peak demand

COVID-19: The Wake-Up Call The Energy Sector Needed

By: Jemma Green
View the original article here

Perhaps Henry David Thoreau was onto something when he set out solo for a cabin in the woods with the aim of becoming completely self-sustainable – for one, he wouldn’t really need to stress about a contagious pandemic. 

Thoreau’s experience would later shape the 19th century literary classic Walden; or, Life in the Woods, detailing how he was able to rely solely on himself, including growing his own food and sourcing firewood for heat and light at night. 

Whether he knew it or not Thoreau was excelling at social distancing and we could all take a leaf out of his book. 

Because, while most of us have got the idea of self-isolation down pat, I bet few are likely to pass the self-sufficiency test.

You only have to look at recent purchasing trends to see some of the panic stemming from a lack of self-sufficiency to see this ‘test’ in action. 

First it was the toilet paper and tinned food, before spreading to plants, with a nursery’s months-worth of vegetables and seedlings stock sold over one weekend. 

Next up: renewable energy infrastructure, as demonstrated by one solar retailer experiencing a 41 percent jump in PV sales and a 400 percent increase in battery enquiries over the past two weeks. 

But where were these eco warriors, cultivating their own veggie patches and living ‘off-grid’ before the apocalyptic hysteria hit? 

If history is any proof, crises are often the perfect kindling for igniting change, especially when standards of living are threatened. 

And the COVID-19 crisis has certainly given the energy world a wake-up call when it comes to sustainability.  

Mother nature gets a well deserved break 

Amid coronavirus-induced lockdowns, shutdowns and working from home, air pollution has significantly dropped worldwide.

In New York, carbon monoxide levels, largely produced from cars, have fallen by nearly 50 percent compared with the same time last year. 

Greenhouse gas emissions in China have also plummeted with NASA releasing images where you can see the country’s reduction in nitrogen dioxide from space. 

Nitrogen dioxide emissions over China – Copyright NASA Earth Observatory by Joshua Stevens, using modified Copernicus Sentinel 5P data processed by the European Space Agency  – NASA

According to one analysis, the slowdown of economic activity in China led to an estimated 25 percent reduction in carbon emissions in just four weeks. 

The restriction on air travel, or any travel at all, has also clearly played a role in reducing pollutants.

And whether you choose to believe the stories of wildlife returning to cities, like dolphins and swans returning to Venice canals, coronavirus has certainly given mother nature a well-deserved moment of respite. 

However, this has been at the expense of economic development, of jobs and livelihoods – and it’s certainly not going to be long-term. 

Air pollutants will likely jump once day-to-day normalities resume. 

However, if we’re smart about it, we can use this period to re-evaluate our energy systems to help flatten the emissions curve and keep our air clean.

Energy systems under pressure 

Aside from the closure of factories and reduction in fuel-consuming transport, we can’t forget that data centers and server-farms are also huge energy-intensive industries. 

Collectively, these spaces represent approximately two percent of the United State’s total electricity use. 

In the UK, there’s been reports of home-working intensifying pressure on the electricity network, instead of being in the office where lighting, heating and cooling are shared. 

Now everyone’s either working from home, or just at home, internet use and streaming is peaking. 

A study by SaveOnEnergy estimated energy generated from the 80 million views on Netflix’s NFLX thriller Birdbox was equal to the equivalent of driving more than 146 million miles and emitting just over 66 million kilograms of CO2 – what it takes to drive from London to Istanbul and back 38,879 times. 

Beyond the environmental impact, coronavirus has brought more attention to the question of whether our current energy systems and frameworks can actually keep up with increasing demand pressures.  

Several country-appointed energy councils have met to discuss electricity demand pressures related to COVID-19, with renewable energy a popular topic. 

In a meeting between Australia’s federal, state and territory energy ministers, the transition towards a genuine two-sided market was emphasized – where consumers become prosumers by contributing excess rooftop solar and battery electricity to the grid.

This would play a large role in forming a ‘day-ahead’ market, to “address concerns that managing challenges like system strength is becoming increasingly difficult with only a real-time market”. 

On top of this, the Australian Government’s Economic Response to the Coronavirus actually includes tax deduction incentives for commercial and industrial solar PV, in a bid to help alleviate financial pressure through reduced electricity bills. 

Digital transformation is underway across the energy sector, with significant advancements in renewable energy technologies and the ways in which energy is distributed. 

For any real change to occur, you need people to switch perspectives.

Powering new mindsets

Tough times spark innovation. Now is as good a time as any to test new energy systems and processes, and it starts with a shift in thinking. 

Energy networks, retailers and operators have delivered services in much the same way for a century – driven by fossil-fuels. 

New technology is making it easier, more effective and affordable to use renewable energy, and the costs associated with installing those technologies, such as solar and batteries are decreasing.

And most industry players recognise the need to change and evolve in order to remain relevant, or are at least are starting to, with a little nudge from COVID-19. 

Self-generating renewable energy infrastructure gives people the power to become self-sufficient for their electricity needs, with some even going ‘off-grid’ altogether. 

National Energy Market retailer Powerclub is one company already trialling new technology to help alleviate demand pressure on the grid via a Virtual Power Plant (VPP) in South Australia and is currently calling for more households to join. 

The VPP enables Powerclub households with batteries to sell their stored, excess solar back to the grid during peak demand periods and price hikes, via peer-to-peer energy trading technology. 

There is a huge benefit to the broader community in that the VPP gives those who may not be able to afford solar panels, or those who are renting, the opportunity to access clean energy. 

As great as it is to think of only the environmental benefit that comes with using clean energy, a monetary incentive certainly makes the proposition more appealing. 

Not only does a VPP provide renewable energy infrastructure owners with a passive income, it can also provide an incentive for others to install solar panels – knowing they’ll be able to pay back their investment faster. 

Pair a VPP with home grown vegetables and you’re a little closer to achieving Thoreau’s vision for self-sufficiency. 

Where to from here? 

At the end of the day, it shouldn’t take a pandemic for people to reconsider their impact on the environment – but it has. 

We’re now being given a chance to press reset on many areas of our lives and reconsider what it takes and what choices to make in order to lead a more sustainable lifestyle. 

Energy regulators are on the right track with numerous initiatives and policy changes currently underway.

But you could make a change right now – how we return to normal life post COVID-19 could lay the foundations for a cleaner and more resilient energy future.

Why does that matter? Well, as Thoreau said; “What is the use of a house if you don’t have a decent planet to put it on?”

What Our Internal Data Shows About Coronavirus Impacts

By The Enel X Energy Intelligence Team, Strategy
View the original article here.

As America enters its second month of widespread lockdowns, the effects of these measures are becoming clearer, especially in electricity demand. Data from the largest United States regional transmission operators (RTOs) show grid-wide declines in electricity usage.

However, because this data includes commercial, industrial and residential end users, the true impacts to specific sectors of the economy are largely hidden—increases in residential energy demand partially or entirely offset significant declines seen in commercial demand. Below, Enel X provides an inside look at our internal data to show how the effects of coronavirus are being felt across individual sectors.

The Broader Picture: Energy Demand Is Down

Grid-wide RTO data shows that energy demand is broadly down for the entirety of 2020. In the first two months of 2020, a mild winter led to lower-than-average consumption due to a decline in heating demand. Then, in mid-March, coronavirus shutdowns led to further drops in demand.

Every year will include variations due to temperature fluctuations, but this sustained and ongoing drop has some analysts worried about long-term effects on consumers. A decline of this magnitude, as James Newcomb of the Rocky Mountain Institute told Utility Dive, could severely affect revenue for utilities. To recoup their losses, utilities may have to increase customer rates.

The drop since mid-March is even more noteworthy when controlling for factors like temperature—The New York Times highlighted work by Steve Cicala, an economics professor at the University of Chicago, who has demonstrated that changes in electricity demand closely tracked changes in GDP during the 2008 financial crisis. Currently, Cicala’s adjusted numbers find electricity demand down about 8% from expectations as of April 6th.

Enel X Internal Data: A Drop in Demand Across Sectors, With Notable Exceptions

Grid-wide data does not tell the story of specific industries, though, and the aggregate numbers include residential data. Internal data from our commercial and industrial customers – who represent approximately 2% of demand across USA and Canada—tells a more detailed story. Most commercial and industrial sectors have seen far more significant declines in consumption than the grid-wide data suggests.

The industries at the bottom of the chart are those with the most drastic reductions, and they are largely unsurprising—media and entertainment is considered inessential, flights are restricted, and schools are closed.

Increases show that some businesses – or even entire industries – are now ramping up their efforts and being called upon to work harder than ever.  Manufacturing has seen a moderate decline in average demand, but our numbers show the sector has seen an uptick in peak demand. 

In part, this may be because many individual manufacturers are operating at a higher level than ever before. One customer we spoke to – a manufacturer of household foods – explained just how much has changed this past month. As a result of quarantine orders and increases in grocery demand, they said, their products have been flying off of shelves. Their order volume has gone up significantly as a result, and that’s led to much higher production levels—what is normally a 24/5 plant has become 24/7, and the plant itself is expanding. 

“Even as demand returns to normal,” the customer told us, “our plant will have to work at higher than normal production levels likely until at least the end of the year.”

What Lies Ahead

Professor Cicala notes that the United States’ electricity trend has tracked Europe with a lag, indicating a further drop may be coming. The grid-wide data shows there is room to fall—ERCOT (Texas), for instance, only implemented state-wide lockdowns on April 2.

If widespread shutdowns and work-from-home measures remain in place when warm summer months arrive, consumption could vary greatly from normal patterns. Commercial buildings often have more efficient cooling systems than personal homes, and offices generally have fewer cubic feet per person than a home does.

While it’s too soon to tell what long-term implications the virus will have on the energy sector, the impact has already been felt in the way homes and businesses are using electricity.

Utilities are starting to invest in big batteries instead of building new power plants

By Jeremiah Johnson and Joseph F. Decarolis
View the original article here.

This is what a 5-megawatt, lithium-ion energy storage system looks like. Credit: Pacific Northwest National Laboratory

This is what a 5-megawatt, lithium-ion energy storage system looks like. Credit: Pacific Northwest National Laboratory

Due to their decreasing costs, lithium-ion batteries now dominate a range of applications including electric vehicles, computers and consumer electronics.

You might only think about energy storagewhen your laptop or cellphone are running out of juice, but utilities can plug bigger versions into the electric grid. And thanks to rapidly declining lithium-ion battery prices, using energy storage to stretch electricity generation capacity.

Based on our research on energy storage costs and performance in North Carolina, and our analysis of the potential role energy storage could play within the coming years, we believe that utilities should prepare for the advent of cheap grid-scale batteries and develop flexible, long-term plans that will save consumers money.

Peak demand is pricey

The amount of electricity consumers use varies according to the time of day and between weekdays and weekends, as well as seasonally and annually as everyone goes about their business.

Those variations can be huge.

For example, the times when consumers use the most electricity in many regions is nearly double the average amount of power they typically consume. Utilities often meet peak demand by building power plants that run on natural gas, due to their lower construction costs and ability to operate when they are needed.

All of the new utility-scale electricity capacity coming online in the U.S. in 2019 will be generated through natural gas, wind and solar power as coal, nuclear and some gas plants close. Credit: U.S. Energy Information Administration

All of the new utility-scale electricity capacity coming online in the U.S. in 2019 will be generated through natural gas, wind and solar power as coal, nuclear and some gas plants close. Credit: U.S. Energy Information Administration

However, it’s expensive and inefficient to build these power plants just to meet demand in those peak hours. It’s like purchasing a large van that you will only use for the three days a year when your brother and his three kids visit.

The grid requires power supplied right when it is needed, and usage varies considerably throughout the day. When grid-connected batteries help supply enough electricity to meet demand, utilities don’t have to build as many power plants and transmission lines.

Given how long this infrastructure lasts and how rapidly battery costs are dropping, utilities now face new long-term planning challenges.

Cheaper batteries

About half of the new generation capacity built in the U.S. annually since 2014 has come from solar, wind or other renewable sources. Natural gas plants make up the much of the rest but in the future, that industry may need to compete with energy storage for market share.

In practice, we can see how the pace of natural gas-fired power plant construction might slow down in response to this new alternative.

Grid-scale batteries are being installed coast-to-coast as this snapshot from 2017 indicates. Credit: U.S. Energy Information Administration, U.S. Battery Storage Market Trends, 2018.

Grid-scale batteries are being installed coast-to-coast as this snapshot from 2017 indicates. Credit: U.S. Energy Information Administration, U.S. Battery Storage Market Trends, 2018.

So far, utilities have only installed the equivalent of one or two traditional power plants in grid-scale lithium-ion battery projects, all since 2015. But across California, Texas, the Midwest and New England, these devices are benefiting the overall grid by improving operations and bridging gaps when consumers need more power than usual.

Based on our own experience tracking lithium-ion battery costs, we see the potential for these batteries to be deployed at a far larger scale and disrupt the energy business.

When we were given approximately one year to conduct a study on the benefits and costs of energy storage in North Carolina, keeping up with the pace of technological advances and increasing affordability was a struggle.

Projected battery costs changed so significantly from the beginning to the end of our project that we found ourselves rushing at the end to update our analysis.

Once utilities can easily take advantage of these huge batteries, they will not need as much new power-generation capacity to meet peak demand.

Credit: The Conversation

Credit: The Conversation

Utility planning

Even before batteries could be used for large-scale energy storage, it was hard for utilities to make long-term plans due to uncertainty about what to expect in the future.

For example, most energy experts did not anticipate the dramatic decline in natural gas prices due to the spread of hydraulic fracturing, or fracking, starting about a decade ago – or the incentive that it would provide utilities to phase out coal-fired power plants.

In recent years, solar energy and wind power costs have dropped far faster than expected, also displacing coal – and in some cases natural gas – as a source of energy for electricity generation.

Something we learned during our storage study is illustrative.

We found that lithium ion batteries at 2019 prices were a bit too expensive in North Carolina to compete with natural gas peaker plants – the natural gas plants used occasionally when electricity demand spikes. However, when we modeled projected 2030 battery prices, energy storage proved to be the more cost-effective option.

Credit: The Conversation

Credit: The Conversation

Federal, state and even some local policies are another wild card. For example, Democratic lawmakers have outlined the Green New Deal, an ambitious plan that could rapidly address climate change and income inequality at the same time.

And no matter what happens in Congress, the increasingly frequent bouts of extreme weather hitting the U.S. are also expensive for utilities. Droughts reduce hydropower output and heatwaves make electricity usage spike.

The future

Several utilities are already investing in energy storage.

California utility Pacific Gas & Electric, for example, got permission from regulators to build a massive 567.5 megawatt energy-storage battery system near San Francisco, although the utility’s bankruptcy could complicate the project.

Hawaiian Electric Company is seeking approval for projects that would establish several hundred megawatts of energy storage across the islands. And Arizona Public Service and Puerto Rico Electric Power Authority are looking into storage options as well.

We believe these and other decisions will reverberate for decades to come.If utilities miscalculate and spend billions on power plants it turns out they won’t need instead of investing in energy storage, their customers could pay more than they should to keep the lights through the middle of this century.