5 ms·

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,

by jartelt 10y ago

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 10y ago
> 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.
- jartelt 10y ago
  Why didn't I make the investment? Because I am a private citizen and not a public utility... Utilities are able to rate base their investment and get a guaranteed rate of return on the investments they make. This rate base system is part of the reason why they often make costly and unnecessary investments in >$1B nuclear plants or expensive substations rather than in cheap energy efficiency measures or distributed solar. We have the technology to help mitigate renewable variability and could deploy it if we wanted to. Utilities just chose to drag their feet and not invest heavily in deploying those solutions because the wanted to keep building the same stuff they always build and get the ROI.
  - dragontamer 10y ago
    > guaranteed rate of return > We have the technology to help mitigate renewable variability and could deploy it if we wanted to. Then build a company if you think its so easy. From my view: its clear that there are risks entailed and that the technology is far too expensive for widescale deployment. But its a free country. If you really think that building a Lithium Ion energy-storage plant is free money, then build a Lithium Ion energy-storage center. There's no reason to blame other people for not seeing the world the same way as you. EDIT: If building such companies isn't in your interest, then buy stocks in those companies that are working on energy storage. Like buy stock in ABB or something. Or maybe TSLA if you really think their Lithium Ion technology really is taking over the electric grid.
    - Retric 10y ago
      You can't actually start a power company and compete with say Dominion etc, as they are legal monopolies. You can't even buy one without regulatory approval.
      - dragontamer 10y ago
        Yeah, but you can start a solar plant to provide energy to Dominion / etc. etc. https://www.dominionresources.com/library/domcom/pdfs/electric-generation/2015-solar-rfp/solar-rfp-document.pdf https://www.dominionresources.com/library/domcom/pdfs/electr... Or you can invest into companies that compete against Dominion / etc. etc. that focus more on renewables.
- logfromblammo 10y ago
  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 10y ago
    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.
- usrusr 10y ago
  Gas peaker plants are storage. Well, half of it anyways. Utilities here in Germany are quietly (because that kind of business works best when not everybody is doing it) ramping up electricity to hydrogen converters everywhere. But not for the 1990ies vision of a full "hydrogen economy" complete with fuel cell cars that don't work and whatnot. They just use them to convert cheap (sometime even negative cost, hence the desire to not inspire too much competition) electricity at peak supply times to hydrogen that they push into the existing gas grid that has a huge storage capacity by itself (think months of national demand). That network is currently carrying mostly natural gas, but it used to carry much higher fractions of hydrogen back in the age of coal gasification. If you can work with natural gas, chances are that you can work with a conservative blend of natural gas and hydrogen with very little extra investment, very much unlike pure hydrogen concepts. (Also, utilities are building a lot of heat storage capacity, so that their cogeneration plants can be freely dispatched according to electricity demand, with the district heating function completely decoupled, even on the seasonal scale)
  - epistasis 10y ago
    That is really fascinating. Is the hydrogen conversion something that's happening so quietly that there's nothing on the internet about it? I can't find any sources at them moment.
    - turbokoze 10y ago
      This Wikipedia entry has some details: https://en.wikipedia.org/wiki/Power_to_gas#Power_to_hydrogen https://en.wikipedia.org/wiki/Power_to_gas#Power_to_hydrogen
    - malloryerik 10y ago
      https://energy.gov/eere/fuelcells/hydrogen-production-electrolysis https://energy.gov/eere/fuelcells/hydrogen-production-electr... Still not deleted by the new administration! It was near the top of Google results for "electric to hydrogen."
- WalterBright 10y ago
  Another way to deal with variable supply is to incentivize the demand to be variable along with it. This is done with variable pricing of the electricity. People will then find it worthwhile to adjust use of the elastic part of their demand to when electricity is cheaper - such as charging their car.
- nikdaheratik 10y ago
  It isn't just on the market or utilities. All of their prices are heavily regulated. Companies that produce baseline power are expected to make a set profit (no more or less) and the people lending them money and buying their stocks also expect a set return on investment. Any price increases have to be justified politically and the companies are expected to pay off previous investments and then return the majority of their profits to the shareholders. It is a case of an extremely conservative market being upended by rapid change. And the kinds of investments the grid needs to move to a majority renewable system are very different from what was needed in the past. Many of the best wind projects, for example, are located out in the middle of nowhere and require large transmission lines to bring them to the places that use the electricity. The distributed nature of solar and wind require more interconnections to bring in power from locations that have an excess of sun or wind to those that need the electricity. It is more difficult to keep these diverse sources of power synced so that the grid transports a steady amount of power at the right frequency, and that also needs more and different investments than in the past. It's not a simple matter of profit/loss, but of balancing a number of political considerations and a huge bootstrapping problem. I don't think any one company can handle this by itself.
stcredzero 10y ago
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. What monopoly embraces change? Only companies that are beleaguered embrace change. This even applies to petroleum conglomerates and the now mighty Apple computer. (The latter became overconfident, then faltered, innovated, then innovated to cannibalize itself, now is going through another cycle.) It applied to Microsoft and IBM in days when they seemed eternal and invincible. (Apple was never a monopoly, which is my point!)
- kalleboo 10y ago
  > What monopoly embraces change? Ones that are well-regulated?[0] Personal experience with this includes the electric utility where I used to live which was proactive in building an open fiber network using their existing conduits, and the effective land-line phone monopoly here which has been at the forefront of wiring everyone with increasingly high-speed fiber when they could just as well have gouged everyone with horrible DSL (there's barely any cable TV here to compete on data). [0] well as in "in a good way", not "very"
  - Bluestrike2 10y ago
    It'd be interesting to see some of the risk analysis they did before branching into fiber, particularly for those early cases like Chattanooga. But off the cuff, I'd imagine that there was very little risk to the move outside the capital outlays. By contrast, because renewables are forcing what's effectively a paradigm shift in power markets, it makes sense that monopolies--which by their nature are very risk averse--had trouble embracing major investment into renewables. Perhaps it's better to say that, at least when it comes to the primary activities that constitute their monopoly, monopolies are risk averse and embrace change as little as possible. And renewables are the sort of long-term suicide that scares the hell out of any self-respecting monopoly.
mahyarm 10y ago
It's more like they want to avoid the utility death spiral: * http://www.forbes.com/sites/jeffmcmahon/2014/02/04/utilities-want-regulatory-rescue-from-death-spiral/#3c5cc23a2f37 http://www.forbes.com/sites/jeffmcmahon/2014/02/04/utilities... * https://www.greentechmedia.com/articles/read/this-is-what-the-utility-death-spiral-looks-like https://www.greentechmedia.com/articles/read/this-is-what-th... That is the major thing in their heads currently for solar. Also since they are monopolies, gov'ts use them as hidden tax vehicles / subsidy givers as part of their monopoly status, which can make it hard to run an actual business. They make money via infrastructure access and selling electricity from power plant assets on the open market, not your specific kw/h power usage. Most utilities should be thought of as extensions of the government in practice.
- edblarney 10y ago
  The transfer mechanism - i.e. the wires running everywhere - yes. Government. But the actual power production itself - no. That should be free. Imagine if you could just buy your electricity from one of dozens of providers? That would be great.
  - diggernet 10y ago
    You can, in Texas.
agumonkey 10y ago
A life form rarely kills itself. See kodak.

by jartelt 10y ago

dragontamer 10y ago

> 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.

jartelt 10y ago
Why didn't I make the investment? Because I am a private citizen and not a public utility... Utilities are able to rate base their investment and get a guaranteed rate of return on the investments they make. This rate base system is part of the reason why they often make costly and unnecessary investments in >$1B nuclear plants or expensive substations rather than in cheap energy efficiency measures or distributed solar. We have the technology to help mitigate renewable variability and could deploy it if we wanted to. Utilities just chose to drag their feet and not invest heavily in deploying those solutions because the wanted to keep building the same stuff they always build and get the ROI.
- dragontamer 10y ago
  > guaranteed rate of return > We have the technology to help mitigate renewable variability and could deploy it if we wanted to. Then build a company if you think its so easy. From my view: its clear that there are risks entailed and that the technology is far too expensive for widescale deployment. But its a free country. If you really think that building a Lithium Ion energy-storage plant is free money, then build a Lithium Ion energy-storage center. There's no reason to blame other people for not seeing the world the same way as you. EDIT: If building such companies isn't in your interest, then buy stocks in those companies that are working on energy storage. Like buy stock in ABB or something. Or maybe TSLA if you really think their Lithium Ion technology really is taking over the electric grid.
  - Retric 10y ago
    You can't actually start a power company and compete with say Dominion etc, as they are legal monopolies. You can't even buy one without regulatory approval.
    - dragontamer 10y ago
      Yeah, but you can start a solar plant to provide energy to Dominion / etc. etc. https://www.dominionresources.com/library/domcom/pdfs/electric-generation/2015-solar-rfp/solar-rfp-document.pdf https://www.dominionresources.com/library/domcom/pdfs/electr... Or you can invest into companies that compete against Dominion / etc. etc. that focus more on renewables.
logfromblammo 10y ago
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 10y ago
  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.
usrusr 10y ago
Gas peaker plants are storage. Well, half of it anyways. Utilities here in Germany are quietly (because that kind of business works best when not everybody is doing it) ramping up electricity to hydrogen converters everywhere. But not for the 1990ies vision of a full "hydrogen economy" complete with fuel cell cars that don't work and whatnot. They just use them to convert cheap (sometime even negative cost, hence the desire to not inspire too much competition) electricity at peak supply times to hydrogen that they push into the existing gas grid that has a huge storage capacity by itself (think months of national demand). That network is currently carrying mostly natural gas, but it used to carry much higher fractions of hydrogen back in the age of coal gasification. If you can work with natural gas, chances are that you can work with a conservative blend of natural gas and hydrogen with very little extra investment, very much unlike pure hydrogen concepts. (Also, utilities are building a lot of heat storage capacity, so that their cogeneration plants can be freely dispatched according to electricity demand, with the district heating function completely decoupled, even on the seasonal scale)
- epistasis 10y ago
  That is really fascinating. Is the hydrogen conversion something that's happening so quietly that there's nothing on the internet about it? I can't find any sources at them moment.
  - turbokoze 10y ago
    This Wikipedia entry has some details: https://en.wikipedia.org/wiki/Power_to_gas#Power_to_hydrogen https://en.wikipedia.org/wiki/Power_to_gas#Power_to_hydrogen
  - malloryerik 10y ago
    https://energy.gov/eere/fuelcells/hydrogen-production-electrolysis https://energy.gov/eere/fuelcells/hydrogen-production-electr... Still not deleted by the new administration! It was near the top of Google results for "electric to hydrogen."
WalterBright 10y ago
Another way to deal with variable supply is to incentivize the demand to be variable along with it. This is done with variable pricing of the electricity. People will then find it worthwhile to adjust use of the elastic part of their demand to when electricity is cheaper - such as charging their car.
nikdaheratik 10y ago
It isn't just on the market or utilities. All of their prices are heavily regulated. Companies that produce baseline power are expected to make a set profit (no more or less) and the people lending them money and buying their stocks also expect a set return on investment. Any price increases have to be justified politically and the companies are expected to pay off previous investments and then return the majority of their profits to the shareholders. It is a case of an extremely conservative market being upended by rapid change. And the kinds of investments the grid needs to move to a majority renewable system are very different from what was needed in the past. Many of the best wind projects, for example, are located out in the middle of nowhere and require large transmission lines to bring them to the places that use the electricity. The distributed nature of solar and wind require more interconnections to bring in power from locations that have an excess of sun or wind to those that need the electricity. It is more difficult to keep these diverse sources of power synced so that the grid transports a steady amount of power at the right frequency, and that also needs more and different investments than in the past. It's not a simple matter of profit/loss, but of balancing a number of political considerations and a huge bootstrapping problem. I don't think any one company can handle this by itself.

stcredzero 10y ago

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. What monopoly embraces change? Only companies that are beleaguered embrace change. This even applies to petroleum conglomerates and the now mighty Apple computer. (The latter became overconfident, then faltered, innovated, then innovated to cannibalize itself, now is going through another cycle.) It applied to Microsoft and IBM in days when they seemed eternal and invincible. (Apple was never a monopoly, which is my point!)

kalleboo 10y ago
> What monopoly embraces change? Ones that are well-regulated?[0] Personal experience with this includes the electric utility where I used to live which was proactive in building an open fiber network using their existing conduits, and the effective land-line phone monopoly here which has been at the forefront of wiring everyone with increasingly high-speed fiber when they could just as well have gouged everyone with horrible DSL (there's barely any cable TV here to compete on data). [0] well as in "in a good way", not "very"
- Bluestrike2 10y ago
  It'd be interesting to see some of the risk analysis they did before branching into fiber, particularly for those early cases like Chattanooga. But off the cuff, I'd imagine that there was very little risk to the move outside the capital outlays. By contrast, because renewables are forcing what's effectively a paradigm shift in power markets, it makes sense that monopolies--which by their nature are very risk averse--had trouble embracing major investment into renewables. Perhaps it's better to say that, at least when it comes to the primary activities that constitute their monopoly, monopolies are risk averse and embrace change as little as possible. And renewables are the sort of long-term suicide that scares the hell out of any self-respecting monopoly.

mahyarm 10y ago

It's more like they want to avoid the utility death spiral: * http://www.forbes.com/sites/jeffmcmahon/2014/02/04/utilities-want-regulatory-rescue-from-death-spiral/#3c5cc23a2f37 http://www.forbes.com/sites/jeffmcmahon/2014/02/04/utilities... * https://www.greentechmedia.com/articles/read/this-is-what-the-utility-death-spiral-looks-like https://www.greentechmedia.com/articles/read/this-is-what-th... That is the major thing in their heads currently for solar. Also since they are monopolies, gov'ts use them as hidden tax vehicles / subsidy givers as part of their monopoly status, which can make it hard to run an actual business. They make money via infrastructure access and selling electricity from power plant assets on the open market, not your specific kw/h power usage. Most utilities should be thought of as extensions of the government in practice.

edblarney 10y ago
The transfer mechanism - i.e. the wires running everywhere - yes. Government. But the actual power production itself - no. That should be free. Imagine if you could just buy your electricity from one of dozens of providers? That would be great.
- diggernet 10y ago
  You can, in Texas.

agumonkey 10y ago

A life form rarely kills itself. See kodak.