Showing posts with label self-sufficiency. Show all posts
Showing posts with label self-sufficiency. Show all posts

Saturday, June 14, 2014

The Message from InterSolar : Self Consumption & Energy Storage

One week after the famous InterSolar 2014 edition in Germany, the message is clear: the market of solar is going towards more Self Consumption and Energy Storage ...



Monday, August 19, 2013

DIY ESS is back on after 3 weeks vacation



After a long and sunny vacation, I am back home and I switched on my ESS yesterday;
Of course, the battery pack breaker/switch was off the whole time so the voltage is exactly the same as when I left home at the end of july

I must say that I was missing it a bit ;-), really

As usual, 2 Wattson units display Solar Generation & ESS on the left  /  Net Usage on the right

Remember, the real time graphs are here

















Thursday, August 1, 2013

Unisolar PVL - 1000W reached yesterday !

994W exactly ... First time I see so much on my Solar System since July 7th, the SMA inverter installation day

It is true that I have almost 1,200Wp (Watt Peak) installed on the roof

1 x 31Wp
6 x 68Wp = 408Wp
6 x 124Wp = 744Wp
Total = 31 + 408 + 744 = 1,183Wp

Tuesday, July 9, 2013

2 Full Days of Solar Production & Storage - Self Consumption works :-)

After my 2 first Full Days of Solar Production, I can see that 2/3rd of the Energy used comes from Solar - Direct or Stored & Given back - and that almost all the Solar Energy has been self consumed in-house :-)

This validates that my DIY ESS works :-)  !!





 (Graphs are from Wattson Professional, because Wattson Anywhere is still in beta testing and sometimes figures are not accurate for now)


Wednesday, May 29, 2013

LiFePO4 DIY ESS - The effect of TV on Home Usage & ESS Generation

Check out the effect of TV making my Home Usage go up and down, along with the screen brightness, and see how my LiFePO4 ESS is reacting to this generating more or less Power to cover this

Tuesday, May 28, 2013

Germany : The commercial sector discovers “own consumption”

The figures for ownership of renewables in Germany indicate a shift from private citizens, who still make up about half of investments, to the commercial sector. Craig Morris says some people saw this coming.

Photovoltaic power station in Lower Saxony


In my last post, I compared ownership statistics from 2011 and 2012 for renewables in Germany. One of the major energy policy changes in 2012 was the expiration of feed-in tariffs for new solar arrays larger than 10 megawatts. To give you an idea of how big that is, the average homeowner probably has space for 3 to 5 kilowatts – 10 megawatts is 10,000 kilowatts.

There was therefore a rush in 2012 to finish up the last systems larger than 10 megawatts, which may account for the two percent uptick in ownership among funds & banks, a likely group to own such systems. But the largest shift – five percent – went from private citizens to the commercial sector. Here, the German policy of “own consumption” (Eigenverbrauch) is probably at work.

Essentially, own consumption is a bit like net-metering with a time factor added to it. In net metering, your power meter simply runs backwards if you produce more solar power than you purchase from the grid. But in Germany’s “own consumption,” the meter never runs backwards – if you produce more than you consume at some point, you are required to store it on your side of the grid connection for later consumption.

The problem for most homeowners is that solar roofs produce most of their power in the afternoon, when most people are at work, not at home. A lot of power therefore has to be stored, and bigger battery packs make the approach less profitable. But the situation is fundamentally different for businesses, which generally have quite a large roof area and consume power during business hours. As I wrote back in 2010, this policy was thus bound to be popular among businesses.

Your average mom-and-pop shop that pays retail rates (around 27 cents) can thus benefit greatly from a solar roof, with feed-in tariffs for new systems installed in June dropping to 15 cents. But even midsize and large industry – which pays wholesale, not retail rates – is discovering the benefits of direct consumption, even of wind power. Last year, BMW put up four wind turbines at one of its plants in Germany. You see, it’s not just a question of the price of a kilowatt-hour, but also of maximum load. Power companies may charge extra if a firm consumes more than a certain amount at any time. Renewables can help keep the maximum load from the grid down.

The tradeshow halls in Freiburg are covered with photovoltaics, but the system still only has a capacity of 245 kilowatts. (Photo by Craig Morris)

This trend will continue. Indeed, it is hard to see how it could be stopped. And because commercial roofs are so much bigger than residential ones, the commercial sector may continue to take up a larger piece of the pie.

Likewise, the losers are also clear to see: the Big Four. They are sitting on a large fleet of conventional power plants designed to run for decades, and there is less and less demand for this power. Their strategy will therefore not be to increase their already small investments in renewables (which would only speed up the process), but to increasingly export power to Germany’s neighbors.


Craig Morris (@PPchef) is the lead author of German Energy Transition. He directs Petite Planète and writes every workday for Renewables International.

Tuesday, April 23, 2013

Germany to Support Solar Energy Storage with New 25 Million EUR Subsidy

Just saw this article this morning in the last days tweets & thought:  This good news comes at a good time because my DIY ESS Kit is almost ready ! ;-)




April 18th, 2013

NEW YORK CITY -- Germany will subsidize consumers' purchases of battery systems to store power from solar panels through a 25 million-euro ($32.6 million) program to promote wider use of renewable energy, according to the German Solar Industry Association.
The government will pay 660 euros a kilowatt of storage capacity under a program that begins May 1, the trade group said today in a statement. The systems will also stabilize the flow of electricity into the grid.

Correction: "The government will pay 660 euros a kilowatt of storage capacity"  : Energy is measured in kWh : they meant here 660 EUR of incentive per kWh, which is prettty good !




Storage is a policy-driven market, Brian Warshay, an analyst for Bloomberg New Energy Finance in New York, said today in an interview.

“I’d expect for the incentive, which is set at a pretty healthy rate for most systems, to be used up quickly,” he said.

Editor's Note: For more information about this subsidy and the energy storage market, see our recent in-depth articles here:


Solar Storage Market Set for Rapid Growth

March 28th, 2013

LONDON -- News that Germany plans to launch a €50 million solar storage incentive is the latest indicator that solar storage's time has come.

Under the program, German owners of solar systems with storage will be entitled to a low-interest loan from KfW, the state-owned bank, and a repayment allowance from the Ministry of Environment, which will cover 30 percent of the battery system's cost. The program will apply to newly-installed PV facilities with storage and solar plants with storage systems installed after December 31, 2012. Systems under 30 kW will be eligible for the subsidy.

Although lack of emissions trading revenue for the Energy and Climate Fund is said to be currently delaying the program, it is predicted that it will soon move forward, possibly by the originally specified date of 1 May.

This incentive will make almost any emerging energy storage technology capable of tying into a PV array cost-effective, according to Brian Warshay of Lux Research. Subsidizing a storage system's energy capacity rather than its power capacity, as does California's Self Generation Incentive Program (SGIP), is a more logical approach, says Warshay, because the solar shifting application requires more energy than power. Germany's incentive will benefit technologies capable of longer discharge duration such as molten salt and flow batteries rather than most lithium-ion batteries, Warshay said.

Research firm NanoMarkets believes the growth of the solar storage market is driven by declining costs for PV modules and reductions in government support for solar power. Without attractive subsidies, self-consumption can be more valuable than selling power and storage becomes desirable. NanoMarkets predicts that demand for storage in the residential and commercial sectors will soon show rapid growth.

A Growing Need

According to IMS Research's recent survey of over 400 purchasers of PV inverters including distributors, installers, integrators, EPCs and wholesalers, the need for energy storage in solar systems is growing fast. Although energy storage is still a young market, nearly one third of respondents said they expect to be using storage in over 40 percent of the PV systems they install by 2015.

Survey respondents from Germany, Italy and the UK identified energy storage as more critical than any other requirement for future PV inverters. When IMS asked what the main driver for the adoption of energy storage would be, the most common response was a reduction in battery prices helping to drive system prices down and make storage financially viable.

IMS found that over 60 percent of respondents believed that an acceptable increase in system price for the inclusion of energy storage would be between 10 percent and 29 percent; however, almost 30 percent of respondents indicated they would be willing to pay even more.

Grid Benefit

According to the 2013 Storage Study from the Fraunhofer Institute, carried out for German solar trade body BSW-Solar, battery storage systems used in conjunction with a PV system can increase the absorption capacity of existing power grids by up to 66 percent.

“The positive effects that decentralized photovoltaic battery systems have on the power grid cannot be overstated,” said Dr Christof Wittwer, head of the Intelligent Energy Systems department at the Fraunhofer Institute for Solar Energy Systems.

“The success of the Energiewende depends on the use of solar batteries as grid-assistive short-term storage capability,” said Jörg Mayer, managing director of the German Solar Industry Association. “What we need now is the initial spark for the development of decentralized battery storage systems, so that we can quickly achieve progress in terms of technology, and above all in terms of costs. With an increasing production of batteries, solar storage systems will quickly come down in price, thus enabling savings in grid expansion.”

Move Fast

Nanomarkets' report entitled Storage 2013 predicts that the global market for solar storage systems will be worth US$2 billion by 2018. Dr. Eicke Weber, head of the newly-established German Energy Storage Association, has called this a “conservative estimate”. Italian energy consultancy BIP said the battery market will reach at least 9 GW of capacity by 2020 from today's 270 MW.

And the commercial sector's uptake is growing in line with the residential sector's. Nicola Cosciani, head of energy storage at Italian industrial battery maker Fiamm, says heavy power users such as cement and steel makers are looking at solar storage. “Germany and Italy will be explosive markets for residential storage and big energy users are also starting to show an interest. This is a game changer,” he said in a Reuters interview.

When implemented, Germany's incentive will result in a short but rapid boom in distributed storage, Warshay predicts. “Developers with any hopes of addressing this market opportunity will need to move quickly into Germany to establish partnerships that will help decipher the bureaucratic requirements necessary to benefit from this new policy,” he said.

Technology growth

Considerable technological innovation is expected in energy storage, yet traditional lead-acid batteries will be the main revenue generator over the next decade, accounting for more than $950 million in revenues in 2018, research firm Global Information (GI)'s Solar Storage 2013report has found. Lead-carbon technology will improve the margins on this type of battery, generating another $135 million by 2018, the report said.

There is also growing interest in the use of lithium batteries in the solar sector; GI expects these batteries to generate $235 million by 2018. Chinese solar energy storage firms seem likely to focus on lithium batteries since China is a major source of lithium. "




Energy Storage Series: Why We Need It, And Why We Don't 

April 4th, 2013

New Hampshire, USA -- It's almost a cliché that there's a "friendly debate" pitting utilities against renewable energy. But concerns on the utility side of the table are real: intermittency, potential destabilization at the feeder level, non-baseload, and peaks in generation that don't necessarily match demand peaks. Today's power infrastructure involves unpredictability in both supply and demand that is extremely difficult to manage. The choice comes down to two options: over-generate so as to not undersupply, or find ways to better match up supply and demand.

"To balance the grid and keep it in a stable condition, you're going to need energy storage," said Doug Staker, VP of business development for Demand Energy. "Every customer interaction, every presentation, one question I'm getting now: what can you do to help me with storage?" He said there's a "huge lack of information and education" about whether energy storage is ready and in what form (e.g. which technology to use, and whether it's centralized vs. distributed) "People really want to understand how to integrate energy storage into a variety of applications."

As more renewable energy comes into the power mix, "high-response energy storage seems to be the way," added Chris Wheaton, CFO of Energ2. "We think storage is an equivalent leg of the chair" alongside solar and wind energy generation.

"In general energy storage is a good thing — except that it is not cost-effective for bulk energy storage," counters Mahesh Morjaria, VP of PV technology applications at First Solar. If the goal is to manage variable energy generation, Morjaria suggests, then the whole grid can act as energy storage, if managed properly. "When part of the resource is not available or generating, other resources are able to provide the load," Morjaria said. "That's the beauty of it, in a more cost-effective manner." Storage too can provide grid flexibility, agreed Morjaria, but it's simply not yet cost-effective enough.

What's It For?

Discussing large-scale energy storage depends on what problems are being solved. "People forget what energy storage is: an enabler," explained Erick Petersen, VP of marketing at Demand Energy. It's not that grid-scale energy storage *can't* be deployed — it's a question of what do you want do with it, whether it's achieve true grid stability, or flatten loads to reduce peak congestion, or provide ancillary services. "The benefits stack up the highest as you move the edge of the grid," he said. "People get lost in the debate whether it should be grid-scale, which battery is right — the answer is, 'All of it,' depending on the problem you're trying to solve."

Reliability and Flexibility

Germany is widely accepted as having a much more robust incorporation and management of renewable energy generation. But even there, many believe the nation's energy overhaul means storage is a matter of not if but when. Wheaton thinks "the jury's still out whether Germany will have an energy storage program." Rick Luebbe, CEO of Energy2, points to a Sandia Labs calculation that problems start emerging at a 20 percent renewables mix at which point storage has to enter the discussion.

Germany has been able to accommodate roughly 22 percent of a renewables mix, mostly variable wind and solar — and they're doing it by leveraging flexibility in their grid "without going out and acquiring a whole bunch of storage," Morjaria points out. Similarly, California's 33 percent renewables target won't rely on building massive amounts of bulk energy storage. In both cases, "they're figuring out other ways to achieve grid flexibility," he said.

In California the difference between trough and peak load on a summer day can be 20 gigawatts, Staker pointed out. "People talk about the [grid] having flexibility and capability to absorb excess generation — and that's true," he said. "But more system saturation becomes more problematic," once you have to start doing things like firming up wind power with gas peakers that by definition want to run in a steady-state condition and not vary up and down to plug intermittent gaps.

Demand Response

"Demand response has been the cure-all for all kinds of system challenges," Staker said. He recalled an effort from Baltimore Gas & Electric with a demand/response plan to reimburse customers for turning off their air conditioners for a few hours during critical peak events. But the system was one-way and radio-based, and closed-loop — no way to really know who responded. So an urban secret spread: wrap your AC in tinfoil to block the signals, and cash in the reimbursement. That, he said, illustrates a problem with demand/response: "at the end of the day, customers can just opt out."

If response time is the target, hydro and possibly compressed air make sense, balancing on a 24-hour cycle, says Luebbe. But either of those options are selective based on geography. For shorter-timeframe needs, electrochemical storage comes into play, with multiple technologies to choose from (lead/acid, lithium-ion, flow, molten, ultracapacitors, hybrid configurations). For balancing solar power into a facility or a grid, lead-acid batteries "will probably be just fine," he said, while flow and molten batteries will emerge at point-of-use to balance intermittent power from a local grid (e.g. cell-phone towers).

Still, Morjaria thinks the costs for energy storage still aren't low enough to make it feasible for this time-shifting. Even if there's a significant difference in the cost of every kilowatt-hour that can be fed into and pulled out of the grid, adding costs associated with energy storage eliminates those potential gains. "In California they're talking about PPAs on the order of $85/MWh [$0.08/kWh]. That's what they expect from solar energy," he points out. (Note that a recent deal in New Mexico was for less than six cents/kWh, and ironically for a First Solar project.) Storing energy and pumping it out adds to that cost — Morjaria ballparks it at $0.20/kWh — which quickly snuffs out any price arbitrage.

Frequency Regulation

Morjaria did acknowledge one area where energy storage is indeed viable: frequency regulation. Constantly adjusting power input to offset increased/decreased demand and keep frequency constant, responding very fast with charging and deploying energy in very short cycles — "that's where energy storage has an interesting role to play," Morjaria said. A123 and Beacon Power have explored that in NY ISO and other places, FERC has tweaked regulation to support it, and "it seems to be making some sense," Morjaria noted. But that isn't necessarily a practice that depends on variable generation from renewables.

Frequency response can stretch out some power output at the expense of some quality, but power coming from renewable sources "is simply not high enough for most independent power producers and transmission to handle," said Chris Wheaton, CFO of Energ2.

What It Costs

The big question in energy storage, Wheaton says, boils down simply: what does it cost to build more generation (to oversupply), vs. how to store and manage energy? Today it's more "economically rational" to build more generation, whether it's solar or wind or even coal, he noted. As energy storage technology costs come down — and as there is better understanding and calculation of externalized costs, such as societal impacts — "we will see those lines cross, and more utilities will go to energy storage as a more economical means to serve the grid."

Fundamentally, economics determines the decision of over-generation vs. energy storage; right now "either energy storage is not cheaper, or the payback is not enough to shift over," noted Luebbe. As the cost (dollars per kilowatt-hour) come down and energy storage costs intersect with those in over-generation, "then everyone will do it because it's economically the logical thing to do."

Part of that economic determination, Luebbe says, has to define, manage and regulate the externality of emissions. That will play out differently in different countries and economies, he noted — how will many countries hit the Kyoto Protocol targets without big changes to grid infrastructures, and how is oxygen interpreted as contributing to emissions calculations. Even the presence of some pilot stage energy storage projects "tells me we're pretty close" to that cost intersection, Luebbe said. "



Source: Renewableenergyworld.com








Thursday, January 24, 2013

The Price of Storing the Sun: Solar Incentives for Energy Storage


Energy storage is too expensive for use in grid-tied residential solar. At least, that’s the current thinking. Though installing distributed storage in each home would help mitigate solar’s intermittent power supply, preventing large local spikes and drops in power supplied to the grid, it’s a tough financial case to make with traditional energy storage. Unlike off-grid solar, where energy storage is necessary to guarantee constant power, grid-tied energy storage mitigates system level issues caused by high concentrations of distributed renewable generation. To incentivize consumers to adopt storage as a way to mitigate this issue, a mechanism must be put in place to pass some of the value created by distributed, grid-tied storage from the system operator to end users.




Greentech Media recently published an interesting article covering this topic. They broke down some of the avoided costs and subsidies associated with residential solar systems:
SGIP: California’s Self-Generation Incentive Program (SGIP). SGIP offers $2 per watt for energy storage systems, which at a four hour discharge rate is equivalent to $500 per kWh.
Federal Tax Credit: This 30% tax credit applies to solar systems, but the real question is whether this could include the battery system as well. This shaves off about a third of the system costs.
Time of use benefits: In California, PG&E offers optional rate plans where users pay less if they reduce consumption during peak hours. Batteries can be combined with this plan to offer consumers substantial savings over time. According to the Greentech Media article, the benefits from this add up to about $500 per kWh over the lifetime of the batteries.

Theoretically, this would mean that a system could cost over $1400 per kWh, or $7000 for a 5 kWh system, and still provide a breakeven value proposition for consumers under the time of use pricingoffered by the CA system. By installing the system, they would get the added benefit of having a backup power supply in the event of a blackout. It should be noted that these numbers assume the ITC benefits could apply to an energy storage system.

Residential energy storage has multiple value streams that benefit both the end users and the utilities. Incentives like SGIP are an attempt to capture these benefits, but storage must be cheap enough to stand on its own, or it must be supported by a system that charges those who receive the value. Energy storage must pay for itself or it will never be a long-lasting solution.



Source: Aquion Energy

Thursday, January 3, 2013

Delphine BATHO launches electric interruptibility for French Grid security






Paris, December 29, 2012


Delphine BATHO, Minister for Ecology, Sustainable Development and Energy has signed a decree making interruptibility possible, published today in the Official Journal.
Pursuant to Article L321-19 of the Enegry Code, it allows RTE (French grid operator), in case of serious and imminent threat to the security of the electric network, to use the interruptible capacities of its customers, in exchange of a fee.





This decree allows us to anticipate a possible saturation of the grid.

From an economic perspective, it is a measure of solidarity between companies and individuals. Through the usage rate of public electricity networks all consumers will pay sites capable of interrupting instantaneously. The cost to consumers is tens of cents per year. These sites will interrupt their usage at RTE's request within 5 seconds for a period of 15 minutes to one hour.





For approved sites, interruptible capacity will be between 60 MW and 300 MW. Currently, those directly interested in the device are particularly sites in the chemical industry and aluminum. The signing of the decree has two purposes: to face instantaneously to any saturation of the grid, and at the same time, allow businesses electro-intensive economic develop the ability to stop.

Press release

Source: Minister of Ecology, Sustainable Development & Energy



French version:


Delphine BATHO, ministre de l'Écologie, du Développement durable et de l'Énergie a signé un arrêté rendant possible l'interruptibilité, publié ce jour au Journal officiel. 

Cette disposition, prise en application de l'article L321-19 du Code de l'énergie prévoit que RTE peut, en cas de menace grave et imminente sur la sécurité du réseau, avoir recours aux capacités interruptibles de ses clients, en échange d'une rémunération. 

Cet arrêté permet d'anticiper une éventuelle saturation du réseau électrique. 
Du point de vue économique, il s'agit d'une mesure de solidarité entre les entreprises et les particuliers. A travers le tarif d'utilisation des réseaux publics d'électricité l'ensemble des consommateurs rémunère les sites capables de s'interrompre instantanément. Le coût pour les consommateurs est de l'ordre de quelques dizaines de centimes d'euros par an. En contrepartie, les sites s'engagent à interrompre, à la demande de RTE, leur consommation d'électricité dans les 5 secondes suivant la demande, pour une durée de 15 minutes à une heure. 

Pour les sites agréés, la capacité interruptible sera comprise entre 60 MW et 300 MW. Actuellement, les acteurs directement intéressés par le dispositif sont notamment des sites de l’industrie de la chimie et de l’aluminium. La signature de l'arrêté poursuit deux buts : faire instantanément face à une éventuelle saturation du réseau électrique et, dans le même temps, permettre aux  entreprises électro-intensives de valoriser économiquement cette capacité à s’interrompre.  


Thursday, September 20, 2012

LiFePO4 ESS Update - No more computer needed

After several weeks of testing, I finally unplugged the computer from the Arduino board and my LiFePO4 ESS is now running in standalone



The laptop computer is gone ...


Grid Tie Inverters stack and Generated Power (in Watts)


Karotz is watching Wattson :-)
I can see our home Net consumption it anytime through its webcam when I am not home or upstairs 


LiFePO4 Battery pack voltage and Wattson Energy Monitor showing Net consumption  


Cell level voltage watching & Arduino board unplugged (except for power from the micro USB connector)


And the Wattson Professional graph shows that it is working well, following the usage and trying to minimize it using battery stored energy whenever necessary (last long test was from 19:00 to 22:00)

Tuesday, September 4, 2012

Smarter Grid Linking Solar Panels May Bypass Utilities

....
"The overall trend is that more and more households are choosing energy self-sufficiency."
....
"In the next fifteen years, the importance of the current grid — smartened or not — will wane and a parallel “new intelligent network” may supplant it."


Smarter Grid Linking Solar Panels May Bypass Utilities


I doubt that electricity is fundamentally a wide-area networking service. At first glance, this statement appears absurd. Like telephony or the Internet, electricity enters our homes through outside wires. Is it not therefore a networking service?


The spread of distributed generation, however, calls into question the nature of the electricity business. Rooftop solar panels, with accelerating price drops, no-payment installation options for households, and guaranteed prices lower on average than those of the incumbent utilities by solar companies, brings increasing “grid independence.”

The emergence of micro-grids and community grids also indicate a movement away from centralized, remote generation. California shows how this movement might spread throughout the U.S.; the Public Utilities Commission’s Net Energy Metering ruling on May 24 effectively doubles rooftop solar generation in the state’s utilities system.

More generally, over 1.5 billion people in India, the African continent and elsewhere are literally grid “independent;” they never had grid electricity. Today, they are getting solar-based electric lighting from standalone systems for the first time. The quaint story of a Florida community resisting grid electricity in favor of a certain lifestyle (New York Times, May 27, 2012) may be a harbinger of things to come.

The overall trend is that more and more households are choosing energy self-sufficiency.

The Smarter Grid

If electricity is not a wide-area network service, then the recent push for a smart grid, focused on improving the legacy infrastructure, is misdirected. The greater opportunity — the smartergrid — may be an entirely different network. ­

In the next fifteen years, the importance of the current grid — smartened or not — will wane and a parallel “new intelligent network” may supplant it. This new intelligent network will manage thousands of distributed generation and consumption points, including rooftop solar installations and networked electric appliances. The network management would resemble that of today’s IT networks and would be easy to set up. We would simply treat solar panels, inverters, and appliances as analogous to computers and other electronic devices on the Ethernet.

While the current smart grid projects primarily address the operational concerns of electric utilities, tomorrow’s smarter grid will serve the end customers, and may not even be managed by electric utilities. Of course, wherever the current grid is in place, which is most of the world, we should make it better and implement the smart grid solutions. But we should realize that parallel intelligent networks would likely be born.

The smart grid discussion is naturally about technology, but it ought to also be about business issues — how firms can adapt to non-traditional competition, industry structure changes, and disruptive innovation. With growing solar rooftop deployments, the traditional electric utilities face threats to their growth, though not to their immediate survival. Smart grid discussion therefore belongs at the corporate strategy level and in boardrooms.

The Legacy Network

Why is today’s electricity delivered to customers through transmission and distribution wires over long distances? For two reasons: a) the economics of scale and b) because we extract electricity from concentrated power sources, including coal, gas, nuclear plants, and dams.

Coal-based power plants or dams are so large and concentrated that only utilities can deliver electricity to customers inexpensively and afford transmission expenses and losses. The externalities of coal burning — the hazards of greenhouse gases – were unknown until recently, and are un-priced today.

Just as Yahoo! and Amazon are portals to repositories of content, electric utilities help us tap into concentrated energy sources such as fossil fuels. Whereas content is getting more concentrated in cloud computing platforms on the Internet, the distributed and “edge” paradigm appears to be the trend in electricity.

With distributed generation, the economics of the electricity business change because of new network topology, economies of scale due to retail installations on rooftops, and the use of diffuse energy sources, particularly sunlight. “Broadcasting” electricity through complicated, loss-prone, wide-area networks becomes unnecessary. While the economics did not favor rooftop solar generation until recently, grid parity is at hand in the renewables industry.

Competition and Parallels with Telecom

Even with thousands of net-zero energy homes powered by rooftop solar, most customers would still use the existing grid as insurance and pay a fixed price for access to it — a maintenance fee of sorts, known in telecom as an “access charge.”

When competition arrived in the telecom industry, new carriers had to pay an access charge to existing telephone companies for the use of their infrastructure. Competitors eventually won the right to use existing infrastructure to offer their services. In time, cellular operators accelerated the breakdown of the traditional landline infrastructure into component elements; competitors only paid for the landline components they used.

A similar fragmentation of the electricity infrastructure appears inevitable — there will be a price to access the grid elements. Power producers today sell electricity to the grid operators through power purchase agreements (PPA). In the future, they may sell directly to end customers. Such non-traditional service providers, like micro-grid operators or community power plants, will compel the disintegration or “unbundling” of the existing utility, whose infrastructure will be sold as separate components.

Households and businesses with rooftop solar are going further – they are becoming their own increasingly self-sufficient micro-utilities.

Substitution is Seldom Sudden

When cellular telephony became mainstream landline connections were not entirely cut off. Though usage has dropped, we still keep the connections. Similarly, even with widespread photovoltaic deployment, we will maintain connections with the classic grid. We need centralized generation from concentrated sources for large factories and railroads, and wired delivery at the consumption points. Substitution will not be complete and the utility architecture will stay in place. The smart grid deployment plan of San Diego Gas & Electric — a fine document — describes it as follows: “SDG&E stores the electricity the customer generates beyond their current demand, and returns that electricity to the customer when they need it.”

Widespread solar for homes faces the additional challenge of inertia: why replace something that works? Are the benefits of grid parity pricing, lower capital costs of deployment, and subsidies sufficient to outweigh the hassles of deployment? Nevertheless, starting with early adopter families, deployment will spread — for reasons including altruism, environmental consciousness, installation convenience for new homes, and rising affordability.

Those skeptical of energy self-sufficiency argue that, without good and affordable storage, renewables like solar and wind will remain peripheral and unreliable. The sun does not always shine nor does the wind blow predictably; renewables will never be mainstream.

But these are not credible arguments. When needed, diesel or gas-based generators and batteries can back-up renewables, as they do in countries with unreliable power. While expensive and polluting, diesel power may be needed only for a few hours per day.

Self Sufficiency and Strategy for Electric Utilities

In describing the transformation to the use of renewable energy sources, the word “self-sufficiency” is appropriate, not “grid independence,” which is commonly used in the industry. Why? Because the latter assumes the existence of the grid as the baseline. The starting point should rather be no power at all; for those without grid electricity, or those experiencing frequent blackouts, self-sufficiency is the only option.

While “self-sufficiency” indicates progressive deployment, “grid independence” suggests a drastic break, which is unlikely. Households may first offset their grid load by perhaps 25 percent, increasing renewable use over time.

In the face of transformative change, electric utilities face a lackluster future. They will lose usage and customers to renewable solutions, and they already have. But they might have a significant opportunity in a related area — the management of the information network linking millions of distributed generation points. The smarts of such a network — monitoring, tracking, billing, customer service, customization, reliability, peak administration, and storage optimization — may be the core competence of future utilities. Such an information network might be an independent overlay on today’s grid.

It might lead to an alternate or smarter grid managing millions of customers and their rooftop generation and usage. The convergence of mobile telephony and solar generation, or the ability to track generation on the Internet via connected solar inverters, are evidence of new intelligent network applications. In any case, the utility of the future is more of an informationcompany and less a generation, transmission, and distribution company.

In contrast, the smart grid being developed today views the electric utility as a customer and emphasizes operational improvements that, while necessary, are an extension of the current business model — a paradigm in decline.





Mahesh Bhave


BIO: Mahesh Bhave, Founder, CEO

Mahesh Bhave is a Visiting Professor of Strategy at Indian Institute of Management, Kozhikode, India since Fall 2010. He has worked in product management, strategy, and business development positions at Hughes, Sprint, and Citizens in the US. He is the founder of a rich media communications start-up in San Diego, CA. He is an engineer from IIT, New Delhi and Ph.D. from Syracuse University. He is also LEED AP.

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