
Wind and solar power are disrupting electricity systems - edward
http://www.economist.com/news/leaders/21717371-thats-no-reason-governments-stop-supporting-them-wind-and-solar-power-are-disrupting
======
jartelt
I can't help but believe that we would be better off (at least in the US) if
utilities had embraced renewables 10 years ago. Rather than fight solar and
wind, utilities could have played the role of solar installer/integrator and
could have encouraged renewable installation and made appropriate investments
in infrastructure to support their variability. Instead, many US utilities
chose to fight back against renewables slow their adoption. Now the utilities
complain that the grid cannot handle the variability and complain that their
job of balancing the grid is getting harder. It's just unfortunate that many
public utilities in the US chose to fight innovation rather using the benefits
of their monopoly to embrace the change and try to profit from it and provide
better service.

~~~
dragontamer
> appropriate investments in infrastructure to support their variability

Erm, why didn't __you __make appropriate investments in infrastructure?

Because it cost money. Why should you expect someone else to make an
unprofitable venture if you yourself were unwilling to do so?

In any case, the variability in solar and wind is known. To keep the same
level of electrical service will require a HUGE increase in energy storage.

The thing about coal / gas / even nuclear to some degree... you can "turn it
off" if there's too much power being pumped into the grid... and you can "turn
it back on" if there isn't enough power. That's why natural gas "Peaker
Plants" continue to be built, despite the fact that they're much more
expensive than Solar or Wind.

The enemy of "Peaker Plants" is cheap energy storage. Coal and Nuclear power
is more efficient if you just keep it on 100% of the time and then store the
energy anyway.

And believe me, utility companies HAVE been building cheap energy storage.
They're called Pumped Hydro for the most part. Other solutions for cheap
energy storage simply didn't exist until recently. Lithium Batteries are
expensive and don't provide much storage believe it or not... not on the
Gigawatt scale needed to last more than a few minutes.

We will likely continue to use "Peaker plants" for the near term, at least
until the energy storage issue is solved with something much much cheaper.

~~~
logfromblammo
I haven't invested in the infrastructure because electricity is not my
business.

If it were my business, I would still be at the mercy of giant incumbent
competitors, and any dollar I spent on common infrastructure would benefit
them more than me. They could then use that advantage to slowly force me out
of the business.

The largest firms have the most to gain from improvements in the industry's
infrastructure. So the onus is largely upon them to make such improvements. In
many cases, there is only one firm with significant pricing power--the natural
monopolist--and everyone else in their territory has to dance to their tune.
They're the only ones capable of improving infrastructure, aside from a
government.

The pricing power is the only way for a firm to afford projects that are
neither profitable nor a competitive advantage. The only point for everyone
else in the market to having firms with pricing power is so they can undertake
those projects that benefit everyone in the long run.

If you're not going to improve the industry, there is no advantage for
everyone else to allow you to remain as the natural monopolist. The logical
thing for them to do is to seize your capital by force and transfer it to
someone who might do more with it (but might do less).

A natural monopoly does not mean the same firm will always have pricing power,
but that the modal situation is that only one firm has it at a time. When
natural monopolists are protected as _de jure_ protected monopolies, yes it
does prevent redundant investment, but it also puts no competitive pressure on
the monopolist to _remain_ the monopolist.

I would guess that electric utilities would make wiser decisions about
infrastructure if they were less protected from competition. That introduces
the risk that a particular market might not be adequately served in an
economic dominance war that wipes out both incumbent and challenger, but I
think those crises would be very temporary, and would likely invoke a
government intervention less costly than protecting the monopoly in the first
place.

~~~
dragontamer
We're talking about energy storage, are we not?

If you think that energy storage "makes money", build a small 10MW battery
plant to supply a neighborhood or two. Buy electricity when its cheap, sell it
when its expensive.

There's no "common infrastructure building" going on here. You own the
batteries, and maybe you have to pay the big utility for some power-poles and
comply with some basic regulations.

The fact of the matter is: these sorts of infrastructure issues are being
solved by the free market all the time. Frequency regulation, long-term energy
storage (which really is just ~hours) and such are commonly subcontracted out
to smaller companies who own small plants from the big utility companies.

\-------

> I haven't invested in the infrastructure because electricity is not my
> business.

Then do the next best thing. Buy stock in companies that are doing grid-scale
energy storage across this country.

~~~
bmelton
Sell it to whom? Your neighbors? In a lot of municipalities, there's no such
thing as "selling it when it's expensive" because the only customer is the
utility, and the utility is only paying wholesale rate from solar /
alternative energy customers.

It may be an option in some places, but at present, I think you'd lose money
under your current plan in a lot of places, and are unlikely to have neighbor-
customers in many of the remainders.

------
afpx
If you all are interested in the 'deregulated' energy markets in the US, you
may want to check out PJM. Via PJM (and similar regional transmission
organizations), you can trade energy and even hook in your own generators and
storage.

Interestingly, renewables still comprise a tiny fraction of generation. I'm
not sure if this is because of regulatory requirements, lack of reliable
storage, or because of cost (nuclear and fossils are pretty cheap and reliable
producers).

Generally, in the US, distribution companies (i.e. electric utilities)
purchase energy from the transmission companies. Many don't generate
electricity themselves. Actually, most distribution companies are co-ops.
There are still regulation via FERC, and they stay active because of high-
impact capacity transmission failures in the past.

But, it's all cool stuff. And, for those interested in machine learning, you
can download a lot (or all) of the data and make a lot of money (I used to
work in a pseudo-quant like capacity in that space).

[http://www.pjm.com/markets-and-operations.aspx](http://www.pjm.com/markets-
and-operations.aspx)

[https://learn.pjm.com/three-priorities/buying-and-selling-
en...](https://learn.pjm.com/three-priorities/buying-and-selling-
energy/capacity-markets.aspx)

[http://pjm.com/markets-and-operations/energy/real-
time/histo...](http://pjm.com/markets-and-operations/energy/real-
time/historical-bid-data/unit-bid.aspx)

~~~
imgabe
How do you "make a lot of money" in this? Is there some publicly available
market that anyone can trade in?

~~~
shitgoose
liquidity is not inspiring:

[http://futures.tradingcharts.com/marketquotes/JM.html#footer...](http://futures.tradingcharts.com/marketquotes/JM.html#footerclose)

------
rodionos
Wind energy production is remarkably volatile throughout the year, especially
if wind farms are co-located in the same pathways as is the case in Denmark.

[https://apps.axibase.com/chartlab/06c5e0b2/2/#fullscreen](https://apps.axibase.com/chartlab/06c5e0b2/2/#fullscreen)

The difference between min and max production for wind is over 100x throughout
the year and inter-quartile range is 14 and 52GWh per day.

So you can't really rely on renewables in this type of configuration just yet.
Until storage 'problem' is addressed, possible solutions are:

1\. Maintain traditional power sources as baseline providers. The problem is
figuring out what is the right baseline.

2\. Have interconnects with suppliers of non-correlated sources such as
Norway's hydropower plants.

3\. Built out nuclear.

------
scblock
This is not a US focused article, but I want to provide some clarifications
specific to the US:

While the incremental operating cost of wind and solar plants (and the related
staffing levels for a given plant size) are much lower than conventional
thermal plants because of no fuel cost, they are far from zero or "free". This
is a misconception that ignores the need for staffing and maintenance
services. Over the 20 year design life of a typical wind plant, for example,
operating costs are expected to roughly equal the initial investment in total.

Additionally, the subsidies most used in the US for wind and solar development
are the Production and Investment Tax Credits (PTC and ITC). Tax credits for
new projects will be phased out completely in the next approximately 5-7 years
(the phase out plan is of fixed duration, but the tax accounting rules allow
projects to claim credits ahead of project completion as long as certain
conditions are met, such as start of construction of outlay of sufficient
capital to show commitment to project completion). The US renewable industry
does not have a general expectation of tax subsidy renewal, and developers,
utilities, and suppliers are all looking to be able to build economic projects
without tax incentives. The reality is that costs have come down and
performance has increased to the point where these renewable resources are
largely able to compete with conventional generation on price already.

Also, the need for transmission line development is apparent, but it's mostly
about bringing transmission to the resources rather than needing to rebuild
existing lines. That means large scale transmission projects to connect low
population areas with high wind and solar resource to population centers.
Existing lines and substations do often need upgrades to accommodate new
generation, but those are determined based on study and the costs are often
(though not always) borne by the project or group of projects requiring the
upgrades.

As others have highlighted, large scale energy storage technology is going to
be key to reducing the need for peaking power plants to cover load gaps
related to these intermittent resources.

Editorially: We are fools if we think we can keep burning things we dig out of
the ground forever. The solar energy needed to power our lives is already
here, and it's on us to learn to harvest and use it effectively. And by all
means continue to work on clean nuclear power but at the moment it is not cost
competitive.

~~~
reacweb
IMHO, we should have increase nuclear power 20 years ago to avoid the current
carbon pollution. Now, it is too late for nuclear. The future is solar power
and it is quickly coming. The amount of available solar energy is enormous. In
a further future, we may also have solar plants in orbit that would reduce
weather problems.

~~~
yuhong
I hope that methane cracking will also help.

------
ansible
Yes, which is why we need to (as a civilization) put more effort into grid-
scale energy storage.

My leading candidate for that is some kind of flow battery. There have
recently been some announcements about a better and more stable electrolyte
that is also non-toxic and non-corrosive. But as always, it might be five
years (or never) before that gets commercialized.

~~~
the8472
We'll need a lot more storage and overcapacity than people think.

For example yesterday germany had a renewable fraction of around 50%
throughout the whole day. Yay? Nope. During january there was a whole week
where it was in the 0-10% range during the night and 5-20% during daytime.
That means we don't just have to smooth out daily variability but on the span
of multiple weeks.

Of course that doesn't mean we need to store all of that in batteries or that
we need to keep a whole shadow infrastructure of fossil/nuclear plants around.
With enough overcapacity from renewables we could also produce hydrogen and
store that for example and run it through fuel cells or gas plants when
needed.

But that still means that a bunch of smartmeters won't fix the issue, we'll
need real infrastructure to handle that variability.

~~~
theandrewbailey
> With enough overcapacity from renewables we could also produce hydrogen and
> store that for example and run it through fuel cells or gas plants when
> needed.

Aren't lithium-ion batteries more efficient than hydrogen fuel cells?

~~~
Filligree
More efficient, but also more expensive and harder to scale.

To expand battery capacity you need to dig up lithium and half a dozen other
rare elements, deal with the toxic byproducts (or dump them in a lake),
manufacture batteries, control circuits and run ongoing maintenance.

To expand hydrogen capacity, you need more pressure vessels. These can be made
of steel or aluminum, two of the cheapest materials in existence, and with
practically zero pollution. Ongoing maintenance amounts to checking for rust
and occasionally replacing valves, so it scales far better.

Hydrogen has serious downsides, but there's definitely a case to be made.

~~~
lllllll
I'd love some more info on Hydrogen storage, in theory and in real projects.
If you have sources I'd much appreciate them.

~~~
Filligree
Nah, what I already wrote already covers about everything I feel sure about,
and half of it is just common sense. Shouldn't be too hard to find better
sources, though.

------
choward
Sorry for being that guy, but I'm getting really sick of the word "disrupt".

~~~
pYQAJ6Zm
It’s a red flag. It’s useful.

~~~
choward
Good point.

------
booleanbetrayal
I think the more interesting story regarding disruption is the story about how
dominant energy players will no longer be able to influence foreign affairs
due to their net exporter status. If you are looking to de-hinge yourself from
overbearing geopolitical influences, standalone energy production is
incredibly appealing.

------
dimitar
So this magazine offers the idea of removing fixed pricing for electricity,
but is electricity demand that elastic? Perhaps in some markets, so this might
be a good option; but should not be made mandatory.

A lot of electricity demand is formed by weather which makes it inelastic in
the short-run - you will still pay your bill if you are cold regardless of
today's price. In the longer run (next season), you'll just make people give
up using electric heating - for natural gas, wood and coal, depending on the
region.

Consider another policy - a carbon tax, which is a very popular tool among
economists or the similar fuel excise taxes. They will lower profits for
plants that solve the intermittency issue with fossil fuels, creating an
advantage for energy storage.

 _To keep power flowing, the system relies on conventional power plants, such
as coal, gas or nuclear, to kick in when renewables falter._ this is also
partially incorrect - nuclear power plants usually are used to generate a
fixed amount of electricity, only France I think which is a primarily nuclear
in energy generation does it. In fact hydro-electric plants are commonly used
for power balancing, with natural gas power plants in second place.

------
iamed2
The last paragraph says:

> _The bigger task is to redesign power markets to reflect the new need for
> flexible supply and demand. They should adjust prices more frequently, to
> reflect the fluctuations of the weather. At times of extreme scarcity, a
> high fixed price could kick in to prevent blackouts. Markets should reward
> those willing to use less electricity to balance the grid, just as they
> reward those who generate more of it. Bills could be structured to be higher
> or lower depending how strongly a customer wanted guaranteed power all the
> time—a bit like an insurance policy._

Most electricity in the US is distributed across wholesale electricity markets
with nodal pricing, which have all of these mechanisms where
distributors/utilities are the customers. The author appears to suggest moving
pricing out to end users, which is possible even just on the utilities side,
without having to restructure power markets. Restructuring power markets to
take into account individual end user behaviour rather than aggregate demand
would be a gargantuan effort--right now the California Independent System
Operator's (CAISO) optimization process takes into account a few thousand
nodal prices, and there are tens of millions of households in California.
Having utilities introduce demand response and smart metering to approximate
their costs would be a much simpler implementation.

It is possible (after clearing many hurdles) to participate in the electricity
markets in order to identify inefficiencies around renewables and incentivize
their use by providing better price signals to planning markets, but this is
very challenging and most utilities and power trading groups/companies are not
interested in that angle. It is, however, one of the things we're doing at
Invenia ( [https://invenia.ca/](https://invenia.ca/)).

~~~
hobolord
I think the author is suggesting to give the end user the option to turn
on/off power in an attempt to do peak shaving. If spot prices are predicted to
go up at a certain time due to grid constraints, then you can inform the user
and if they want, they can turn off their air conditioning/washer/pool heater,
etc. There would also be the monetary incentive, saving money since the prices
are high. [https://www.bidgely.com/](https://www.bidgely.com/) offers
something similar to that, but I'm not totally sure.

This also depends on the pricing models allowed within the retailing side.

------
wbillingsley
It strikes me that this is very similar to the NBN (broadband network)
problem. There is a widely deployed network of old technology that is no
longer worth investing in (copper in the NBN case / coal plants) and newer
technology (solar + storage) that is still a little pricey (storage) and not
widely enough deployed.

Which means you need to manage a transition so it's not too painful.

A first random guess -

One way might be to allow a few coal plants to go bust, and enact "load
shedding" (turning off areas of the grid during times of low demand). Within a
year or so, enough places will have batteries that you're load shedding less
often.

If the government purchases the coal plants when they go bust (at a steep
discount), they can then stagger the shutdowns enough that load-shedding is
controlled.

But it doesn't seem sensible to force it to be economic to run the coal plant
full-time. Surely that just drags out the transition, and suppresses the
demand for storage that we're hoping will be the solution?

------
corradio
The easiest fix to the intermittency problem is to use electricity when
renewables produce [1]. That would reduce the need for batteries in the
beginning.

[1] [http://www.co2signal.com](http://www.co2signal.com)

------
philipkglass
The rise of renewables at the expense of fossil is also a tale of
technological unemployment across mining, power, and even _transportation_
sectors.

Coal plants, particularly the older ones most at risk of closure in the US,
require significantly more labor per MWh generated than cleaner sources.

Here's a recently announced coal plant closure:
[http://www.cortezjournal.com/article/20161001/News05/1610099...](http://www.cortezjournal.com/article/20161001/News05/161009993/0/FRONTPAGE/Coal-
fired-plant%E2%80%99s-closing-sends-shockwaves-in-Nucla)

...

 _the local job options could be pretty limited in far-western Montrose County
once two of its major employers close their doors, eliminating what are
currently 55 jobs at the plant and 28 at the mine._

...

According to the EIA, the Nucla plant generated 416,150 MWh in 2015 for an
average annual power of 47.5 megawatts:
[http://www.eia.gov/electricity/data/browser/#/plant/527](http://www.eia.gov/electricity/data/browser/#/plant/527)
That's an abysmal productivity per employee (or a fabulous job source,
depending on your perspective): 0.86 real annualized megawatts per employee at
the plant ; 0.57 megawatts per employee if you include the mining jobs.

A well-sited utility scale solar farm like Desert Sunlight can produce an
average annualized power of 147 megawatts with just 15 full time employees,
for a ratio of 9.8 megawatts per plant employee.

The construction of renewable energy systems still consumes fossil fuels as
inputs to manufacturing concrete, glass, metals, plastics, and silicon.
Construction machinery likewise still runs on fossils. But the lifetime-
amortized dependence on extractive industries for a MWh of renewable energy is
much lower than for fossil energy.

\---

In the recent past, coal made up 30% of all dry bulk shipping:
[http://marketrealist.com/2014/01/key-players-involved-
global...](http://marketrealist.com/2014/01/key-players-involved-global-
seaborne-coal-trade/)

In the USA, coal is the single greatest railroad transport category by
tonnage. From 2008-2012, when volumes were considerably higher, coal was an
even greater #1 by tonnage and was also the #1 source of railroad revenue:

[https://www.aar.org/BackgroundPapers/Railroads%20and%20Coal....](https://www.aar.org/BackgroundPapers/Railroads%20and%20Coal.pdf)

There's no commodity that has enough volume to make up for the decline of coal
transportation. There's going to be "stranded assets" left in railroads and
shipping along with fossil extraction.

And, coming with the rise of electric vehicles, trucking jobs on the chopping
block too. Hazmat certified tanker truck drivers -- the ones who drive tankers
carrying flammable fluids -- are highly paid, well above trucking jobs in
general:

[http://www.truckdriverssalary.com/tanker-trucking-
salary/](http://www.truckdriverssalary.com/tanker-trucking-salary/)

[https://qz.com/24388/how-to-earn-170000-a-year-driving-a-
tru...](https://qz.com/24388/how-to-earn-170000-a-year-driving-a-truck-
warning-its-messy/)

Their ranks will dwindle if/when electric vehicles suppress demand for
refueling with fluid fuels. Even if self-driving trucks never pan out.

------
jlebrech
what about a gravity battery? and it can serve as a space catapult sometimes
too

~~~
rusk
You mean like this? [https://en.wikipedia.org/wiki/Pumped-
storage_hydroelectricit...](https://en.wikipedia.org/wiki/Pumped-
storage_hydroelectricity)

~~~
marcosdumay
Probably this:
[https://en.wikipedia.org/wiki/Space_fountain](https://en.wikipedia.org/wiki/Space_fountain)

~~~
rusk
That is very cool, thanks. I don't think it could be used for energy storage
though.

 _Its major disadvantages come about from the fact that it is an extremely-
high-energy active structure. It requires constant power input to make up
energy losses and remain erect._

~~~
marcosdumay
Wikipedia used to have a much more elaborated explanation on them.

A superconductive structure with evacuated rails wouldn't need energy to stay
in place (always in theory - one would certainly need something active). An
electromagnetic one will use a lot of power, but still much less than the
amount stored.

Sill, it's not something simple that one could deploy today.

------
JoeAltmaier
Better title: "Green power subsidies are disruption the power economy".
Subsidies are good for wind and solar, but corrosive to existing
infrastructure, which are being squeezed to stay in business. Maybe some more
measured plan would be good. Instead of blind enthusiasm.

~~~
6d6b73
And nuclear, oil, coal were never subsidized? It's not like most of these huge
power plants were built with gov money ,right? It's not like we spent billions
to protect our interests in places that have abundance of oil, but lack of
stability. It's not like we subsidize coal industry, farming and other part of
the economy, right?

~~~
dmix
Capitalism is responsible for fossil fuels and climate change but only kept
alive by greed.

Government is responsible for renewable energy and saving the planet but only
kept alive by subsidies.

That's the reductionist narrative that you find everywhere but largely misses
the bigger picture. You don't have to dig very deep to find counter points.

~~~
6d6b73
While I would prefer that our society didn't have to depend on fossil fuels,
without them our advanced society would not be possible. Fossil fuels are bad
but they were/are necessary. All we need to do know is to just recognize that
they will not be needed in the future, and keep investing into renewables.

~~~
dmix
> All we need to do know is to just recognize that they will not be needed in
> the future, and keep investing into renewables.

They may soon not be needed in western society - which can afford the capital
investments into renewable tech and the subsidies to push rates to competitive
markets rates.

But all of those oil wells and mines still exist. They will just find a market
in developing countries such as Asia and Africa. Africa is going to be where
the greatest amount of population growth will be for the next few decades.
Combine that will a flood of cheap oil and it will likely partially offset the
benefits of renewable energy in the short term.

Eventually renewable tech will be so cheap that it will no longer make
economic sense to use oil/coal but I don't think that will happen globally as
fast as people hope.

~~~
6d6b73
>But all of those oil wells and mines still exist. They will just find a
market in developing countries such as Asia and Africa.

I have to disagree. Consider this - when countries in central europe, after
the fall of Berlin Wall, began to invest into IT and Communication
infrastructure they usually invested into the new technology, simply because
that made more economic sense. They did not have to go through
analog->digital, instead they jumped right into the newest tech.

Developing countries in Africa and Asia will be able to skip right into
renewable and save money by not having to build new power lines, new power
plants, transfer stations etc. Renewables will grow much faster than most
people anticipate, and since the demand for fossil fuels will drop, their
price will grow, which in turn will turn renewable into even better
investment.

~~~
dmix
True, that might be the case as power plants and infrastructure are expensive.
But there's also existing infrastructure and there is a lot of industry
already in place supporting fossil fuels, such as equipment makers,
manufacturers, and fuel suppliers.

These operations won't necessarily just go out of business or just become
renewable energy firms, they will likely drop prices and sell to other
developing markets.

Renewable energy is largely defined by high upfront capital costs but long
term savings (solar panels, wind turbines). This is the primary barrier that I
see in poorer countries. The cost of fossil fuels is more distributed over
time as you buy cheap engines and pay more over time for the fuel.

Again this is the short term side effects. Eventually it will shift to green
tech as there will also be social pressures, not just economic ones. It will
also be a positive benefit as prices drop and helps develop industry - even if
their are climate costs.

