RNE has a post on a Morgan Stanley report on tesla's potential to hasten the utility death spiral - How Tesla could pull more consumers off the grid.

Investment bank Morgan Stanley says the global electricity utility industry is still underestimating the potential of EV maker Tesla to achieve a dramatic reduction in battery storage costs, luring more and more consumers to go “off-grid.”

In a detailed report released in late July, Solar Power & Energy Storage, Morgan Stanley said that energy storage, specifically that being developed by Tesla in its so-called “giga-factory” could be disruptive in US and Europe, and elsewhere.

It does not mention Australia in the report, but Australia has all the ingredients of a market perfect for such disruption – excellent solar resources and high electricity costs, and more specifically, high network charges.

“Given the relatively high cost of the power grid, we think that customers in parts of the US and Europe may seek to avoid utility grid fees by going “off-grid” through a combination of solar power and energy storage,” Morgan Stanley’s leading energy analysts write in the report.

“We believe there is not sufficient appreciation of the magnitude of energy storage cost reduction that Tesla has already achieved, nor of the further cost reduction magnitude that Tesla might be able to achieve. once the company has constructed its “Gigafactory,” targeted for completion later in the decade.“

This, of course, has massive implication for the incumbent utilities, not to mention for other consumers. The immediate response for networks has been to seek to raise fixed charges to protect their revenue, an option that Morgan Stanley says will be counter-productive.

IEEE Spectrum has an article on cogeneration and other forms of distributed energy generation - Natural Gas Sets Off a Distributed-Energy Boom.

Rooftop solar has long been the poster child of distributed energy, but experts say the boom in the natural gas supply and memories of large-scale outages are also playing a big role in moving electricity generation out of the hands of big utilities.

Different gas-fueled technologies—fuel cells, microturbines, reciprocating engines, and turbines—are now competing for a spot in the basements of businesses. “People are genuinely waking up to their options,” says Kerry-Ann Adamson, research director at Navigant Research. “Distributed-generation technology can be better than the current option of centralized power on the grid.”

Depending on local electricity prices and government incentives, natural gas–powered distributed energy can be less expensive than grid power over the lifetime of the equipment. This is most often true if it’s a combined heat and power unit—also called a cogeneration unit—in which the heat from electricity generation is captured as hot water or steam. There can be environmental benefits as well: Many of these technologies can run on gas from landfills or biomass digesters. When both heat and electricity are used, system efficiency can top 80 percent.

Inhabitat has a post on the success of distributed generation in Germany - German Village Produces 321% More Energy Than It Needs.

Ok, those Germans are just showing off now. Not only has the nation announced plans to shut down all of its nuclear power plants and started the construction of 2,800 miles of transmission lines for its new renewable energy initiative, but now the village of Wildpoldsried is producing 321% more energy than it needs! The small agricultural village in the state of Bavaria is generating an impressive $5.7 million in annual revenue from renewable energy.

It’s no surprise that the country that has kicked butt at the Solar Decathlon competition (to produce energy positive solar houses) year after year is the home to such a productive energy-efficient village. The village’s green initiative first started in 1997 when the village council decided that it should build new industries, keep initiatives local, bring in new revenue, and create no debt. Over the past 14 years, the community has equipped nine new community buildings with solar panels, built four biogas digesters (with a fifth in construction now) and installed seven windmills with two more on the way. In the village itself, 190 private households have solar panels while the district also benefits from three small hydro power plants, ecological flood control, and a natural waste water system.

All of these green systems means that despite only having a population of 2,600, Wildpoldsried produces 321 percent more energy than it needs – and it’s generating 4.0 million Euro (US $5.7 million) in annual revenue by selling it back to the national grid. It is no surprise to learn that small businesses have developed in the village specifically to provide services to the renewable energy installations.

Dave Roberts has a post at Grist on a Scientific American article he wrote on distributed power generation - Local power: tapping distributed energy in 21st-century cities.

Residents of Hammarby Sjöstad, a district on the south side of Stockholm, Sweden, don't let their waste go to waste. Every building in the district boasts an array of pneumatic tubes, like larger versions of the ones that whooshed checks from cars to bank tellers back in the day. One tube carries combustible waste to a plant where it is burned to make heat and electricity. Another zips food waste and other biomatter away to be composted and made into fertilizer. Yet another takes recyclables to a sorting facility.

Meanwhile, wastewater is taken to a treatment plant, from whence it emerges as biosolids for more compost, biogas for heat and transportation fuel, and pure water to cool a power plant, which also runs on biofuels grown with the biosolids. Looking at a chart of all this is enough to induce dizziness. "In terms of what you can do at the local level for energy efficiency and renewable energy, it's incredible. It's just amazing," says Joan Fitzgerald, author of Emerald Cities (Oxford University Press, 2010).

After they are done, district authorities hope Hammarby Sjöstad will produce about half its power independently, a task made easier by the fact that residents, thanks to a broad range of efficiency and conservation measures, will consume half the energy of the average Swede (who already consumes only about 75 percent as much as the average American). These intrepid Swedish urbanites are pushing the envelope on a phenomenon catching on in cities across the developed world: "distributed energy."

That's the beginning of my new piece for Scientific American, "Local Power: Tapping Distributed Energy in 21st-Century Cities." Click on over to read the rest. I want to add a few quick things here.

First, the piece is focused mostly on technology, since I assumed that's what most Scientific American readers are curious about, but the primary barriers to distributed energy are not technological but institutional. Changing the way electric utilities (and their regulators) operate, changing financial institutions and mechanisms, creating more cohesive regional governing authorities, planning across sectors to reduce emissions, and growing carbon markets -- all these have to do with changes in law and practice.

Second, yeah, yeah, solar panels are expensive. But cogeneration isn't. Passive solar space and water heating are cheap. Geothermal heat pumps are economical. Burning methane from wastewater treatment and landfill facilities is cost-effective. In many areas biomass is renewable and relatively inexpensive for combined heat and power. District heating is lowering costs all over northern Europe. And of course efficiency is cost negative.

Efficiency -- the other half of distributed energy -- pays for the rest. That doesn't just mean more efficient appliances and cars, but more efficient metropolitan systems. Sensors and microchips are getting cheaper so fast that pretty soon it will be possible to wire everything. Information about where energy is being generated and consumed, where traffic is congested, which parking spaces are occupied, where fresh and wastewater are flowing and how much, will be available at every node in the network. With that kind of information and the computing algorithms to make sense of it available to every building, vehicle, and consumer device, it will be possible to institute variable pricing for everything from energy to congestion to parking to water. Efficiency will be infused into the system rather than tacked on.

Third, the social effects of distributed energy are among its most intriguing aspects, but also most difficult to predict. Recall what happened when computing and information technology became widely available. Now imagine the hackers of the future with their hands on local energy management. The very notion probably makes Dick Cheney lose sleep at night (if he sleeps at all), but our kids and grandkids will take their ability to shape their environment for granted. As with the internet, the furious pace of distributed innovation will produce benefits that dwarf the security risks.

More prosaically, local distributed energy just requires more civic involvement. Efficient living spaces are by nature smaller, so there's more time spent in communal spaces. There's trash sorting and thermostat programming and community planning and all the rest. Several sources I spoke to for the story waxed poetic about the cities and districts pursuing distributed energy, how the effort became a source of civic pride and engagement. As Bill McKibben puts it in a beautifully wrought essay, Hammarby Sjöstad is "a place that makes sense."

The BBC has a look at Jeremy Rifkin's latest pronouncements on distributed generation, proposing a Europe wide smart / super grid - 'Distributed power' to save Earth.

Economist Jeremy Rifkin galvanised the Research Connections 2009 conference in Prague with a roadmap to simultaneously solve the economic and energy crises.

He proposed a pan-European strategy of small-scale energy generation and smart energy grids that make everyone a partner in energy.

What is more, he said, the plan would create millions of jobs and foster investment that would see the end of the current economic crisis.

Mr Rifkin leads a roundtable of 100 top CEOs and government officials who have subscribed to the plan.

The roundtable is part of the Foundation on Economic Trends, which Mr Rifkin founded.

He said old economic models will not see humanity through, and the combination of the climatic, energy and economic woes of the planet created a "perfect storm" that will see in a new era for its inhabitants.

But such a revolution is not unique to human history, he said.

"The great economic revolutions in history occur when two things happen," he explained.

"First, we humans change the way we organise the energy of the Earth; we've done this frequently over the course of our history.

"Second, and equally important, we change the way we communicate to organise new energy regimes. When energy revolutions converge with communication revolutions, those are the pivotal points in human history."

Your building becomes your power plant, just like your computer becomes your information vehicle to the world

The current renewable energy push, in common with the information and communication technology revolution that characterised the 1990s, is just such a pairing of regime changes.

But in Mr Rifkin's grand plan, every citizen of the EU would participate in order to revolutionise the way energy is generated, used, and monetised.

Four pillars

Although the sheer scope of the idea raised eyebrows throughout the room, Mr Rifkin laid out a cogent, four-part plan that he said could in one stroke dispel the perfect storm he described.

The first two pillars of the plan were a call to technological arms: further develop renewable energy technologies' efficiencies, amplify production to access "economies of scale", and develop means to store the intermittent energy they harvest.

The third pillar is a common idea writ very large indeed. He called for a pan-European commitment to microgeneration - small installations of renewable energy technology work in place of, for example, vast wind farms - but on every single building already up or yet to be built.

"We cannot build enough centralised wind and solar parks to run Europe," he said.

"If this energy is distributed over every square foot all over the world, why would we collect it only at a few points? The problem is we're using 20th century, centralised, top-down business models."

The large-scale, centralised nature of power generation may be changing

Instead, Mr Rifkin suggested overhauling the technology of infrastructure and architecture such that buildings have integral power generation: solar panels and small vertical wind turbines on roofs, heat pumps harvesting geothermal energy in basements.

In rural settings, agricultural waste could be used to generate methane and in coastal regions, tidal power could be harvested.

"Your building becomes your power plant, just like your computer becomes your information vehicle to the world. Every home, factory, industrial park, every building is converted," he explained.

While existing buildings could generate a sizeable fraction of their energy demands, new buildings would be "positive power" - generating more than they need through grand changes in building materials and architecture.

Jump-start

Such an idea is not new; in fact, installations are already underway. Mr Rifkin cited car maker GM's Opel factory in Zaragoza, Spain, which sports a $78m (£52m) solar panel array.

It produces some 10 Megawatts of power, which means the energy savings could pay for the installation in just nine years.

Elsewhere in Spain, Navarra and Aragon have, in the past 10 years, moved to generating 70% of their energy with renewables.

Using wind turbines in the Pyrenees, hydroelectric generation from snowmelt, and sun-tracking solar arrays, Aragon will be 100% self-sufficient in six months and be in energy surplus in six more.

"Everyone can do that tomorrow," Mr Rifkin emphasised. Moreover, it is a handy way out of an economic abyss.

"If you want to jump-start an economy it's always about construction. You jump-start not hundreds of thousands of jobs building solar collectors, but millions of jobs reconverting the entire infrastructure."

The scale of the proposed changeover is unconvincing for Paul Ekins, professor of energy and environment policy at King's College London.

"People tend to want power when they demand it and they tend to want it to be there all the time," he told BBC News.

"It's certainly possible that microgeneration has a role to play in the future energy system, but my view is that central generation is likely to be a very important part of satisfying that demand."

'Distributed capitalism'

The fourth pillar of the plan would make everyone a stakeholder in the scheme by overhauling the outdated power grid system.

"We're going to use the same tecnology that created the internet; we take the power grid of the EU and turn it into an 'intergrid' that works just like the internet.

"Say you're producing 30% of your energy need, it's peak period in the middle of the day and you don't need the electricity. If millions of people send just a little bit back to the grid, peer-to-peer just like we send information on the internet, that's distributed power."

But the distributed computing allowed by the revamped power grid could introduce a new economic paradigm - what Mr Rifkin calls "distributed capitalism".

"The main grid [will be] completely distributed, software connected to sensors connected to every appliance in your home: thermostat, washing machine, toaster, everything.

"At any one time the system will know what every washing machine is doing in Europe. If you have peak demand, not enough supply, software can say to two million washing machines 'forget the extra rinse'.

"If you bought the program - it's all voluntary - you get a cheque at the end of the month or a credit from the electricity company."

Like microgeneration, the idea of such "smart grids" has been circulating in the energy community for some time. But it is the sheer scope of all facets of Mr Rifkin's plan that makes it unique.

He has formed the "Third Industrial Revolution Roundtable" with 100 leaders from industry - big names such as IBM and BASF are on the list - as well as governments to further promote the idea.

The Freakonomics blog has a guest post from Amory Lovins on the advantages of micro and distributed generation over the old model of large, centralised power plants - Does a Big Economy Need Big Power Plants?.

If I told you, “Many people need computing services, so we’d better build more mainframe computer centers where you can come run your computing task,” you’d probably reply, “We did that in the 1960’s, but now we use networked PC’s.” Or if I said, “Many people make phone calls, so we’d better build more big telephone exchanges full of relays and copper wires,” you’d exclaim, “Where have you been? We use distributed packet-switching.”

Yet if I said, “Many people need to run lights and motors, Wii’s, and air conditioners, so we’d better build more giant power plants,” you’d probably say, “Of course! That’s the only way to power America.”

Thermal power stations burn fuel or fission atoms to boil water to turn turbines that spin generators, making 92 percent of U.S. electricity. Over a century, local combined-heat-and-power plants serving neighborhoods evolved into huge, remote, electricity-only generators serving whole regions. Electrons were dispatched hundreds of miles from central stations to dispersed users through a grid that the National Academy of Engineering ranked as its profession’s greatest achievement of the 20th century.

This evolution made sense at first, because power stations were costlier and less reliable than the grid, so by backing each other up through the grid and melding customers’ diverse loads, they could save capacity and achieve reliability. But these assumptions have reversed: central thermal power plants now cost less than the grid, and are so reliable that about 98 percent to 99 percent of all power failures originate in the grid. Thus the original architecture is raising, not lowering, costs and failure rates: cheap and reliable power must now be made at or near customers.

Power plants also got irrationally big, upwards of a million kilowatts. Buildings use about 70 percent of U.S. electricity, but three-fourths of residential and commercial customers use no more than 1.5 and 12 average kilowatts respectively. Resources better matched to the kilowatt scale of most customers’ needs, or to the tens-of-thousands-of-kilowatts scale of typical distribution substations, or to an intermediate “microgrid” scale, actually offer 207 hidden economic advantages over the giant plants. These “distributed benefits” often boost economic value by about tenfold. The biggest come from financial economics: for example, small, fast, modular units are less risky to build than big, slow, lumpy ones, and renewable energy sources avoid the risks of volatile fuel prices. Moreover, a diversified portfolio of many small, distributed units can be more reliable than a few big units.

Bigger power plants’ hoped-for economies of scale were overwhelmed by diseconomies of scale. Central thermal power plants stopped getting more efficient in the 1960’s, bigger in the 1970’s, cheaper in the 1980’s, and bought in the 1990’s. Smaller units offered greater economies from mass production than big ones could gain through unit size. In the 1990’s, the cost differences between giant nuclear plants — gigantism’s last gasp — and railcar-deliverable, combined-cycle, gas-fired plants derived from mass-produced aircraft engines, created political stresses that drove the restructuring of the utility industry.

Meanwhile, generators thousands or tens of thousands of times smaller — microturbines, solar cells, fuel cells, wind turbines — started to become serious competitors, often enabled by IT and telecoms. The restructured industry exposed previously sheltered power-plant builders to brutal market discipline. Competition from a swarm of smaller electrical sources and savings created financial risks far beyond the capital markets’ appetite. Moreover, the 2008 Defense Science Board report “More Fight, Less Fuel” advised U.S. military bases to make their own power onsite, preferably from renewables, because the grid is vulnerable to long and vast disruptions.

Continuing on the locavore / locastore theme of the night, WorldChanging has a post on "locavolts" (aka distributed generation - which needs to be supplemented with building scale energy storage and smart grids to be truly effective) - The Locavolt Movement: Pushing For Energy Independence.

Peter Asmus at the San Francisco Chronicle reported yesterday on the "locavolt" movement. The growing trend is catching on in communities nationwide, where residents seek freedom from the energy grid through reliance on local generation points like solar panels, small wind turbines and even electric cars that can feed excess power back into the owner's system.

Bay-Area government is considering a plan that would allow its residents more freedom to choose options beyond those offered by giant provider Pacific Gas and Electric Co. As Asmus reports:

Within the next year or so, the Bay Area may bolster its locavolt credentials with a California program that allows local governments to choose power supplies for their constituents. San Francisco, Oakland, Berkeley and Marin County are all investigating a plan that would allow them to stay with Pacific Gas and Electric Co. for billing, distribution and repair service, but allow local elected officials to choose more locally produced green power. In Marin County, for example, the long-term goal is 100 percent renewable energy.

The locavolt movement still faces numerous stumbling blocks, notably the hiccups and even long downtimes in naturally generated power that occur with changing seasons and weather conditions. And, as Asmus notes, there are bureaucratic challenges as well, including legal restrictions preventing residents who generate their own power from provide power to their neighbors. These types of policies, which serve the interest of major power companies, stand in the path of would-be community energy innovators.

Still, those who are determined to achieve energy independence are pushing forward, despite the frustrations of trial-and-error, and the high costs of investment in new technologies. As Asmus concludes:

If truth be known, the technology is now available to secure up to 40 percent of our electricity from local, distributed renewable energy sources like wind and sun, if we stay connected and get creative with storage from batteries, cars and maybe fuel cells. Something tells me the locavolts are on to something big.

Grist has a post on why building a national electricity grid makes switching to renewable energy cheaper ("A purely local approach would double or triple costs") - A national grid will make renewable electricity work.

This is one more attempt to kill a zombie myth: the notion that local generation of renewable electricity can substitute for long-distance transmission. I can see where this comes from -- the sun shines almost everywhere, and the wind blows strong within a few hundred miles of most places where it doesn't, right? If we are going to use renewable electricity at all, it's hard to understand why we wouldn't get it from rooftops, parking lots, or at worst surrounding rural areas.

But if we generate renewable electricity locally (locally being anything from your own rooftop to a wind farm a few hundred miles away), we end up with a huge monthly variation. Even in one of the nation's best solar sites [PDF] you end up with slightly over half the power available in the worst months compared to the best. Wind sites can be worse. For example, the Northfield, Minn. school district recorded a more than a 3 to 1 ratio between best and worst months.

In contrast, if you connected all existing U.S. wind farms [Excel] in a national transmission grid, in 2007 the ratio between best and worst months would vary by no more that 1.7 to 1. Add solar electricity (which tends to be high in months wind is low) and that ratio would be reduced to a 30 or 40 percent difference between best and worst production months. Long-distance transmission can reduce daily variation as well.

In short, a mostly renewable grid without long-distance transmission will cost at least double one that includes such transmission. Note that this applies to rooftop generation and giant solar or wind farms alike.

Q&A

Aren't long-distance transmission lines even more expensive?

Not than doubling or tripling generation. Also very high prices quoted for transmission installation and maintenance conflate transmission and distribution. In the U.S., long-distance transmission costs are about half of distribution. Maintenance is even a smaller percentage. For example, a few years ago Western Washington suffered a major outage where wind storms took down both transmission and distribution. Long-distance transmission was mostly up within 24 hours, whereas distribution was fixed over the course of almost two weeks. Even though transmission is much more expensive to build and repair per mile, distribution requires many times the line miles. Transmission is point to point, or perhaps a few points to a few points. Distribution has to branch out to ever county, municipality, unincorporated area, and ultimately to every home.

Don't long-distance lines reduce reliability?

Not if they are modern High Voltage Direct Current lines. The most common HVDC type installed today actually can help guard against spikes and improve power quality. ...

Won't demand shifting in a smart grid make long-distance transmission unnecessary?

Demand shifting for a few hours or even a day won't compensate for monthly variations in production. Even on a day-to-day basis, long-distance transmission is probably needed to produce a smooth enough production curve for smart-grid demand shifting and electricity storage (including vehicle to grid) to match.

Don't most such variations match local seasonal peaks? That is, isn't wind strongest in winter in cold climates, and sun strongest in summer in hot ones?

If we were just changing electricity supply this would be valid. But climate control has huge potential for both efficiency improvements and non-electrical renewable supplies. Improved insulation, weather sealing, air circulation, along with ground source heat pumps can reduce demand. Direct solar heating (in commercial buildings and multi-unit residences cooling) also has significant potential. Dollar for dollar, these save or provide more energy than renewable electricity. This does not mean we don't need renewable electricity. By the laws of physics, doing more with less won't ever extend to the point where we can get something for nothing. ... These efficiency techniques will reduce seasonal variation in electricity demand.

Tom Konrad has a guest post at The Oil Drum comparing power demand with wind availability and looking at the benefits of using a combination of wind power and heat pumps - Wind and Heat Pumps: A Winning Combination.

Last month, I posted some nice maps showing when and where good wind resources are found in the US. Now I've found something better: a visual comparison of electrical load with wind farm production, published by the Western Area Power Administration in 2006. The study compared electricity production from five wind farms in Northern Colorado, Southwestern Nebraska, and Central Wyoming in 2004, 2005, and the start of 2006, compared with electricity consumption in the same area over the same time period.

Comparison of Wind Production to Electricity Demand

I've copied four of the most representative graphs below.

The first and third heat graphs below show electricity production at the five wind farms studied in 2004 and 2005, respectively. The second and fourth show electricity demand in the surrounding territory. Red(blue) denotes areas of high(low) production or demand.

For wind advocates, these are probably rather scary graphs. The first thing you probably noticed was the big blue patches of wind production during summer peak demand, roughly 10am to 10pm in June, July, and August. This is why wind is referred to as an "energy resource" not a "capacity resource." Right when demand is often highest, the wind is least likely to be blowing, namely hot summer afternoons.

On Second Thought - How Much Backup Do You Need?

That is just the first impression, and while it is a true impression, it's also an oversimplification. If you look at the scale, you will notice that the blues on the wind production graphs actually represent wind generating at 10% to 15% of nameplate capacity. If you factor in the fact that a normal capacity factor for wind is about 25-40%, that means that even on these hot summer afternoons, the farms are generating at one-third to one-half of their "normal" output. This means that, contrary to popular misconception, wind does not require a "100% back-up with natural gas." It is true that wind is less reliable than baseload power plants such as coal and nuclear, which typically run about 90% of the time, but in an apples-to-apples comparison, a 100 MW coal or nuclear plant will produce as much energy over the course of a year as a 270 MW wind farm. During the peak summer months, the coal plant will need some backup power in case of an unscheduled shut down due to lack available coal (this happened in Colorado in 2005 due to problems with dust in rail tracks) or lack of available cooling water during a heatwave, and when a coal or nuclear plant goes down, it goes all the way down, so the 100 MW baseload plant has a small chance of needing 90 MW of backup to produce at its "normal" rate of power production. On the other hand, the wind farm will be operating at (a conservative) third of its "normal" capacity, producing about 30MW. To bring that up to its normal capacity for the year, it will need 60MW of back-up power.

In other words, because some part of a large distributed group of wind farms is always producing some power, it will never go completely down. A large baseload power plant, on the other hand, is completely down about 10% of the time (although less during peak summer months, because utilities schedule maintenance in off seasons.)

Pick Farms to Match Your Load

Another point worth noting, is that the wind has different annual patterns in different locations. The smallest (8.4 MW out of 139MW) of the five farms in the study was "Wind Farm B" in central Wyoming. If you look at the following two heat maps below for 2004 and 2005, which show the production of just this wind farm, you will note that during the peak summer demand, this farm was producing at over 50% of "normal" capacity for much of the summer peak.

Since we know what electricity demand looks like, if we plan new wind farms (and adequate transmission), we can choose to build wind farms that produce more power when we most need it. If all the farms in the example in the last section had more favorable production patterns like Farm B, even less back-up generation would be needed to bring them up to "normal" capacity.

For instance, in the Texas Competitive Renewable Energy Zones study wind in the coastal area (along Texas's southern gulf coast) was found to be a much better match for the ERCOT load shape than wind in other areas, although the average capacity factor was considerably lower than panhandle wind. ...

Hence, careful selection of wind farms can lead to wind production with higher capacity during peak loads, and correspondingly less need for dispactchable power. Although Texas is currently focusing on developing wind farms in West Texas and the Panhandle because of their high capacity factors and correspondingly high annual energy output, the power from coastal wind farms is likely to become increasingly valuable as wind reaches higher penetration. ...

How Heat Pumps Fit In

Which brings me to the title of this article: why heat pumps are an excellent fit with wind generation. In my article on how to invest in the Pickens Plan, I mentioned that ground-source heat pumps (GHP) can displace gas used for heating with a smaller amount of electricity from wind. Since a GHP is both an efficient air conditioner as well as an efficient heat source, it not only reduces natural gas used for heating, but also reduces electricity used for cooling in hot summer months, which in turn reduces summer peak loads.

Deployment of GHPs does three things to make energy supplies fit energy demand:

1. Winter electricity usage is increased just when wind capacities are highest.
2. Summer electricity consumption is decreased when wind capacities are lowest.
3. Use of natural gas for heating is reduced during times of peak gas demand.

GHPs, because of their extreme efficiency, also have the benefit of saving users a lot of money. ...

Electricity Demand Can Shift

Heat pumps are just one option for changing the shape of the electricity demand curve. Many such efficiency measures can do so. Other examples are improved home sealing and insulation, which typically pay for themselves in a couple years or less, and, because air conditioners work less hard in the summer, reduce summer peak loads. Wind is undoubtedly a tricky sort of electricity to use in the existing grid, but the fallacy that demand is fixed makes the problem seem much harder than it needs to be.

Tom also had a column looking at various related topics at Alt Energy Stocks recently - Investment Ideas From the One-House Grid.

In June, I wrote how intermittent power sources such as photovoltaics and wind would have to compete with baseload technologies such as IGCC "Clean Coal" and nuclear for capacity on the grid. The key problem is that neither baseload technologies nor intermittent technologies are able to match themselves to the fluctuations of demand. This creates a need for technologies which can fill the varying gaps between supply from these sources, and normal energy use. From the comments, it seems like I was not completely clear how intermittent and baseload power cause problems for each other, so I will start with a simplified example, which I will use to illustrate the various strategies for dealing with the problem. I see investment potential in all of these strategies.

The One-House Grid: An Illustration

Suppose that the entire grid were just one house, and it was the utility's job to make sure that there was always enough power to run all the gadgets that anyone in the house was using. Even in the middle of the night when everyone is asleep, there will still be some power usage: running clocks, the VCR, charging cell phones for use the next day, and maybe the porch light. That is the minimum load of the house, and traditionally utilities have met this demand with baseload power. In contrast, there will probably also be a moment on hot summer afternoon when the air conditioner is running full blast, the refrigerator kicks on, dad is watching football on his 60" plasma TV, dinner is cooking in the electric oven, and 15 other appliances are on somewhere or other. This is peak load, and the difference between the minimum load and peak would traditionally be met with dispatchable generation, which, until recently, mostly means gas turbines.

In addition, some dispatchable generation will always be kept running below full capacity in order to maintain power quality and availability as appliances are turned on and off throughout the day. These ancillary services [pdf] are called load-following reserves (maintaining availability) and voltage and frequency regulation (power quality,) and both require fuel, even if the actual energy provided is negligible. Ancillary services are like your car's engine idling at a stop light so that you can start quickly when the light changes. They're necessary to keep the system running, and they use fuel, but they don't actually get you anywhere. Also like idling engines, options like hybrids exist which can save much of the energy cost (see below.)

Add a Solar Panel

Suppose we now add a photovoltaic system and a wind turbine on the roof. Most people with solar systems know, that if you want to spin your meter backwards (i.e. produce more energy than you are using) the best time to do it will be in the late morning, while it is still cool, but it's bright enough that the panels (which actually produce more power from the same amount of light when they are cool) are producing near their peak output.

With grid-connected solar, spinning your meter backwards may be fun, or at least get you bragging rights. However, in my fictional one-house grid, we now have a new minimum demand: demand will be negative (we're going to have to find something to do with the excess electricity) because there is no other grid to sell it back to. Peak demand will also be reduced, because on the hot summer day, the PV will also be producing power. The result is that the one-house gird with a PV system will no longer need any baseload generation (since minimum demand is now negative), and it will probably also need less dispatchable generation, because peak demand will also have been reduced, most likely by more than minimum load. Not only will peak demand have been reduced, but it will also have shifted to the early evening when the PV is producing little electricity, but cooling, cooking, and football watching needs are still high.

Adding a wind turbine to the roof has a similar effect. Now, the meter will also be spinning backwards on windy nights, and demand is reduced whenever it's windy, which will in turn save fuel and reduce the need to run the remaining dispatchable generation.. However, if the climate is similar to that here in Denver, on the hottest days of the year, the wind will typically be minimal, so there will be little further reduction in peak load, so nearly the same total amount of dispatchable generation will be needed, although it will not be in use as often.

Consequences

As the above illustration shows, the oft-repeated shibboleth that we "need" baseload generation is not only misleading, but also counter-productive. Adding baseload generation will simply increase the number of hours per year that intermittent sources of power exceed net demand. I too, formerly believed we needed baseload. I no longer do, although some level of baseload power in the grid is no doubt inevitable, at the very least produced by renewable sources such as geothermal and electricity generation from industrial waste heat.

Solutions

Returning to our one-house grid thought experiment, a number of options present themselves.

1. Storage. In the real world, if you build a house off the grid, you will add batteries so that you can still run your lights when the sun isn't shining and the wind isn't blowing.

2. Transmission. Suppose our one-house grid has a neighbor, running his own one-house grid. While generation from their PV and wind systems will be similar (but not identical), demand at the two houses is likely to be different. By diversifying the electric demand, average demand will double, but peak load will increase by somewhat less, and minimum load will more than double. This reduced volatility of electrical load brought by connecting two homes is analogous to the reduced volatility of a portfolio of two securities, rather than just one. Unless the electrical load of the two homes is perfectly correlated, there will be benefits in terms of a reduction in the overall amount of dispatchable generation needed to service the same total load. Our knowledge of the principles of diversification will correctly lead us to the intuition that connecting dissimilar users of electricity will lead to greater diversification benefits than similar users. If residential, commercial, and industrial users are all on the same grid, the same average electric demand will be easier to serve than if only residential or only industrial customers were connected, because a residential user will have lower correlation of demand with most industrial users than with other residential users.

3. Demand-Response. My sister lives in an old house, and the kitchen is on an old, low amperage circuit breaker. If she ran both the microwave and the toaster at the same time, it would trip the breaker and she would have to trudge outside to turn it back on. Needless to say, she quickly stopped using the toaster and the microwave at the same time, and thereby reduced the peak load in her kitchen. Demand response involves getting electric customers to agree ahead of time to refrain from using high-wattage appliances during times of high electric demand. In the one-house grid example above, dad might choose to record the football game and watch it later in that evening.

4. Energy Efficiency. Another way to reduce volatility of demand is simply to reduce overall demand. If dad had decided to buy an LCD TV rather than a Plasma TV, the demand from his 60" TV might have been reduced by as much as 200-300 watts, depending on the models, and this in turn would have reduced peak load. ...

EWnergy Tech STocks has a story on a variant of the "distributed power station" theme that I've mentioned here a few times (both for Californian solar projects and German renewable energy projects centred around biogas) - Duke Energy’s New Solar Concept Has Potential to Supercharge Solar & Smart Grid Companies.

Duke Energy just said it plans to test a concept which, in EnergyTechStocks.com’s opinion, has the potential to revolutionize the solar power industry even before it has taken root. Duke’s plan envisions turning rooftops into solar power collectors. Nothing new about that, right?

Wrong. Duke is going to test the idea of linking hundreds of solar-power-collecting rooftops into a unique kind of power plant, one that’s the opposite of today’s power plants. Today’s plants generate electricity from a central location and transmit it over lines into millions of homes, offices and factories. Duke’s idea is for a completely de-centralized power plant, one that generates electricity remotely and then feeds that power into the grid at the same point where power from a central plant is being delivered.

Duke’s test will involve rooftops at some 850 locations in North Carolina. Not just homeowners but schools and other buildings will be involved. Public support could be strong, given that Duke plans to pay a rental fee to participants. (Every school board in America might warm to that idea.)

If Duke’s test works – and it’s still very much an “if” – just imagine the increase in business that might come the way of companies that make solar chips and panels, as well as inverter manufacturers and more. Imagine also the companies that could benefit from making the computer chips and other software that would be needed to make the power grid “smart,” essentially enabling a simultaneous two-way flow of electricity into and out of your home.

Duke’s test calls for generating 16 megawatts of electricity from those 850 locations. Think about how many rooftops there are – and how anxious people might be to rent their roofs to their local utility – and it’s easy see how, within a decade or less, not just the solar power industry but the entire electric utility industry could be radically transformed. To be sure, solar power will continue to grow, which no doubt is why Duke is conducting its test. Either Duke and other electric utilities figure out a way to keep their customers in the fold, or they risk losing them to suppliers of solar systems that promise to take homes “off the grid.”

Renewable Energy World has an excellent survey of the US wind power industry from a pair of authors at Lawrence Berkeley National Laboratory - Surpassing expectations: State of the US wind power market.

The wind power industry in the US has been growing dramatically in recent years, and the rapid pace of development has made it difficult to keep up with trends in the marketplace. Yet the need for timely, objective information on the wind industry and its progress has never been greater. As Figure 1 shows, the country added roughly 5300 MW of new wind power capacity in 2007 – more than twice the previous record set in 2006 – bringing the cumulative total to more than 16,900 MW. This growth translates into roughly US$9 billion (real 2007 dollars) invested in wind project installation in 2007. No other country, in any single year, has added the volume of wind capacity that was added to the US electrical grid in 2007. ...

However, within the US some individual states are beginning to realize relatively high levels of wind penetration. Minnesota and Iowa lead the nation in terms of estimated wind power as a percentage of total in-state generation, at 7.5% each (Table 2, above). Four additional states – Colorado, South Dakota, Oregon, and New Mexico – surpass the 4% mark by this metric. Though not shown in Table 2, some individual utilities are achieving even higher levels of wind penetration – greater than 10% in some cases – into their individual electricity distribution systems.

Wind has also made great strides in terms of becoming a significant contributor to the nation’s resource mix. For the third consecutive year, wind power was the second-largest new resource added to the US electrical grid in terms of nameplate capacity, behind the 7500 MW of new natural gas plants, but ahead of the 1400 MW of new coal. New wind plants contributed roughly 35% of the new nameplate capacity added to the US electrical grid in 2007, compared to 19% in 2006, 12% in 2005, and less than 4% from 2000 through 2004, as shown in Figure 4, above. Based on the amount of wind power capacity currently working its way through eleven of the major transmission interconnection queues across the country, this trend is expected to continue (see Figure 5). At the end of 2007, there were 225 GW of wind power capacity within these interconnection queues – more than 13 times the installed wind capacity in the US. Moreover, this wind capacity represents roughly half of all generating capacity within these queues at that time, and is twice as much capacity as the next largest resource in these queues (natural gas). Although many of these planned projects are still early in the development process, and a large number are unlikely to achieve commercial operations any time soon (if ever), the 225 GW figure is nevertheless astounding, and indicates the increasingly important role that wind may play in the nation’s power mix. ...

Though transmission availability, siting and permitting conflicts, and other barriers remain, 2008 is, by all accounts, expected to be another banner year for the US wind industry. Another year of capacity growth in excess of 5 GW appears to be in the offing, and past installation records may again fall as developers rush to complete projects prior to the scheduled year-end expiration of the PTC. Local manufacturing of turbines and components is also anticipated to continue to grow, as previously announced manufacturing facilities come on line and existing facilities reach capacity and expand.

All of this is likely to occur despite the fact that wind power pricing is projected to continue its upwards climb in the near term, as increases in turbine prices make their way through to wind power purchasers. Supporting continued market expansion, despite unfavourable wind pricing trends, are the rising costs of fossil generation, the mounting possibility of carbon regulation, and the growing chorus of states interested in encouraging wind power through policy measures.

If the PTC is not extended, however, 2009 is likely to be a difficult year of industry retrenchment. The drivers noted above should be able to underpin some wind capacity additions even in the absence of the PTC, and some developers may continue to build under the assumption that the PTC will be extended and apply retroactively. Nonetheless, most developers are expected to ‘wait it out,’ restarting construction activity only once the fate of the PTC is clear.

Home scale wind power (micro-wind power) doesn't seem to be a particularly economical way of generating power, but for those in windy or off-grid areas (or those determined to be self-sufficient / energy independent) it is an interesting option. EcoGeek has a roundup of some of the products available - Want Your Own Wind Turbine? Here's Our Guide.

gigawatts of wind power are being proposed all over the globe, and new wind farms are regularly being proposed that outstrip one another to be the largest in their respective locations, or in the world. At the far end of the scale, the largest size wind turbines have a rotor diameter of 126 meters (413 feet), and are estimated to be capable of producing 20,000,000 kilowatt hours of electricity annually (enough to power as many as 5000 European homes). Since the power generated by a turbine increases exponentially as it gets larger, new turbines will continue to grow in size.

But small-scale turbines are perhaps a more exciting realm of development. The standard, propeller-style turbine is well established, and there are many suppliers for this kind of generator in a range of sizes. In 2007, Home Power Magazine had a roundup of more than a dozen small wind turbines ranging from 8 feet to 56 feet in diameter (the latter of which is far larger than even a large, inefficient household would need for their power requirements).

Besides the propeller turbine, there are a number of other options that are being developed and coming into availability that offer different features and performance that can make them appealing alternatives for some.

The Independent has a look at energy options for Britain - decentralised renewable energy generation vs centralised nuclear power - Greener power to the people: the real energy alternative?.

Ministers could avoid building nuclear reactors by encouraging families to fit solar panels and other renewable energy equipment to their homes, a startling official report concludes. The government-backed report, to be published tomorrow, says that, with changed policies, the number of British homes producing their own clean energy could multiply to one million – about one in every three – within 12 years.

These would produce enough power to replace five large nuclear power stations, tellingly at about the same time as the first of the much-touted new generation of reactors is likely to come on stream. And, it adds, by 2030, such "microgeneration" would save the same amount of emissions of carbon dioxide – the main cause of global warming – as taking all Britain's lorries and buses off the road.

The conclusions of the report – approved and partly financed by the Department of Business, Enterprise and Regulatory Reform (DBERR) – sharply contrast with initiatives hurriedly launched by Gordon Brown last week in reaction to the lorry drivers' fuel-price protests.

In his most pro-nuclear announcement to date, the Prime Minister indicated that he wanted greatly to increase the number of atomic power stations to be built in Britain. And he met oil executives in Scotland to urge them to pump more of the black gold from the North Sea's fast-declining fields – even though his own energy minister, Malcolm Wicks, admitted that this would do nothing to reduce the price of fuel.

Even more embarrassingly for the embattled Mr Brown, the report closely mirrors policies announced by the Conservative Party six months ago to start "a decentralised energy revolution" by "enabling every small business, every local school, every local hospital, and every household in the country to generate electricity".

Yesterday Peter Ainsworth, the shadow Environment Secretary, said: "We have found that there are huge economic, social and environmental gains to be made by doing this. It is good that, at last, part of the Government seems belatedly to be coming to the same conclusion, and we can only hope that the Prime Minister can rise above his panic-stricken clutching at old technologies and grasp the opportunities microgeneration offers for clean and more secure energy supplies."