Megatrends in the Electric System

The electric grid is undergoing rapid modifications, driven largely by the needs to address climate change. The consumption of fossil fuels needs to be reduced dramatically in a short time. The structure of the existing energy system is becoming inefficient and ineffective, meanwhile the challenges in the coming transition may be a lot larger than the industry and consumers anticipated. Three key issues are in dire need of attention to usher in a smooth transition—each of these factors will play major roles in what lies ahead:

  1. Overall capacity AND energy needs
  2. Dispatchable and undispatchable resources
  3. Energy-constrained and power-constrained resources

Reliance on Fossil Fuels

i Fossil fuels (liquid petroleum products, natural gas and coal) have been large, inexpensive sources of energy. The first Conference of Parties (COP) Conference, held in Brazil in 1992, recognized the need to reduce emissions. At that time, 87% of global energy was provided by the combustion of fossil fuels. In 2020, after 28 years of initiatives, target setting and talking, 83% of global energy is still reliant on fossil fuel. Even Germany, with large investments in renewable energy, reduced reliance only to 78% of its total energy supply. Figure 1 shows targets set by Kyoto, Paris and now the COP Conference held last year in Scotland. Progress is minimal, and each target shows a steeper requirement to achieve the proposed target. Currently used concepts are failing to meet the projected and agreed upon targets. There must be a better way forward.
Two of the key issues that needs to change is efficiency and demand. But there are reasons for this lack of focus—energy is too cheap! People complaining about the cost of gasoline will need to stop and look at a bigger picture. A healthy young man, with a shovel can do about 2-3 kWh of work in an 8-hour day. At normal electrical utility prices, that amount of work would be worth less than $0.40. It is suddenly not hard to understand why waste and efficiency have not received attention, which will be required to usher in this energy transition.

Energy Needs

The electric grid seems to be identified as the key system to displace all uses of fossil fuel, but the challenges associated with such a catch-all are significant. Currently, US electricity supply delivers only 19% of the total energy needs of users. Natural gas delivers 29%, oil delivers 51% and coal delivers 2% (not including coal used to generate electricity). Over 80% of energy delivered is based on the use of fossil fuels, and even if the existing electric system can be modified to deliver all “clean” energy, the physical changes to increase delivery from 19% to 100% by the electric grid is more than a challenge if current methods are used. However, there may be opportunities to absorb more capacity into the electric grid than what has been possible in the past. Communications, controls and technology can provide solutions previously not considered. There are other high level factors in the sources of energy that also need to be considered. Most available generation falls into one of two general subcategories:

  1. Energy-constrained resources deliver a limited amount of energy over a period. A hydro generating source is an example of an energy constrained resource. The maximum energy that can be generated in a year is based on the total flow of water available for generation in that year.
  2. Capacity-constrained resources deliver a fixed peak amount of power with no limits on the total energy that can be delivered. Examples are coal fired generators, gas turbines or nuclear-powered generators. These stations are power constrained, energy, limited by the fuel supply.

Much of the Canadian grid, powered by hydro facilities, is energy constrained, while much of the US, powered with coal fired steam turbines and nuclear-powered generation is capacity constrained. What is significant in the US is the fact that any large-scale conversion to renewable capacity (wind and solar) will displace capacity constrained generation with energy constrained sources. This transition will have significant effects on grid operations.
One often hears that hydro-plants have the same annual capacity factors as many of the wind turbines and as a result the wind turbines can be used in the same way as hydro is used. That is not quite what happens. Wind is intermittent and is an excellent source when the wind is blowing. Hydro is capacity limited, but may be sized to meet peak capacity needs, and cannot run for extended periods at maximum as there will be insufficient water supply.
Another factor that must be considered is if the generating source can be dispatched as needed. The hydro generation can be started and stopped when required, and typically, the only constraint is the availability of water. If there is water available in the reservoir, the plant can be run on demand. Wind is quite different. It is available only when there is wind. The two are vastly different. Ironically, nuclear generation is quite different, as it is capacity-constrained, but it is essentially non dispatchable. A nuclear plant is typically used for base loads. The reactor output is not easily altered, but the generator output can be changed simply by reducing the flow of steam coming from the reactor to power the generator turbine. In this case, source steam is fixed, but steam used may vary, resulting in a discharge of excess steam to waste. While highly inefficient, this method has been used.
Utilities in North America are all different, some based largely on energy-constrained resources (Canada), and some based on capacity-constrained resources (most of the US). Many of the utilities in the Pacific Northwest are hydro based and are energy constrained. Adding intermittent generation capacity such as wind or solar to these systems may result in different approaches. As these resources are increasing, the concepts used for operations for more than 100 years are often inadequate to address the growing needs of the new paradigm.
Unlike the natural gas system, the electrical grid has a significant constraint that creates a challenge in the operation. The natural gas system has a structure of pipelines that collect the gas at wellheads and delivers it to customers. The main trunk lines operate at a high pressure, and the actual pressure may vary. At any given time, there is a large quantity of gas in the pipeline, and if the line pressure is increased by 20%, the quantity of gas in the line increases by 20%. This is real storage that is often used. I recall a pipeline failure, when I was living in Toronto. The single TransCanada Pipeline gas system from Alberta to Toronto ruptured and was shut down in Northern Ontario. The winter weather was cold, and I was expecting a serious problem. Would we have to evacuate the city? After about 3 days, my curiosity got the best of me and I called an engineer friend at the company that ran the pipeline. “No problem” he said. “We will have the line fixed in 5 days, and there is enough gas in the line to keep us all warm for almost 2 weeks.” That was remarkable. At the sending end, they can pump gas into the pipe, and should they wish to pump more, they simply allow the pressure to go up. It is simple and effective.
The electric grid is different. There is no storage, so the utility has adjusted generation continuously for more than 100 years to maintain the balance between supply and demand. This was a relatively simple task, because any imbalance resulted in a change in the system frequency. Old electric clocks would run fast or slow if the frequency was above or below the nominal level. The generators making the electric power would all speed up or slow down together if the load was less or more than the supply. Utilities relied on speed governors on generators to maintain system frequency at a constant level, and this matched the supply with the demand. It worked for more than 100 years.
The old system worked well but was not efficient. In recent years, it has been shown that adjusting load instead of generation was a more efficient means of achieving the same result. At the turn of the century, Enbala (now Generac Grid Services) was a pioneer in the use of managed demand to provide balance, and the company name Enbala reflects energy balance. (It should have been Power Balance, but most agreed that Enbala sounded better than Powbala.) We have a granted patent on the method that we pioneered.
The addition of intermittent generation, that is displacing much of the older capacity constrained generation has brought a host of new issues, and the change has only started. Storage is playing a huge role, converting the intermittent resources into more conventional energy constrained resources. The maximum energy use is based on the amount of sunshine or wind that is available, and no amount of cash will purchase more fuel to increase the output. Utilities that have survived with capacity constrained supplies are suddenly finding new and different challenges in their operations. Utilities with hydro generation (US Pacific Northwest, and much of Canada) have learned that their hydro facilities may have the ability to storage energy efficiently, so they are finding opportunities to sell storage—taking afternoon surplus solar capacity at low or even negative prices, only to sell it back at higher prices a few hours later.
These are the basic principles of the transition that is starting and will have significant impacts on operations in the future. Many changes will be needed to optimize, and many new opportunities will exist for new concepts. We now have low-cost communications that can provide services, and new technologies in protection and control will provide many new ways of doing much more. Generac Grid Services is striving to position itself to be the leader in this area, as the rewards will be potentially large. It was heartwarming last week, to see an investment house see the same potential and recommend the company stock to investors. ii

i Clean Energy Pathways to meet British Columbia’s Decarbonization Targets; Clean Energy Research Centre (CERC), University of British Columbia January 2022, Part 1
ii https://www.cnbc.com/2022/06/02/ubs-says-generac-is-a-top-pick-with-more-than-80percent-upside.html

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