How Alternative Energy is Creating More Dynamic Challenges for Utilities
In this blog, we provide an overview of the unprecedentedly dynamic challenges that growing alternative energy usage will introduce to utility management. We conclude by looking at why utilities will need to leverage analytics more extensively than ever in a world rapidly moving toward an alternatives-first energy mix.
Alternative energy is a growing imperative everywhere, propelled both by public sector policy and consumer demand. And, after years of strong growth, alternative energy sources are no longer peripheral. Renewables are an increasingly prominent part of the energy mix. For example:
- Deloitte reports that in 2020, “the share of renewables had exceeded that of coal in generation for 153 days compared with 39 days in 2019.”
- The IEA renewable energy update for 2021 notes that “renewable capacity additions increased 45% to almost 280 GW – the highest year-on year increase since 1999,” predicting that “ high capacity additions become the “new normal” in 2021 and 2022, with renewables accounting for 90% of new power capacity expansion globally.”
- Prominent North American regional markets are moving purposefully to accelerate alternative energy adoption. California, for example, has set a goal of using 100% clean power by 2045.
The United Nations (UN) Intergovernmental Panel on Climate Change (IPCC), estimates the world has 12 years to completely transform the energy economy, and sustained growth is only likely to accelerate as the globe continues to pivot to address climate change.
Consequently, utilities are working hard to integrate new alternative power sources into the grid. Doing so successfully comes with substantial challenges, both technical and operational. Greater adoption of alternative energy will require utilities to adapt not only their grids, but their methods for leveraging data throughout the organization.
How Alternative Energy is Driving Rapid Change for Utilities
First, alternative energy sources are making new businesses organizations viable, adding new wrinkles to the market for electric power. Wind co-ops are a great example. This article from T&D World takes an interesting look at how wind energy is transforming some rural communities. They note that over 850 electric co-ops provide service for 42 million mostly rural Americans (covering over 56% of US landmass). Historically, rural electric co-ops centered on coal-fired plants, but wind generation is creating new opportunities for more distributed generation with more direct community benefits.
The growth of rural wind co-ops is just one small piece of the puzzle, but even this small change creates new operational challenges. First, rural co-ops will find themselves managing a more complex, dynamic grid than ever. Second, the volatile nature of renewable sources means rural co-ops may need to integrate more extensively with core urban grids, selling excess power during peak generation times and purchasing it when wind or solar production wanes. This particular issue is not confined to rural power; it highlights one of the core complexities associated with the growth of alternatives: a more dynamic, decentralized grid than ever before.
Rural co-ops are not the only new, decentralized players on North American electric grids. Distributed Energy Resources (DERs) like residential and commercial rooftop solar units, electric vehicles, and home battery storage systems are proliferating quickly. Deloitte reports that new battery-driven business models are emerging fast at both a residential and utility scale, with energy storage “becoming one of the fastest-growing asset classes in the energy industry.” For example, San Diego Gas & Electric owns and operates 13 energy storage projects, totaling about 45MW of energy storage. Their new Kearny Energy Storage Project is part of a company-wide sustainability initiative to become carbon-neutral by the year 2045.
“Falling costs and maturing technology are making use cases for storage more economical, which could enable storage to provide multiple functions, from ancillary grid services to on-demand power,” according to Deloitte.
More distributed generation has the potential to support a more resilient grid, but only if utilities can successfully manage an energy mix that can change by the minute. Issues like storm management that were already challenging for utilities will now be doubly complicated if, for instance, stormy weather causes solar generation to plummet even as it threatens power lines. Seasonal and time-of-day effects have always been a source of complexity for demand forecasting, but now they affect generation as well. In other cases, decarbonization is expected to drive increased acquisition, as utilities involved in generation seek to purchase alternative energy companies in order to meet regulatory targets for including renewables in their portfolio. Integration of these acquisitions will be yet another source of ongoing operational complexity.
Why Analytics Are an Essential Part of the Picture
“The increasingly dynamic nature of the grid means platforms need to handle all aspects of the analytic modeling process in an integrated and seamless fashion to rapidly get from analytical model development to business decision-making.” – Utility Analytics Institute, “For T & D Leaders, Change Is NOT on the Horizon. It’s Here NOW.”
Alternative energy generation is by nature far more variable than fossil fuels, and utilities are navigating a more dynamic operational environment than ever before. Some alternative energy providers are experimenting with other generation techniques, like geothermal, that could help reliably supplement more variable wind and solar production. Google, for example, is working with geothermal startup Fervo Energy (which has adapted fracking advances to improve geothermal generation) to add renewable generation capacity to help offset its datacenter consumption on the Nevada power grid. For the foreseeable future, however, growing alternative energy usage will mean an unprecedently decentralized, fast-moving, and management-intensive grid.
In this context, analytics will become more crucial than ever. In a variety of areas like outage management, field service, and customer support, utilities can already glean substantial value from enhanced real-time analytics capabilities. As renewables continue to surge, so will this value, and now is a great time to invest in enhanced real-time analytics infrastructure.
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