“What if the sun isn’t shining and the wind stops blowing?” critics of renewable energy often say along with, “fluctuations in supply mean renewables can never be our base-load power source.” However, our power system has been designed around coal, gas and nuclear generation for decades and if we really want to make a shift to renewables then we must reshape our power system to account for that.
Renewable energy is not just another source of energy competing for a piece of the energy mix. It is a clean form of power that helps us solve one of the biggest problems facing our world today. Despite proving itself on price and power provision under a system designed for its competition, renewable energy still faces criticism. If renewables are the inevitable goal of our current highly polluting power system, then isn’t it about time that we redesign the playing field to help ourselves achieve it?
“Putting super-cheap, “base-cost” renewable power at the heart of the world’s grids in this way will require a revolution in the way the electricity system is regulated. Renewable power’s progress to date has been achieved mainly by subsidizing or mandating its installation, while forcing the rest of the system to provide flexibility, within otherwise unchanged regulatory environments and power market rules,” explains Michael Liebreich, Chairman of the Advisory Board and Angus McCrone, Chief Editor at Bloomberg New Energy Finance.
Renewables have done relatively well in many markets, achieving as much as 20 or 30% power provision, there is a ceiling however. Without a significant restructuring of our power system we will never be able to reach more than 50 or 60% penetration. Thankfully we have all the technical requirements and policy specifications we need to make this shift, all we need is the will power to move beyond our old fashioned energy system.
“We are reaching the point in the story where power system regulation will have to be fundamentally rethought. Simply layering on a capacity market is the wrong response: creating guaranteed demand for obsolete technologies has never ended well,” says Liebreich.
So how will these fluctuating, inflexible, anti-establishment, technologies break through their ceiling to dominate our power system? The key, according to many, is demand response. Rather then looking for flexibility and reliability from the power source itself, we can gain those attributes by rethinking the demand side of the equation. By doing so we can also increase efficiency and reduce overall consumption.
A system enabled by the smart grid and distributed energy, combined with smart buildings and energy storage, provides flexibility, reliability and cost advantages, while also reducing energy generation’s impact on the environment. The capital cost of such a shift is not even that significant; demand response can use our existing communication infrastructure and smart meters, to provide the structure needed to manage renewable energy.
Last month, the California’s Public Utility Commission concluded a study of cost-effective demand response potential, which produced encouraging results. By 2025, shifting 10% of daily demand from evening to daytime becomes economical and technologically feasible it found. All this simply by programming activities like daytime electric vehicle charging, commercial HVAC pre-cooling, and energy-intensive processes like water pumping and data processing to run during low consumption – high renewable generation periods of the day.
Consumers can win too. Reducing overall consumption will bring down energy bills and for those energy users for which shifting consumption times represents a low opportunity cost, there are significant savings to be made. For those who use their energy at night, or need it regardless of when the wind is blowing, the simple addition of energy storage will allow them to stockpile cheap electricity to use whenever they please.
Buildings, which account for 40% of electricity consumption, can apply efficiency measures and storage to reduce their cost of energy. Smarter buildings can even create new sources of income by acting as virtual power plants in a distributed energy system. If they were more willing to adapt, utility companies could position themselves at the heart of this inevitable energy future, creating renewable generation that feeds into distributed storage within a demand response structure.
This is not an impossible dream, as many would have you think, it is feasible with the knowledge and technology we have today, we are only missing the mindset, as BNEF’s Liebreich suggests. “We expect 2017 to be the third year in a row in which the global economy grows, but energy-related emissions do not. The contribution of renewable energy and energy efficiency to this achievement will be evident to anyone whose mind is at all open.”