realized in the Northeast with the significant spike in natural gas prices due to soaring demand for building heating.  A similar spike was experienced during the Northeast US Polar Vortex in 2014. The 2014 Polar Vortex led the DOE request of FERC to subsidize fuel secure supplies such as coal and nuclear power. Not sure if that is a great idea. Other than the request distorting power markets, coal is not that fuel secure. Coal piles froze during the polar vortex and we watched Hurricane Harvey turn the coal supply at the Texas WA Parish Plant into a coal slurry. They had to switch to gas.

The benefit of diesel or natural gas generator is largely the upfront cost. According to an NREL study, the cost to install a 5 kW solar + battery storage system is about $7.8 per watt. In contrast, the cost for a similar size natural gas turbine is about $0.89 per watt. Kind of hard to make that pencil out looking at first costs. The high costs for the solar + battery storage system are largely due to the cost of the battery, about $10,000 for a 5 kW system according to the NREL study, as well as a good bit of cost for the labor and the balance of system components. Fortunately, the costs for solar + battery storage continue to decline significantly with some projections seeing the cost decline by approximately 70% over the next 15 years.

New Way of Doing Things? 

The upfront costs, at least for the next few years, is a big hurdle for solar + battery storage systems to overcome. However, the resilience benefits can be pretty significant. The benefit of the solar + battery storage system is that everything to operate the system is on-site. There are not fuel supply constraints, nor are their fueling requirements during the life of the system. This is a significant benefit if your solar + battery storage system is replacing a diesel generator option and even a natural gas-fueled option.

As stated earlier California, Hawaii and New York have taken the lead in this solar +battery storage effort. The east and west coast continue to be early adopters and first movers in trying out innovative power systems. San Francisco has developed the Solar+Storage for Resilience initiative (SSR) which is in place to develop a roadmap for San Francisco and the nation to determine the best path forward in deploying solar + storage systems to improve storm preparedness of critical infrastructure. They recently launched a solar + storage resilience calculator called SolarResilient. This calculator is to help building owners find the appropriate sized solar + battery storage system for their needs.  The National Renewable Energy Lab (NREL) also has developed a tool for commercial building operator and owners to determine the economic feasibility and the appropriate size for solar + battery storage systems at their site. The system is called REopt.

Another example of a City actively pursuing solar + battery storage for resilience is Salt Lake City, Utah. SLC is part of the DOE Solar Market Pathways initiative. This initiative has supported SLC to set goals and begin deploying solar + battery storage systems for emergency preparedness of critical facilities. It includes integrating solar + battery storage into healthcare facilities, as well as work with the private sector to put together emergency preparedness plans. This project is also developing a 10-year deployment plan for the entire state.

These are just a couple of examples. A great opportunity exists to expand our critical infrastructure resilience options. DOE, through its Solar Market Pathways program, is providing free technical assistance to build resilience with solar + storage systems. The program focuses specifically on how to integrate resilient solar into emergency management plans.

Time is Right for Texas to Consider its Options. 

The State of Texas and Houston, particularly, have witnessed increasing numbers of power outages in recent years. Two million people lost power with Hurricane Harvey. Fortunately, much of the power was restored fairly quickly. Hurricane Ike knocked the power out for 7.5 million people, 95% of CenterPoint’s Texas territory and that was only a Category 2 hurricane at landfall.

I realize that it is a bit sacrilegious to suggest other backup power alternatives other than natural gas. However, natural gas systems have their vulnerabilities. It is in our best interest to ensure we have available all viable options to ensure the long-term resilience of our communities. Solar + Battery storage looks to be one of the better options. It may not be a bad idea during this interim session, as the State thinks about ways to recover from Harvey and improve resilience to conduct a study of solar + battery storage options. We may then have something we can act on in the 2019 session that will lead to improved resilience of our communities.

 

Critical Action Needed to Make Electric Power Grid more Resilient to Climate Change

With three major hurricanes wreaking havoc on the United States’ power sector in 2017

2560px-Katia,_Irma,_Jose_2017-09-08_1745Z–1935Z
Katia, Irma and Jose…After Harvey and before Irma…                 Hurricane Season 2017

there has been a growing discussion on how to make the grid more resilient. Due to climate change, it is anticipated that storms are likely to become more intense and possibly more frequent, placing growing pressure on the ability of the power system to keep the lights on. We are already finding that climate-induced extreme weather events are already resulting in more frequent and longer duration outage events in the United States.

Defining Resilience 

With this growing threat, a resilient power system sounds like a good thing. Unfortunately, it appears that there is some difficulty in defining what we mean by a resilient power system. From many of my recent conversations, I find there is confusion by what we mean by resilience. For example, I see in some cases, reliability and resilience are used interchangeably. To be clear, reliability is not resilience. According to a recent National Academies of Science Report “Enhancing the Resilience of the Nation’s Electricity Grid,” reliability deals with ensuring there is an adequate amount of power supplied to meet demand, even in times of expected and “reasonably” unexpected outages. Resilience differs in that the expectation is that a resilient system can adapt and lessen the likelihood that an outage will occur and if one does occur to manage the event, lessen impacts, recover as quickly as possible and learn how to deal with future outages.

Valuing Resilience 

IceStormPowerLinesBeyond defining resilience another issue we face is that much of the decision making and cost/benefit calculations are based on economic efficiency calculations that value the benefits of a reliable grid, not a resilient grid.  The focus is on short-term cost-benefit optimization that is detrimental to resilience improvements. In other words, the calculation looks at what keeps the lights on now in our current environment, not what investment would limit the large-area, long-duration outages that may occur due to severe weather activity or other cyber or physical attacks. To overcome this issue requires that there is a better understanding of how to value resilience. To do this requires that we have a better idea as to the probability and intensity of future events that may impact the grid. These known unknowns and unknown unknowns are not easy to value which is problematic when putting together a rate case to fund this investment. Fortunately, steps are being taken to quantify metrics tied to what would be considered a resilient power system. With the development of better metrics to measure performance, it will be more likely we can make more resilient appropriate investments.

Resilient Components – Weighing the Costs

As we get better at improving our ability to define, measure and value a more resilient power system, what would be some strategies that we could pursue? There are a variety of ways to make the transmission and distribution system more robust. All of them may add significant upfront costs to the system but are likely to also provide long-term benefits as the power system is more able to withstand more severe weather events. Following is a very high-level overview of some options that could be considered.

Put the wires underground, sometimes…Undergrounding power lines is an option that I hear a lot. The problem with “undergrounding” is that it is significantly more expensive than hanging the wires on poles. So, we must weigh the cost and benefit of such an approach. In an area that is susceptible to high winds, ice storms and tornadoes, placing the wires underground may be worth the cost. The question we must ask is whether we anticipate there will be an increasing number of these events that would justify burying these cables? At this time, we know that things are going to get a bit hairier, but we are uncertain as to how hairy and when. That makes it difficult to pull the trigger.

Also, we must remember that an approach that would make a power system more resilient in one location may not be as successful in other. For example, if an area is susceptible to flooding, burying wires may be a bit more problematic. Although protections can be put in place to protect against flooding of underground lines, that adds additional cost and it may still not prevent a disruption. Further, any disruption, due to damage to an underground cable, will likely take longer to fix and be more costly than repairing above-ground wires. We must ask are we preparing for floods, high winds or both?

Elevate substations…Not only are the wires susceptible to water, substations can be, as Underwater_substation,_Cedar_Rapids,_June_12_2008well. This was demonstrated by Hurricane Harvey flooding which ruined multiple substations. This damage can be limited by elevating the platform for where these components sit. Levees and dikes can also be built to protect these systems. This is easier done for new infrastructure development, however moving or elevating legacy systems can be cost prohibitive if the proper valuation of this benefit is not properly accounted for.

Strengthen wires and poles...Additionally, for the transmission system, there are methods that can make it more robust, particularly to ice storms and strong wind events. This would include reinforcing poles and towers or constructing wind-resistant concrete and/or steel poles. There could also be more frequent deadends placed along the system. At present, the practice is to place a dead end every ten miles. Placing these deadends more closely together will reduce the likelihood of a domino effect if one of the standard designed poles are compromised.

A smarter gridFor distribution systems, improving resilience requires moving from a radial design to a more networked design. A networked design has more than one supply feed that limits outages if one of the lines go down. The network designs should be coupled with more advanced communication infrastructure that allows systems damage to be isolated and to reroute power when a component is damaged. These smarter grid systems have been deployed in a patchwork across the United States. CenterPoint, in the Houston-Galveston region, does have some smart grid components deployed which allowed for more rapid recovery during Hurricane Harvey.

Final Thoughts

The bottom line is that solutions exist. I presented a short list of options that may be considered. I didn’t even touch on the fast-approaching opportunities that come with decreasing cost of battery storage. The problem with pursuing many of these strategies is the added expense. Our decision-making frameworks for utility investment are not set-up for resilience investment, they are set up to ensure a reliable grid. Fortunately, with better climate modeling and resilience metrics, we are getting closer to properly valuing the short and long-term benefits of the resilient investment and are moving in the right direction. In the meantime, we will just keep trimming the trees.

 

 

 

Ensuring Electric Power Resilience in Face of Climate Change – Federal Testimony

On October 3rd, I had the opportunity to testify in front of the House Committee on Science, Space and Technology. It was a great opportunity to discuss electric power resilience in the United States in respect to climate change. I wanted to share the testimony. Please see below. Also, here is the link to the video testimony.

Testimony before the House Science, Space and Technology Committee:

Chairman Smith, Ranking Member Johnson, and members of the committee, thank you for the opportunity to appear before you today. I

electric power climate resilience
Pink Sherbet Photography from Utah, USA

am Gavin Dillingham, Program Director for Clean Energy Policy at HARC and I am pleased to provide testimony on the resilience of the United States’ power infrastructure, particularly in respect to the risks posed by the increasing number of extreme weather events.

HARC is a non-partisan research institute in The Woodlands, TX. We were founded by George Mitchell in 1982. The organization was founded to conduct research and analysis that can be shared with communities to help with their decision making. Our researchers focus on areas of water quality and supply, air quality, ecosystem services, and energy, both clean energy deployment, as well as research to reduce the environmental impact and improve the health and safety of upstream oil and gas operations. HARC is an inter-disciplinary organization so many of us work across these disciplines to improve the resilience and adaptive capacity of our communities.

I appreciate the opportunity to discuss the findings of Enhancing the Resilience of the Nation’s Electricity System report. This report is very timely and important. It pushes forward the discussion that we must have to ensure a more resilient power system. A key area of interest for me is the discussion related to the increasing number and intensity of extreme weather and their current and future impact on national electric power system. These systems must be designed and constructed for a multitude of extreme weather events. To give you a Texas example, in recent years, Texas has experienced some pretty extreme weather patterns resulting in significant power outages and disruption to communities.

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First, there was the state wide drought in 2011 and 2012. This multi-year drought placed considerable pressure on power generation. Most power generation is dependent on water for cooling.  During the drought there was either not enough water to cool the plants or water was too warm for cooling.  During 2011, ERCOT, the organization that manages the Texas grid, was concerned about losing “potentially several thousand megawatts” if the drought did not end. There were also plants during this time curtailing operation at night so they would have plenty of water to provide power during the day, as well as plants that were piping water from other sources to ensure they could operate.

A recent paper by Argonne National Lab “Impact of Future Climate Variability on ERCOT Thermoelectric Power Generation” considered the drought implications for the ERCOT grid. The findings indicate that out to 2030, unless we become less dependent on water, the Texas grid could face severe stress due to lack of water availability both in drought and non-drought scenarios, as well as derating of thermoelectric plants due to high water temperatures. This stress on the power system due to water supply is not limited to Texas. It is an issue particularly across the western United States.

Most recently we have had to manage extreme flooding events, three five hundred year plus flood events in the last three years.  The most recent being two weeks ago with the arrival of Hurricane Harvey. Harvey dumped about 27 trillion gallons of water along the Gulf Coast, about 86,000 Astrodomes worth of water, and left close to one million utility customers without power. The other two floods were the Tax Day Flood of 2016 and the 2015 Memorial Day flood. The Memorial Day Flood flooded communities stretching from the Texas Hill Country to the Gulf Coast. Flooding can cause significant damage to transmission and distribution infrastructure, particularly substations. The potential long-term duration of floods can significantly delay the restoration of power to communities where substations and other power infrastructure are inaccessible.

I would be remiss not to mention Hurricane Ike in 2008. Ike caused power losses for over 2.1 million customers in a service territory of 2.2 million people. Many of these customers did not have power for over two weeks. This is a fairly small number when you consider the power outages from Hurricane Irma, at over 9 million and Hurricane Maria cutting power to nearly the entire island of Puerto Rico.

Beyond droughts, hurricanes and floods, Texas also deals with on averages 146 tornadoes per year, more than any other state, and has had to deal with two of the largest fires in recent history, the Bastrop Fire in 2011, small in acreage but with a large price tag of $325 million and the 2017 fire in the Texas panhandle which scorched 750 square miles.  Not only did 2017 bring Harvey and the Panhandle fire, a large ice storm blew through the Texas Panhandle in January cutting power to 31,000 customers.

This is just an example of one state that has had significant stress placed on its power system due to extreme natural disaster events. Similar stories of extreme weather events can be told across all states. The Department of Energy published a report in 2013, titled “US Energy Sector Vulnerabilities to Climate Change and Extreme Weather” that goes into significant detail concerning the problems power systems have experienced and will experience due to extreme weather.

The events listed above very much parallel the findings of the report. Natural disasters are increasing in number and intensity and this puts our existing grid at considerable risk. A problem faced by the power industry is that there is not just one type of natural disaster placing stress on the power system. There are multiple pending disasters. Further this does not include cyber or physical attacks to these system. The problem with all of these pending threats is that it is very difficult to determine the timing, the location and intensity of these events. With this level of uncertainty and when resources are limited, it is very challenging to make the appropriate investment decisions.

My expertise is not with cyber or physical threats, I can only speak to natural disaster threats. Due to the multitude of natural disaster threats, we have seen the development and growth of what is called the adaptation gap. Due to uncertainty of timing and intensity of natural disaster events, decision making can be hampered. When decisions are not made, infrastructure is not built. When the natural disaster events occur our systems are not prepared. The result is significant damage and loss to our communities, environment and economy. Unfortunately, most of the US is largely in a reactive mode of loss recovery, rather than focusing on loss mitigation and resilience. This is not to say there are not some efforts underway, particularly on the east coast with the aftermath of Superstorm Sandy, but there is considerable work that still must be done.

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Uncertainty is the enemy of action. Fortunately, we are seeing the development and deployment of down scale regional climate models that can provide significantly improved information on the likelihood of future extreme weather events. Texas Tech University Climate Science Center is doing great work in developing down-scaled models that are being shared with key decision makers as they conduct resilience planning. Better visibility into future climate patterns will improve planning and decision making across all critical infrastructure, particularly our power generation systems.

There are two key areas I would like to discuss a bit further. First, the potential lack of water supply available to existing and future power systems and one solution, microgrids and their current deployment.

The NAP report suggests there will be an increased likelihood of water stress across the United States. This is due not only to drought, but increasing competing demands by communities, agriculture and industry. The ANL report mentioned above provides a nice explanation of water constraints.

At present, the United States current power generation portfolio is highly water dependent; approximately 85% of power generation requires water to operate. This does not include hydropower, rather this is water to cool coal, natural gas, and nuclear based power generation systems.  Fortunately, systems that do not require water to produce power are being actively deployed across the country, largely in the form of wind and solar generation systems and to a growing extent, battery storage, micro-grid and micro-grid combined heat and power (CHP) systems. However, to date, the speed to which these systems are being deployed does not look to significantly shift the grid away from water dependent power generation resources in the near future. This has been well illustrated in the Department of Energy’s 2017 Annual Energy Outlook (AEO). Some argue the AEO is too conservative and place projections of solar and wind at 35% of total installed capacity by 2050. Regardless of what projection you accept, both still have over 60% of the power system dependent on water.

The highly anticipated DOE Grid Reliability which considered the impact of renewable energy on grid reliability finds that increased deployment of solar and wind does and will not negatively impact the operation of the grid. The technology and capability is available to quickly deploy these systems, unfortunately, policies and regulations do not.

As with any infrastructure system a key issue is the availability of funding. Two key funding mechanisms that could increase the deployment of renewable energy is to allow renewables to participate in master limited partnerships, similar to fossil fuel assets. Second, accelerating the deployment of green bonds to fund renewable infrastructure. Although there has been a growing number of green bonds issued for green infrastructure, there is still some hesitancy due to what defines a green bond, what can be funded by these bonds and how they can be positioned in the financial markets.

Two other key issues are the lack of interconnection standards across many states and an old-utility model that still largely cannot account for the benefits provided by distributed energy resources (DER). Granted, there are some utilities that are doing great work and actively working on valuing and deploying DER. However, the current patchwork of activity does not allow for a rapid deployment of DER and/or utility scale systems.

Federal and state policy makers should consider the development and deployment of power resilience standards such as PEER (Performance Excellence in Electricity Renewal). PEER is a rating process designed to measure and improve sustainable power system performance. Very similar to the LEED building rating program. PEER is a voluntary program that utilities and power providers can work toward. A PEER rated power system meets strict criteria for reliability and resilience, operational effectiveness and environmental standards.

One final note on DER concerns the growing deployment of microgrids. These are mini-power systems for a building, campus, neighborhood, that typically have a variety of generation resources working together including a combined heat and power system, solar panels, and/or batteries. Microgrids and particularly microgrids with CHP are being considered more often to increase the resilience of critical infrastructure, such as hospitals, wastewater and water treatment plants, police and fire stations, data centers, emergency centers, etc. It is estimated that approximately 3.7 GW of microgrid systems will be deployed by 2020. Small in comparison to other resources, but a very important resource as we look for systems that are resilient and have demonstrated their efficacy through a wide number of natural disaster events.

Microgrid CHP systems have on multiple occasions demonstrated their ability to stay online during and after significant natural disaster events, with the most recent example being the new CHP system at the University of Texas Medical Branch in Galveston during Harvey. The deployment of these systems have seen a significant level of support from, the Department of Energy. The DOE has been actively working to increase the deployment of CHP through its Better Buildings Initiative Resiliency Accelerator and the Combined Heat and Power Technical Assistance Partnership.  It is recommended this technical assistance continue.

[amazon_link asins=’B011DFQU7M,1107012791,144083315X’ template=’ProductCarousel’ store=’750astrodomes-20′ marketplace=’US’ link_id=’a2c83d85-ac5c-11e7-9561-7d0e3e86597c’]

To conclude, the tendency is to count the number of hurricanes and extreme weather events and make that a key climate metric. The numbers are increasing, there is uncertainty when exactly there will be a material increase, but that is largely irrelevant as the intensity of these storms increase, which they have. There is considerable agreement by the climate models that they will continue to do so. We are not prepared for this growing intensity, much less an increasing number and intensity.

Natural disaster threats are real and are now directly impacting the operation of our grid. If we continue business as usual, systems will become only more vulnerable. The economic and societal disruption costs will continue to increase and recovery will become less sustainable due to growing demand on constrained resources. The technology and systems exists that are being deployed now to limit this risk. However, significant barriers still exist, particularly funding, regulations and utility models that hinder the deployment of theses resilient systems.

 

Reducing Vulnerability of Electric Power Grid to Extreme Weather Events

This post originally appeared on the HARC Blog

The primary story line for Hurricane Harvey is the amount of rain that it dropped on

Hurricane-Tropical_Storm_Harvey_in_Houston_-_August_26_2017_(36007370604) (1)
Picture Taken by R. Crap Mariner from Houston, USA

southeast Texas. Some estimates have the total amount at about 27 trillion gallons of water, approximately 86,000 Astrodomes. Much of the region saw significant flooding and recovery will take some time. Fortunately, Hurricane Harvey did not cause significant, long-term power outages. There were a large number, estimates range up to 800,000 customers, but my no means the power outages that were seen during Hurricane Ike, where 2.1 million customers in CenterPoint’s territory alone lost power1. Many of these customers were without power for several weeks. Hurricane Irma looks to put millions of utility of customers in the dark, as well.

Hurricanes and tropical storms are just one of the increasing number of natural disaster events that are threatening our electric power system. Ice storms, tornadoes and wildfires in 2017 have also resulted in significant power outages for the state. To see the national extent of this disaster potential check out the DOE report titled “US Energy Sector Vulnerabilities to Climate Change and Extreme Weather.”2

Fortunately, the threat to our electric power system continues to be on many people’s agendas. The National Academies Press has just published a report titled “Enhancing the Resilience of the Nation’s Electric System3.” This report considers a multi-pronged threat to our system including cyber, physical and natural disaster threats. I will be in Washington DC this week discussing the natural disaster risk findings of this report with the House Committee on Science, Space and Technology.

Solutions
For all of the risks, there are a variety of technology and data solutions that are actively being deployed that can minimize them.

Deploy Resilient Technologies
First, in light of our current situation, microgrids should be further deployed to reduce risk of hurricanes, tropical storms and flooding. Microgrids are mini-power systems for a building, campus, neighborhood, that typically have a variety of generation resources working together including a combined heat and power system, solar panels, and/or batteries. Microgrids and particularly microgrids with CHP are being considered more often to increase the resilience of critical infrastructure, including hospitals, wastewater and water treatment plants, police and fire stations, data centers, emergency centers, etc. It is estimated that approximately 3.7 GW of microgrid systems will be deployed by 2020.4 Small in comparison to other resources, but a very important resource as we look for systems that are resilient and have demonstrated their efficacy through a wide number of natural disaster events. To be resilient, these systems must be placed above predicted flood levels, have black start capability; must be able to operate independent from the grid, have appropriate switch gear controls and ample carrying capacity. An emerging funding mechanism to pay for these these systems may be resilience bonds. These bonds are to be issued to mitigate risk to critical infrastructure. This bond type has yet to be issued but has received a recent push by the insurance industry because of a desire reduce risk exposure to natural disasters. Technical resources also exist to help deploy CHP and microgrids. This includes DOE’s CHP Deployment program. Under this program, HARC has partnered with the DOE to operate the Southwest CHP Technical Assistance Partnership.

The second risk that is not so apparent now, but was a real problem a few years ago, is extreme drought and heat. Approximately 85% of power generation in the United States requires water for cooling. Due to drought risk, there should be greater emphasis on deploying systems that do not require water to operate5 . Water supply is a problem for states such as Texas that have been known to experience long-term droughts. The 2011 and 2012 Texas droughts resulted in the curtailment of power generation across the state. Besides drought, many western states see significant water risk due to growing demand for water by communities, agriculture and industry. Two generation systems that require no water to operate are PV solar6 and wind7 systems. These systems have been deployed at a growing rate, but will need financial resources and regulatory certainty to scale more quickly. A potential financial solution could be the master limited partnerships. This would put renewables on a more even playing field with fossil fuel assets that already use this funding mechanism. Green bonds are another possible solution that should receive further consideration.

Build to a Certain Standard
No matter what weather event is being prepared for, it is highly recommended that utilities and power system developers begin to design their power generation systems and transmission and distribution infrastructure to meet resilience standards like PEER (Performance Excellence in Electricity Renewal). PEER is a rating process designed to measure and improve sustainable power system performance. PEER is a voluntary program that utilities and power providers can work toward. A PEER rated power system meets strict criteria for reliability and resilience, operational effectiveness and environmental standards.

Improve Decision Making
It is difficult to determine the timing, the location and intensity of extreme weather events. With this level of uncertainty and when financial resources are limited, it is challenging to make the appropriate investment decisions. When decisions are not made, infrastructure is not built and our systems are not prepared. The result is significant damage and loss. However, recently there has been some progress in better understanding future climate patterns. Progress is being made with climate models that are greatly improving our understanding of the likelihood and intensity of future storms. Down-scaled regional climate models, developed by organizations like Texas Tech University’s Climate Science Center, are helping planners and decision makers to make more informed decisions. As our understanding improves better decisions can be made that will result in more resilient power infrastructure.

Conclusion
Solutions exists and new solutions are coming online to reduce the risk to our electric power systems. I discuss only a couple of options and their role in mitigating the risk of certain natural disaster events. For a resilient power systems, there is not just one or two solutions, there are a number of solutions and combination of solutions that must be deployed. For example, utility scale wind is great for drought scenarios, but may be vulnerable to high wind events, tornadoes and ice storms.
To scale these solutions quickly will require political will and considerable funding. The funding is there, but due to the political environment, it is largely sitting on the sideline. The political will has been a bit slow catching up. Regulations and policies must catch up with the reality that power systems are facing. The way is clear, the political will is less certain.

1http://www.chron.com/business/energy/article/Outages-dwindling-across-Te…
2https://energy.gov/sites/prod/files/2013/07/f2/20130710-Energy-Sector-Vu…
3https://www.nap.edu/catalog/24836/enhancing-the-resilience-of-the-nation…
4https://www.greentechmedia.com/articles/read/u-s-microgrid-growth-beats-…
5https://750astrodomes.com/2017/07/14/electric-power-sector-you-have-a-wa…
6http://www.seia.org/research-resources/us-solar-market-insight
7https://energy.gov/eere/wind/maps/wind-vision
8http://peer.gbci.org/faqHurricane-harvey-nasa

 

 

Reducing Climate Vulnerability of Electric Power Grid to Extreme Weather Events

This post originally appeared on the HARC Blog

The primary story line for Hurricane Harvey is the amount of rain that it dropped on

Hurricane-Tropical_Storm_Harvey_in_Houston_-_August_26_2017_(36007370604) (1)
Picture Taken by R. Crap Mariner from Houston, USA

southeast Texas. Some estimates have the total amount at about 27 trillion gallons of water, approximately 86,000 Astrodomes. Much of the region saw significant flooding and recovery will take some time. Fortunately, Hurricane Harvey did not cause significant, long-term power outages. There were a large number, estimates range up to 800,000 customers, but my no means the power outages that were seen during Hurricane Ike, where 2.1 million customers in CenterPoint’s territory alone lost power1. Many of these customers were without power for several weeks. Hurricane Irma looks to put millions of utility of customers in the dark, as well.

Hurricanes and tropical storms are just one of the increasing number of natural disaster events that are threatening our electric power system. Ice storms, tornadoes and wildfires in 2017 have also resulted in significant power outages for the state. To see the national extent of this disaster potential check out the DOE report titled “US Energy Sector Vulnerabilities to Climate Change and Extreme Weather.”2

[amazon_link asins=’0316353000′ template=’ProductCarousel’ store=’750astrodomes-20′ marketplace=’US’ link_id=’82741c0c-a32e-11e7-8302-515bbf5f1787′]

Fortunately, the threat to our electric power system continues to be on many people’s agendas. The National Academies Press has just published a report titled “Enhancing the Resilience of the Nation’s Electric System3.” This report considers a multi-pronged threat to our system including cyber, physical and natural disaster threats. I will be in Washington DC this week discussing the natural disaster risk findings of this report with the House Committee on Science, Space and Technology.

Solutions
For all of the risks, there are a variety of technology and data solutions that are actively being deployed that can minimize them.

Deploy Resilient Technologies
First, in light of our current situation, microgrids should be further deployed to reduce risk of hurricanes, tropical storms and flooding. Microgrids are mini-power systems for a building, campus, neighborhood, that typically have a variety of generation resources working together including a combined heat and power system, solar panels, and/or batteries. Microgrids and particularly microgrids with CHP are being considered more often to increase the resilience of critical infrastructure, including hospitals, wastewater and water treatment plants, police and fire stations, data centers, emergency centers, etc. It is estimated that approximately 3.7 GW of microgrid systems will be deployed by 2020.4 Small in comparison to other resources, but a very important resource as we look for systems that are resilient and have demonstrated their efficacy through a wide number of natural disaster events. To be resilient, these systems must be placed above predicted flood levels, have black start capability; must be able to operate independent from the grid, have appropriate switch gear controls and ample carrying capacity. An emerging funding mechanism to pay for these these systems may be resilience bonds. These bonds are to be issued to mitigate risk to critical infrastructure. This bond type has yet to be issued but has received a recent push by the insurance industry because of a desire reduce risk exposure to natural disasters. Technical resources also exist to help deploy CHP and microgrids. This includes DOE’s CHP Deployment program. Under this program, HARC has partnered with the DOE to operate the Southwest CHP Technical Assistance Partnership.

The second risk that is not so apparent now, but was a real problem a few years ago, is extreme drought and heat. Approximately 85% of power generation in the United States requires water for cooling. Due to drought risk, there should be greater emphasis on deploying systems that do not require water to operate5 . Water supply is a problem for states such as Texas that have been known to experience long-term droughts. The 2011 and 2012 Texas droughts resulted in the curtailment of power generation across the state. Besides drought, many western states see significant water risk due to growing demand for water by communities, agriculture and industry. Two generation systems that require no water to operate are PV solar6 and wind7 systems. These systems have been deployed at a growing rate, but will need financial resources and regulatory certainty to scale more quickly. A potential financial solution could be the master limited partnerships. This would put renewables on a more even playing field with fossil fuel assets that already use this funding mechanism. Green bonds are another possible solution that should receive further consideration.

Build to a Certain Standard
No matter what weather event is being prepared for, it is highly recommended that utilities and power system developers begin to design their power generation systems and transmission and distribution infrastructure to meet resilience standards like PEER (Performance Excellence in Electricity Renewal). PEER is a rating process designed to measure and improve sustainable power system performance. PEER is a voluntary program that utilities and power providers can work toward. A PEER rated power system meets strict criteria for reliability and resilience, operational effectiveness and environmental standards.

Improve Decision Making
It is difficult to determine the timing, the location and intensity of extreme weather events. With this level of uncertainty and when financial resources are limited, it is challenging to make the appropriate investment decisions. When decisions are not made, infrastructure is not built and our systems are not prepared. The result is significant damage and loss. However, recently there has been some progress in better understanding future climate patterns. Progress is being made with climate models that are greatly improving our understanding of the likelihood and intensity of future storms. Down-scaled regional climate models, developed by organizations like Texas Tech University’s Climate Science Center, are helping planners and decision makers to make more informed decisions. As our understanding improves better decisions can be made that will result in more resilient power infrastructure.

Conclusion
Solutions exists and new solutions are coming online to reduce the risk to our electric power systems. I discuss only a couple of options and their role in mitigating the risk of certain natural disaster events. For a resilient power systems, there is not just one or two solutions, there are a number of solutions and combination of solutions that must be deployed. For example, utility scale wind is great for drought scenarios, but may be vulnerable to high wind events, tornadoes and ice storms.
To scale these solutions quickly will require political will and considerable funding. The funding is there, but due to the political environment, it is largely sitting on the sideline. The political will has been a bit slow catching up. Regulations and policies must catch up with the reality that power systems are facing. The way is clear, the political will is less certain.

1http://www.chron.com/business/energy/article/Outages-dwindling-across-Te…
2https://energy.gov/sites/prod/files/2013/07/f2/20130710-Energy-Sector-Vu…
3https://www.nap.edu/catalog/24836/enhancing-the-resilience-of-the-nation…
4https://www.greentechmedia.com/articles/read/u-s-microgrid-growth-beats-…
5https://750astrodomes.com/2017/07/14/electric-power-sector-you-have-a-wa…
6http://www.seia.org/research-resources/us-solar-market-insight
7https://energy.gov/eere/wind/maps/wind-vision
8http://peer.gbci.org/faqHurricane-harvey-nasa