Distributed energy has often been seen as a more expensive alternative to utility-scale power plants, but new modeling reveals that it is actually a vital complement. (If you don't want to read, you can listen!)
Another excellent article! I added 15 panels to my home in 2020. Glad it will benefit the community more than I knew. Hopefully, PG&E will recognize our contributions in the years ahead.
I don’t follow how DERs serve as a knob that operators can turn to reduce demand. Does that assume some degree of centralized control over distributed resources, such as consumers allowing operators to control when batteries are discharged to the grid? Or if not, how does the knob work?
I was pretty confused by this writeup because it seems to leave out the comparison that's most informative, the value of a dollar spent on centralized vs decentralized storage/generation.
But the chart on p. 23 here[0] makes it a little clearer: the choice isn't between no storage vs distributed storage but about the optimal mix. The chart shows says their CE-DER solution is about a 50/50 mix of centralized and decentralized storage, and a relatively small fraction of distributed generation. So it's really all about cutting the peaks offer transmission load.
I'm curious what the model would say about distributed storage without generation. Installing a residential battery along is a lot simpler than battery+solar. And due to space constraints, there are a more places to put storage than panels; e.g you could imagine neighborhood, or city-level storage that gets most of the economies of scale.
I understand how home batteries can make a difference. The case for distributed demand management tools is a good one. But I can't see any virtues to distributed supply, unless they have something to do with transmission losses. A solar watt is a solar watt, and the cheapest solar watts are the bestest solar watts.
Thanks for covering VCE's work and this incredibly important topic. I've never bought the argument about DERs being "more expensive than utility-scale." As John Farrell likes to say, they compete in entirely different markets. If a local business puts solar on its roof, all it cares about is whether it is cheaper than buying electricity from the grid (hint: it usually is). That local business could care less what it costs to build a utility-scale solar project because the business is very unlikely to ever see any of those cost savings directly.
Nearly all the conventional thinking on DERs you reference (and do a wonderful job dispelling) is out of date and does not reflect the reality of where DERs will force the market to go.
I've spent the last few years on a book that takes a very deep dive into this (it'll come out in October). It covers the big-scale vs small-scale generation but looks at it through the lens of opportunities for innovators and entrepreneurs... more of an outside-in view.
The VCE work is top-notch. Thank you for doing your usual excellent job of raising the knowledge tide for everyone. Thank you.
I would love to see a follow-up to this. Maybe it's the backward state I live in, but I've seen almost no momentum around rooftop solar. A handful of bespoke solar farms, but that's about it.
My wife & I are very satisfied with out roof-top system. We're grid-tied & net metered with Appalachian Power (in Va.). Since April of 2021 we have paid only $8:39 per month for our connection. Our home is 100% electric.
It.. is... about.... time! I've been hounding our PUC here in Oregon, trying to get them to think seriously about how the advent of digitally moderated energy storage, systems that will also provide important ancillary services, will change the way power flows and the value proposition for utilities. Needless to say, I've not gotten any answers since no one had worked this out until now.
By 2027 or so, when Battery Electric Vehicle (BEV) sales, including fleet & used vehicles, reach about 25% of the California market, owners of leased commercial property like large apartment buildings, neighborhood shopping centers & business parks will finally begin to experience market demand from tenants to install vehicle-to-grid (V2G) chargers with integrated rooftop or parking lot canopy solar & stationary battery storage. These relatively high power demand properties will become the hubs of 1 to 2 mile radius micro-grids networked across our typical CA suburban neighborhoods. Electrical consumers, including lots of hard working lower income folks, will become “Produ-sumers” instead of just consumers of power, and reap grid stabilizing service fees from their connected BEV vehicles, at home &/or work. That’s how we get grid reliability & price stability with social equity to replace autocratic petro-states and fossil fuel & utility company monopolies. Think about how much reducing & stabilizing utility bills and transportation costs will benefit young families & everyone living on modest incomes. For a peek into the direction we’re headed, see: https://www.pearlx.com/ and
Right on! Tesla's autobidder software and mega battery packs is a close cousin to this topic. VW, Tesla (not enabled but installed) and Ford have the electronics to allow EV to buy low and sell high but this is not permitted by government rules for utilities. Perhaps because there are too few EV's. The added electronics to enable this plus central control software (coordinating all the factors discussed) is proven. Let's see 100 million EVs X say 25 Kwh /EV-day (so 1/3 of available storage) X about $0.05 /kWh difference between low and high cost (about 1/2 for utility and 1/2 for EV) X 365 days = a big number. Maybe start in about 5 years. For sure home solar, battery and EV's plus control software will be significant $$$ savings.
I'm still skeptical although I'll read the report and look for reviews. In the last decade solar costs halved three times. They went from 10 cents/kwh to 5 cents to 2.5 cents to 1.5 cents, a decline of 80+%. 87.5% is 3 halves. That's for the wholesale cost of electricity generated from large-scale solar arrays. Analysts with good track records (there is only 1 -- Tony Seba) predict the same for this decade. By 2030 solar will be in the neighborhood of .25 cents/kwh. Again, that is for large-scale arrays, not rooftop. In other words the generation cost of electricity will be virtually free. Forget 95% by 2050 -- it doesn't make economic or climate sense (or health sense as you so refreshingly point out -- Mark Z. Jacobson has been highlighting it for years). I believe the main push must focus on utility-scale solar which does not mean it all needs to go on the transmission grid. Most rural areas can generate all their own energy and supplement it with storage, also on a steep downward cost trajectory. Demand management is not a big factor in this cost analysis, but it will be in organizing vehicle charging and some industrial practices. It's another powerful tool. DERs make sense from the standpoint of resilience. I'm a little depressed by your comment about needing gas -- we need to get rid of it asap. From the grid above all but also from building heating and cooling. I'm fairly certain about the cost benefits of grid-scale solar, but that comes in second in my opinion to speed of deployment. That's where grid-scale solar truly shines. It's fast and will get faster if we ever get over the hump in government. And, we need fast deployment above because of the scale of the transition. That should be the focus and throwing panels on rooftops seems to me to be a waste of time and a distraction from the focus we need to get this all important job done. In conclusion, I respect Clack and his team and David is one of my heroes, but I'm still strongly of the opinion that we should be focusing on the main component of the task at hand. One final comment, IOUs are not interested in cheap energy. Their business model -- 10% guaranteed profits for investors and high salaries for execs -- incentivizes high costs. That's why they are dragging their feet. If ever there was a time for truly public utilities, it is now.
"The more DERs you put in place, the more centralized renewables you can put on the system. DERs are a utility-scale renewable accelerant...the practical implication is that going all out on DERs is to everyone’s benefit, up and down the electricity supply chain, from utilities to consumers."
The assumption, of course, is that renewables are "to everyone's benefit" – that they're the best, most affordable, fastest path to decarbonization - despite any evidence to support it.
Currently only 8 countries in the world have grids powered by >50% renewable energy, and all have abundant natural resources unavailable elsewhere (geothermal and/or hydroelectric). Germany, with the highest percentage of wind and solar, has the most expensive electricity of any non-island country in the world.
Why is it that pro-renewables advocates, those who want to build more transmission, abandon economies of scale, and spend more money, are always among the the most privileged residents of the planet?
For everyone else, VCE's WIS:dom model is a non-starter.
Another excellent article! I added 15 panels to my home in 2020. Glad it will benefit the community more than I knew. Hopefully, PG&E will recognize our contributions in the years ahead.
I don’t follow how DERs serve as a knob that operators can turn to reduce demand. Does that assume some degree of centralized control over distributed resources, such as consumers allowing operators to control when batteries are discharged to the grid? Or if not, how does the knob work?
I was pretty confused by this writeup because it seems to leave out the comparison that's most informative, the value of a dollar spent on centralized vs decentralized storage/generation.
But the chart on p. 23 here[0] makes it a little clearer: the choice isn't between no storage vs distributed storage but about the optimal mix. The chart shows says their CE-DER solution is about a 50/50 mix of centralized and decentralized storage, and a relatively small fraction of distributed generation. So it's really all about cutting the peaks offer transmission load.
I'm curious what the model would say about distributed storage without generation. Installing a residential battery along is a lot simpler than battery+solar. And due to space constraints, there are a more places to put storage than panels; e.g you could imagine neighborhood, or city-level storage that gets most of the economies of scale.
[0] https://www.vibrantcleanenergy.com/wp-content/uploads/2020/12/LocalSolarRoadmap_FINAL.pdf
I understand how home batteries can make a difference. The case for distributed demand management tools is a good one. But I can't see any virtues to distributed supply, unless they have something to do with transmission losses. A solar watt is a solar watt, and the cheapest solar watts are the bestest solar watts.
Thanks for covering VCE's work and this incredibly important topic. I've never bought the argument about DERs being "more expensive than utility-scale." As John Farrell likes to say, they compete in entirely different markets. If a local business puts solar on its roof, all it cares about is whether it is cheaper than buying electricity from the grid (hint: it usually is). That local business could care less what it costs to build a utility-scale solar project because the business is very unlikely to ever see any of those cost savings directly.
Nearly all the conventional thinking on DERs you reference (and do a wonderful job dispelling) is out of date and does not reflect the reality of where DERs will force the market to go.
I've spent the last few years on a book that takes a very deep dive into this (it'll come out in October). It covers the big-scale vs small-scale generation but looks at it through the lens of opportunities for innovators and entrepreneurs... more of an outside-in view.
The VCE work is top-notch. Thank you for doing your usual excellent job of raising the knowledge tide for everyone. Thank you.
I forwarded this thought-provoking piece to my city and county's development office.
I come back to this one when I'm feeling down about the transition to renewables.
I would love to see a follow-up to this. Maybe it's the backward state I live in, but I've seen almost no momentum around rooftop solar. A handful of bespoke solar farms, but that's about it.
My wife & I are very satisfied with out roof-top system. We're grid-tied & net metered with Appalachian Power (in Va.). Since April of 2021 we have paid only $8:39 per month for our connection. Our home is 100% electric.
It.. is... about.... time! I've been hounding our PUC here in Oregon, trying to get them to think seriously about how the advent of digitally moderated energy storage, systems that will also provide important ancillary services, will change the way power flows and the value proposition for utilities. Needless to say, I've not gotten any answers since no one had worked this out until now.
Thank you very much for giving this visibility.
Have you seen this recent post? Myths that Solar Owners Tell Themselves
A new post by Severin Borenstein. https://energyathaas.wordpress.com/2022/06/05/myths-that-solar-owners-tell-themselves/comment-page-2/?unapproved=87273&moderation-hash=dd2f630a1ba882f293b29d77c013be55#comment-87273. What do you think of the Energy Institute at Haas? I commented asking about VCE's model that you discuss. Has there been any serious academic work on VCE's model?
By 2027 or so, when Battery Electric Vehicle (BEV) sales, including fleet & used vehicles, reach about 25% of the California market, owners of leased commercial property like large apartment buildings, neighborhood shopping centers & business parks will finally begin to experience market demand from tenants to install vehicle-to-grid (V2G) chargers with integrated rooftop or parking lot canopy solar & stationary battery storage. These relatively high power demand properties will become the hubs of 1 to 2 mile radius micro-grids networked across our typical CA suburban neighborhoods. Electrical consumers, including lots of hard working lower income folks, will become “Produ-sumers” instead of just consumers of power, and reap grid stabilizing service fees from their connected BEV vehicles, at home &/or work. That’s how we get grid reliability & price stability with social equity to replace autocratic petro-states and fossil fuel & utility company monopolies. Think about how much reducing & stabilizing utility bills and transportation costs will benefit young families & everyone living on modest incomes. For a peek into the direction we’re headed, see: https://www.pearlx.com/ and
https://www.nrel.gov/docs/fy17osti/69017.pdf
Right on! Tesla's autobidder software and mega battery packs is a close cousin to this topic. VW, Tesla (not enabled but installed) and Ford have the electronics to allow EV to buy low and sell high but this is not permitted by government rules for utilities. Perhaps because there are too few EV's. The added electronics to enable this plus central control software (coordinating all the factors discussed) is proven. Let's see 100 million EVs X say 25 Kwh /EV-day (so 1/3 of available storage) X about $0.05 /kWh difference between low and high cost (about 1/2 for utility and 1/2 for EV) X 365 days = a big number. Maybe start in about 5 years. For sure home solar, battery and EV's plus control software will be significant $$$ savings.
I'm still skeptical although I'll read the report and look for reviews. In the last decade solar costs halved three times. They went from 10 cents/kwh to 5 cents to 2.5 cents to 1.5 cents, a decline of 80+%. 87.5% is 3 halves. That's for the wholesale cost of electricity generated from large-scale solar arrays. Analysts with good track records (there is only 1 -- Tony Seba) predict the same for this decade. By 2030 solar will be in the neighborhood of .25 cents/kwh. Again, that is for large-scale arrays, not rooftop. In other words the generation cost of electricity will be virtually free. Forget 95% by 2050 -- it doesn't make economic or climate sense (or health sense as you so refreshingly point out -- Mark Z. Jacobson has been highlighting it for years). I believe the main push must focus on utility-scale solar which does not mean it all needs to go on the transmission grid. Most rural areas can generate all their own energy and supplement it with storage, also on a steep downward cost trajectory. Demand management is not a big factor in this cost analysis, but it will be in organizing vehicle charging and some industrial practices. It's another powerful tool. DERs make sense from the standpoint of resilience. I'm a little depressed by your comment about needing gas -- we need to get rid of it asap. From the grid above all but also from building heating and cooling. I'm fairly certain about the cost benefits of grid-scale solar, but that comes in second in my opinion to speed of deployment. That's where grid-scale solar truly shines. It's fast and will get faster if we ever get over the hump in government. And, we need fast deployment above because of the scale of the transition. That should be the focus and throwing panels on rooftops seems to me to be a waste of time and a distraction from the focus we need to get this all important job done. In conclusion, I respect Clack and his team and David is one of my heroes, but I'm still strongly of the opinion that we should be focusing on the main component of the task at hand. One final comment, IOUs are not interested in cheap energy. Their business model -- 10% guaranteed profits for investors and high salaries for execs -- incentivizes high costs. That's why they are dragging their feet. If ever there was a time for truly public utilities, it is now.
"The more DERs you put in place, the more centralized renewables you can put on the system. DERs are a utility-scale renewable accelerant...the practical implication is that going all out on DERs is to everyone’s benefit, up and down the electricity supply chain, from utilities to consumers."
The assumption, of course, is that renewables are "to everyone's benefit" – that they're the best, most affordable, fastest path to decarbonization - despite any evidence to support it.
Currently only 8 countries in the world have grids powered by >50% renewable energy, and all have abundant natural resources unavailable elsewhere (geothermal and/or hydroelectric). Germany, with the highest percentage of wind and solar, has the most expensive electricity of any non-island country in the world.
Why is it that pro-renewables advocates, those who want to build more transmission, abandon economies of scale, and spend more money, are always among the the most privileged residents of the planet?
For everyone else, VCE's WIS:dom model is a non-starter.
So cool...and now I see a solution to the pressure now for the carbon capture folks. Indeed, here is a viable alternative!