Q&A with Dirk van Ouwerkerk, Partner, Microgrids, at Anbaric, an electricity infrastructure development company focused on upgrading and enhancing the U.S. power grid.
1. While the main topic I want to discuss is grid defection, let's start off with something that sparked my interest as a New Yorker. I had a chance to look through Anbaric's whitepaper "Reaching New York's 50 by 30 goal" and I wanted your comment on the potential regional energy market proposed in it. The proposition includes a lot of export lines -is this due to the fact that renewable energy storage is still not cost-effective?
The most cost effective trade is actually done by the grid. If you create bottlenecks or restrict access to that trading platform or market, then you won’t have as efficient a market—and that doesn’t benefit anyone. It’s our supposition that the grid in itself is a very good trade mechanism—including for renewables. And because of that, integrating and connecting new technology, including storage, and expanding the existing trading platform through current and future transmission lines to neighboring markets will only make it more efficient and cost-effective for the end user.
2. Would the map look the same if excess power from renewable sources could be adequately and effectively stored?
As with any other commodity, large-scale storage would influence the timing of trade, but it would probably not influence the direction or value of trade.
3. Right now, grid defection is not an economically sound decision. If that changed overnight, would utilities be able to adjust to the sharp energy market shift?
If grid defection really happens, then the utility model is in peril because it’s not going to be the low income customers who are defecting. They will still be tied to the grid. It’s the high paying customers who will have the option and opportunity to defect because they can invest in storage. Truth be told, if that happens, the grid will still have to maintain itself, but with less income as result of having less users. Would the utilities be able to adjust? Maybe, but not without great difficulty. It would be a hard reality to grapple with—one that may bear an unsettling amount of similarity to the “too big to fail” decision and aftermath of the recent past.
4. Can grid defection actually be a good thing in less dense regions where grid energy supply involves a lot of energy loss and maintenance costs?
In the 1930s, for example, the federal government spent heavily to connect remote areas to the larger grid. In many cases, this was a federal project and costs were shared with urban areas. Removing these “less dense” regions from the grid may occasionally be a net benefit to that area, but in our view that would be a really special case. Most areas benefit greatly from connections to the larger grid.
Put another way, even in remote grids there will almost always be a net benefit to connecting customers and resources across a locality or region. And in most cases, it will remain efficient to connect those local areas and regions for trading and reliability purposes. The reason is that electric power always automatically looks for the path of least resistance: it’s a near-perfect, automated arbiter of what’s the best resource to serve each load.
5. There's also the hot button issue around grid maintenance -should renewables participate more actively in maintaining grid capacities?
Yes, but they are already doing that. From the renewable side, they are already capable of providing more services to the grid, but the grid isn’t always capable of consuming them. Renewables are more sophisticated and have much more potential to contribute to grid maintenance than is currently being deployed.
For example, residential rooftop solar is often limited in how it can connect due to voltage-related limiting factors on the local grid. Getting the PV system to dynamically support voltage issues, which most modern smart PV systems are capable of, can help resolve this issue and create an environment where rooftop solar is feeding back into the grid without limitations. Unfortunately, at the moment, there isn’t enough incentive for the grid to participate and procure those services. Luckily, regulators are waking up, but it’s a complex issue and it’s not going fast enough.
6. Given enough time, how should utilities adjust to accommodate renewables? What is the future of utilities?
We see the future of utilities as platforms for controlling and trading resources that are connected both to the distribution grid and to large-scale renewables carried by the transmission system. For that reason, utilities have a role of executing those trades and of maintaining, operating and safeguarding the platform. And that in itself is a substantial role.