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Smart Grids 101: Lesson 2: The Future of Power Generation

By Shidan Gouran (ICP) October 27, 2009
Today is a fitting day for this article, since President Barack Obama will be announcing the results of the stimulus awards at the DeSoto Next Generation Solar Energy Center (he probably already has by the time you read this).
 
I’m optimistic that in his speech today, the president will clearly state that, even though today, the smart grid is all about smart meters, the end goal is much greater energy efficiency and a shift to clean energy. Distributed generation as explained in this article and a major upgrade of our transmission systems as will be discussed in the next article, will be key for this vision.
 
In our first article of this series, we examined the various power generation systems used today. We explored how their use can be explained by understanding the capabilities of each for meeting the load curve, their economics and environmental impact. Important facts that came from the last article were that coal generators, which are one of the most substantial threats to the environment, are used almost exclusively to meet baseload demands because their variable costs are the lowest. On the other side of the spectrum, gas is used almost exclusively for meeting peak load due to very high operational flexibility, but with high variable cost, it’s unfortunately the least preferred method for meeting baseload needs.
 
Now let’s explore alternatives we can start implementing now. We will begin with the concept of “negawatts” as a new type of power generation. The concept of negawatts was first coined by Amory Lovins in this 1989 talk and it amounts to paying consumers and utilities for not using power.
 
This concept, as a business model for demand response, has the strong backing of the industry for meeting peak load as an alternative to running very costly peaking gas generators. This is a good thing and should definitely be part of the mix. However, this does relatively little for reducing the general cost and environmental impact of energy consumption.
 
The problem is the concept of sustained and constant “negawatts” is not a business model that makes sense for the energy industry and this is an area where the need a new regulatory incentive model is required. One great byproduct of automated demand response is that the base “smart home” technologies will be implemented in homes and appliances to automate some of the management and behavioral changes necessary for a consistent reduction in wasted energy.
 
Now, rather than considering conservation lets look at some future options for efficient and clean power generation for meeting the general load curve. A first step to achieve both of these is through moving the centralized and highly inefficient power generation systems of today to a highly decentralized system where the power sources are much closer to the communities and businesses they serve.
 
“Modern” coal plants have seen little change in the last 50 years. Apart from the fact that 30 percent of greenhouse gases come from coal power plants, in the process of producing electric power, at least 70 percent of their potential is converted into waste heat. In addition, at least 10 percent further is lost as waste heat during transmission (this is only considering resistance and reactive power, we will explore transmission on a smart srid in our next “Smart Grids 101” article).
 
It’s obvious that moving the source closer to consumers will reduce the transmission losses significantly. But there is a much better justification for doing so: the concept of combined heat and power or CHP.
 
It turns out that more than half of our energy consumption goes towards the heating and cooling of buildings. From this EIA report, it’s obvious that less than 30 percent of residential HVAC is satisfied by electricity but, rather, close to 70 percent is satisfied through direct consumption of fossil fuels.
 
CHP systems generate both electric power and useful heat (which can also be used for cooling). They do this by capturing the waste heat and provide this heat to buildings and industrial units directly for their heating and cooling needs. In order for CHP systems to work, they need to be sufficiently close to the buildings they serve so that they can deliver the heat without significant loss. This rules out coal based generation, since the chemical pollution levels would be unacceptable, as well as nuclear, due to safety concerns and the risk of disaster. However, natural gas CHPs have much less environmental impact and the sequestration or even recycling of carbon dioxide, produced from these CHPs as fertilizer, have proved to be relatively straightforward.
 
By consuming the same amount of natural gas for producing both the heat and electricity, you are, in effect, doubling the total energy efficiency of the system while halving its dirty emissions. Another real positive “by-product” of this system is much greater resilience and reliability due to its highly distributed architecture and thus fewer single points of failure.
 
CHP systems go hand in hand with micro generation from renewable sources. Ultimately, even natural gas is a limited resource and CHP really gives us a way to extend, actually double, our limited supply of natural gas. But the efficiency gains of CHPs will be key even for renewable and carbon neutral sources of carbon based fuels like biomass (wood cuttings, straw, and so on) and bio-fuels in general. Adding other micro generation facilities in the mix such as geothermal and rooftop solar panels, will even increase the efficiency further and thanks to the high operational efficiency of CHP systems, a hybrid system will work very well; this is one of the keys for introducing renewable sources over time.
 
However, to meet the ambitious goals of renewable sources accounting for 20 percent of our consumption by 2020, the large-scale wind, wave, tidal stream and solar farms will be crucial and this is the main reason why new interstate transmission lines and a connected national grid will continue to be needed.
 
Distributed Energy Resrouces, or “DER,” and renewable resources both enable and need a very smart infrastructure. They need it for the two major reasons that we describe below.
 
To meet our goal of more sustainable energy, we will need the ability to optimize the management and least-cost routing of distributed electricity. The thing with renewable sources is that they are very transient supplies – one day it’s cloudy, the next day there’s no wind, and so on.
 
In fact, the complexity of routing and control of CHP, geothermal, solar and large-scale renewables interacting as one system is very similar to the Internet itself. The important realization is that distributed generation actually enables the concept of an “Internet of Power,” where power can be routed, stored and retrieved using elements such as electric cars, or “PEVs.”
 
Another aspect that shows the need for advanced information and communications infrastructure in a distributed environment is that the central management, monitoring and control of tens of thousands of distributed generators, not to mention all their supporting elements, will necessitate an unprecedented level of networked intelligence.
 
The quick introduction, hopefully, provides sufficient motivation to explore CHP technologies and distributed generation further.

Learn more about Smart Grid technology at the Smart Grid Summit, an event collocated with ITEXPO East 2010, to be held Jan. 20 to 22 in Miami. This is the event you need to attend if you want to understand the role that IP communications technologies will play in how the Smart Grid evolves – not just for making utilities more efficient, but also for enabling the Smart Home and a new generation of communications innovations. Register now.

Shidan Gouran is co-founder of Intelligent Communications Partners (ICP), a strategic advisory consultancy focused on the emerging Smart Grid opportunity. To read more of his Smart Grid articles, please visit his columnist page.

Edited by Michael Dinan

Co-founder, Intelligent Communications Partners

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