Managing Grid Stability and Transmission Congestion
New Age of Energy
By Michael Hinton
The New York subway officially opened in 1904, yet after more than 100 years, it has remained relatively the same - effective still, but little changed. Similarly, the U.S. power grid traces its beginnings to more than a century ago, and in many ways it’s not tremendously different today than it was then.
While the grid has arguably been a marvel of engineering ingenuity for decades, we’re entering into a new era. The upkeep required for the aging U.S. infrastructure, the rise of renewables, the creation of new technologies and the continuing high levels of consumer power needs all lead to one place - the grid is facing evolving and increasing demands, and nothing is going to change that.
Slowly but surely, the electricity industry is transitioning to a smart grid that will allow for more efficient operations with better features and functionality. With a smart grid, we can have a more responsive electrical system that can make adjustments in real time, prevent potential outages, and be better suited to accommodate the growing impact of renewable energy.
However, remaking the grid requires significant time and an enormous capital investment, especially considering we need to account for what power demands and plant inputs will be not only for tomorrow, but for the next half century or longer. With technology rapidly shifting, we must have a grid that can adapt, expand and repel hackers as well as be more efficient as society’s requirements change.
Companies are working hard to modernize the grid. For example, Pacific Gas & Electric Co. (PG&E), one of the largest combined natural gas and electric energy companies in the U.S., is committed to reaching a 55 percent renewable energy target in 2031.
Even so, as we migrate to a smarter grid and continue to increase the amount of renewable energy sources used to power the U.S., there clearly will be challenges to overcome.
Supply and Stability
At this point, the data is clear that coal is losing share in the marketplace, with natural gas accounting for 34 percent of U.S. electricity in 2016. At the same time, zero-carbon sources will be pressed further into action by some states, cities and private enterprises, with or without the Paris Agreement. Unquestionably, coal-fired plants have several years left, but their detractors and low natural gas prices are making for a difficult existence.
Nuclear power, which has never lacked for critics, is today around 20 percent of U.S. generation, but as we go forward these plants appear far more likely to be decommissioned, such as Vermont Yankee, than appreciated as a source of clean generation that should be added in greater strength to the grid. Only recently, word emerged that Pennsylvania’s Three Mile Island might be taken offline in only a few years. We may hear more of this in the near future.
Where does this leave us? Green energy receives a great deal of backing, politically and in the press, but making a switch is anything but simple. A not insignificant worry about renewable energy, in particular wind and solar, is that the supply side isn’t consistent and there can be substantial fluctuations in the amount of power produced. If producers generate too much power, they can be facing negative pricing situations.
To have a stable grid, the U.S. system will need the right resources to keep the system operating at a generally even level of supply and demand. However, power that’s produced today can’t currently be stored in significant amounts, although that’s changing as new ways of storage are explored and enhanced. This may be one of the most fascinating components of the energy space, as Morgan Stanley has predicted the power storage market may increase from less than $300 million a year to $4 billion in the next two to three years.
As options for storage improve, producers will be able to store power so they don’t lose it if it’s not used immediately, which could potentially reduce the need to sell at negative prices.
The Future Is Smarter
The hope with a smart grid is it will allow for quicker restoration if the power does go out, while also enabling efficient transmission of electricity that can respond quickly to the ever-changing demand. The congestion will decrease with a more sophisticated, two-way grid that can handle fluctuations and switching between power sources based on the needs of the end users.
In addition, with storage options, the U.S. will experience a more stable and efficient system that will allow companies an effective option to resolve issues of grid resiliency and reliability.
While it will take time, patience, debate and a great deal of funding to complete the transition, we are already on our way to a smarter grid system, one that will lead to overall market stability and a stronger power infrastructure for the U.S.
About the Author: Michael Hinton is the chief strategy officer at Allegro Development, a developer of commodity management software for companies who buy, sell, produce or consume commodities. For more than 30 years, Allegro has delivered position visibility, risk management, comprehensive controls and regulatory compliance through a forward-compatible architecture that is built for your business. Headquartered in Dallas, Texas, Allegro has offices in Calgary, Houston, Jakarta, London, Singapore and Zurich, along with a global network of partners. Visit Allegro’s website at www.allegrodev.com.