The world is burning, but energy needs to think local

A violent weather event, a critical piece of infrastructure down, a population left without power for hours or even days. And then the necessary repairs to get everything back up and running as they were before.

That’s the new normal in California and elsewhere around the world. Most recently, 100,000 acres have been charred in the state’s third straight destructive wildfire season. A similar story has been repeated from the Bahamas toCanada toBritain in the past few months, and right now in Australia, as weather and climate crises have plunged homes, businesses and entire economies into blackouts and chaos.

These outages are also amplified by our outdated energy network models, where utilities distribute electricity in one direction, from a single hub to a giant, sprawling network of customers. These aging facilities are typically inefficient and reliant on fossil fuels – and when an unexpected storm or accident threatens the hub, the entire network is at risk.

Piling on to the issue, our antiquated energy networks and utilities can be the actual spark for wildfires in our bone-dry forests, and they can also help the fire spread through downed electrical wires. Californians know this story too well, and that’s why PG&E’s new policy is to preemptively shut down the grid when it becomes too risky to keep the lights on.

To help mitigate this problem and plan for a new normal of extreme weather events, our utilities and energy grids need to be cleaner, meaner and leaner. To accomplish that, they need to get more local.

Local energy means investing in the “edge” of the grid, the last few miles between the hub and end customers, towards local community microgrids – autonomous, distributed power networks that serve as primary or backup energy sources for smaller communities of users. Microgrids use renewable energy like solar, wind or hydro and to store energy in devices such as batteries. They’re capable of running independently or connecting with the wider grid to give or take power in what is becoming known as a “transactive” energy network.

Home chargers were the microgrids Tesla tycoon Elon Musk had in mind when he jumped into the fray, pitching his company’s solution: “Order Tesla Solar + Powerwall battery for 24/7 clean power & no blackouts!” Musk tweeted, offering Californians $1,000 off a Tesla system that retails for up to $35,000.

That raised some eyebrows, but Musk wasn’t wrong about the big picture. While home batteries and other flexible microgrids can be pricey to install upfront, they are among the smartest energy investments going – both for their owners and for our energy utilities, which can use them to not only enable clean energy, but also to offset expensive infrastructure costs and drive down rates.

Globally, the power and utilities industry is set to spend$20-trillion (U.S.) on large power infrastructure projects between 2016 and 2040. Utilities can spend that money on old school centralized network infrastructure, like they always have. Or they can take a good, hard look at our future climate and consider microgrid technologies that offer cleaner supply, greater efficiency and much better network resilience against catastrophic disruptions.

At a basic economic level, renewables are winning on cost. The average global cost of adding new generation based on hydroelectric, onshore wind, solar, biomass or geothermal energy is now competitive with or better than oil, gas and coal.

Battery storage has also reached a critical threshold. For example, large investments in storage technology have driven cost and performance improvements that are obviating the need for new natural gas plants.

Yet Musk’s battery powered local microgrid is only a fraction of the solution. Not everyone can afford microgrid solutions to buy resiliency. As we learned from any platform business, building individual silos of capabilities – whether they be computing power, data, or energy – is not cost efficient nor functionally superior unless they’re connected together in a network.

Meanwhile, advanced and AI-driven software analytics are now capable of managing distributed energy resources much more efficiently and inexpensively than ever before. Our own research has found that digitization can add 38 to 43 percent more distributed energy to the capacity of an existing network without the need for massive development costs of new infrastructure.

Utilities need to look at microgrids and distributed energy resources as alternatives when they rebuild after an extreme weather event, and when capital upgrades are planned. It just doesn’t make sense to continue building energy infrastructure designed for an era with a more stable climate.

Last year, former Governor Jerry Brown signed into law a microgrid bill that requires publicly owned utilities to create separate rates and tariffs for microgrids, that streamlines interconnection standards and that reduces cost barriers to development.

That’s a good start, but let’s connect them together. To prosper in this unpredictable new world, energy needs to be more local, more networked, and it needs to be more resilient.

This blog was originally published November 26, 2019 on Power Grid International.