This article originally appeared in Energy Central‘s special issue Electrification in Transportation. Energy Central helps the global power industry share their insights and knowledge with other professionals. You can view the original article here.
The transition to more sustainable practices is crucial for our planet’s future. However, the integration of renewable energy technology, like Electric Vehicles (EVs) and rooftop solar panels into the grid, presents several challenges for utilities. The shifts in power supply and demand resulting from these new technologies require energy providers to be more flexible and adaptable to meet the increased demand—while also managing the influx of excess power generated by solar panels and other weather-dependent renewable sources.
Energy providers must prioritize investment in new technologies, such as generation assets with fast ramp rates and energy storage systems, for increased operational flexibility. This will allow utilities to adapt quickly to changes in supply and demand and ensure the grid remains reliable and stable.
The Supply and Demand Challenge
- Supply-side Challenges:
Renewable technologies, such as wind and solar power, are less predictable than traditional fossil fuel sources due to their dependence on weather patterns. This unpredictability can create challenges for energy providers who need to ensure there is enough energy to meet demand at all times.Solar power is a great example of how new renewable technologies are impacting the power supply. Consumers with rooftop solar panels generate their own power, reducing their reliance on the grid. During periods of high solar output, rooftop solar panels can generate more electricity than is needed by homes or businesses where they are installed. This excess energy can be fed back into the grid, creating a new source of power supply that utilities must manage.In some cases, utilities may be obligated to purchase excess solar power generated by consumers and integrate it into the grid. This approach promotes the efficient utilization of renewable energy resources and encourages the growth of distributed generation. If there’s insufficient demand for the excess power fed back to the grid, utilities must ensure they have enough storage capacity to accommodate this excess power. If utilities do not have the necessary infrastructure or mechanisms in place to absorb and distribute the surplus electricity, curtailment may be necessary to maintain grid stability and prevent blackouts. In some instances, utilities may be subject to fines or penalties for curtailment.
- Demand-side Challenges:
The demand for electricity is shifting and increasing in different ways. For example, EVs require charging, which can place a significant strain on the grid during peak periods. The rise in popularity of EVs has led to an increase in power demand due to the need for charging infrastructure, which poses challenges for power grid management.EV charging patterns can create additional demand during peak load hours, typically in the evening when people return home from work. This concentrated charging, which tends to happen when the power supply from renewable sources such as solar is relatively low, can put stress on the grid and require utilities to manage and balance the load effectively. Without proper planning and management, an influx of EVs charging simultaneously can lead to local grid congestion or overloading, and potentially impact the reliability of electricity supply.
Overall, the combination of increasing EV adoption and widespread solar panel installations is reshaping power supply and demand dynamics. Electricity transmission and distribution utilities have a number of strategies in place for managing these changing demand dynamics, but power producers must also incorporate operational flexibility into their operations to mitigate the impact on grid stability.
The combined effect of technologies like consumer rooftop solar panels and EVs is higher peak load demand than producers are used to, and the possibility of curtailment when demand is low but solar generation is high—resulting in high variability of the load requirement, which impacts the reliability of existing infrastructure. These challenges require innovative investment strategies that ensure the grid remains reliable and stable while accommodating new sustainable practices.
Adapting Asset Strategies to Improve Operational Flexibility
Operational flexibility refers to the ability of a power generation system to respond and adapt to changing supply and demand conditions in an efficient and effective manner. It involves the capability to adjust the output of power plants, switch between different generation sources, and optimize the overall operation of the system to meet fluctuating electricity demand, grid requirements, and market conditions.
- Fast Ramp Rates:
Generation assets that ramp up and down quickly can help balance out fluctuations caused by renewable sources, enabling utilities to respond quickly to load variations and maintain grid stability. For example, gas turbines can be adjusted by varying the fuel supply; micro-hydro systems can be adjusted by managing the flow of water through the turbines; and combined cycle gas turbines can ramp up or down by adjusting the output of the gas and steam turbines—making these assets ideal for providing peaking power.
- Energy Storage:
The integration of energy storage systems, such as batteries or pumped hydro storage, enhances operational flexibility in power generation. When there’s a sudden increase or decrease in demand, or when intermittent renewable energy sources experience variability, energy storage can quickly inject or absorb electricity to help stabilize the grid and maintain grid frequency and voltage within acceptable limits.Unlike conventional power plants, which may take time to start up or shut down, energy storage can respond immediately, making it ideal for addressing sudden load changes or compensating for fluctuations in renewable energy generation. This load shifting capability allows for better matching of electricity supply and demand, reducing the need for rapid adjustments in power generation.
Quantifying the Benefits of Investments that Increase Operational Flexibility
Overall, generation assets that can ramp up and down quickly offer many benefits for power producers, including increased flexibility, improved integration with renewable energy sources, and reduced costs. Investment in these assets can be costly, so quantifying the benefits is crucial. Although it isn’t a question of whether or not these investments need to be made, justifying decisions to stakeholders can be challenging.
Copperleaf® helps electric generation utilities develop decision-making frameworks to quantify the benefits of investments on a common economic scale. We use “value models” to quantify the benefits of all proposed investments, enabling organizations to understand the areas in which new technologies can provide value, and make trade-off decisions between competing technologies and different approaches to solving challenges.
Here are some examples of value models being used by our clients:
- Ramp-up Benefit:
Ramp-up Benefit measures the ability to quickly supply additional power to the grid and avoid purchasing power externally. It compares the ramp response rate of existing generation unit(s) to the response rate of the theoretical new asset(s) being proposed for investment. By looking at a theoretical power demand increase and the actual power ramp-up capabilities of the existing assets, the lag between the two can be used to quantify the power that cannot be supplied using existing assets. One can assume that this power must be purchased externally, at the market rate. If the generation ramp capabilities can be improved, and the lag time to the optimal generation demand shortened, the difference between the two is the power that no longer has to be procured externally and is therefore a quantifiable benefit that can be used to justify investment in assets that improve operational flexibility.
- Ramp-down Benefit:
Ramp-down Benefit measures the fuel costs saved by ramping down power generation. We can quantify the value of the ramp response rate in a value model that measures the lag between the demand and supply. The faster a generation asset can be ramped down, the larger the fuel savings benefit. Similar to the Ramp-up Benefit, any lag between the demand drop and the actual ramp down is a cost incurred, while any difference between the actual ramp down response and the new response is value added by installing the new asset.
- Energy Storage Capacity Benefit:
In the case of excess power generated by renewables, we can quantify the avoidance of energy curtailment by storing excess energy that can be discharged when demand increases. As the demand drops, excess power is stored according to the capacity and charge rate of the assets. Since the response time is negligible, the benefit can be quantified as the capacity of available energy storage added that can absorb excess power. A factor can be used to account for the assumed portion of that capacity that is available for charge and discharge at any given moment.
Addressing the impact of renewable technologies on the supply and demand dynamics of power generation requires a proactive approach from utilities, policymakers, and industry stakeholders. With proactive planning, power producers can effectively address these challenges and leverage operational flexibility as a valuable strategy for grid optimization and the integration of renewable energy sources.
As the energy landscape evolves through the incorporation of more renewable energy sources, distributed generation, and variable demand patterns, operational flexibility is becoming increasingly important in power generation. It enables power systems to adapt, optimize generation, and maintain a reliable and resilient electricity supply. By effectively implementing operational flexibility in generation, power producers can adapt to the changing energy landscape while promoting the use of clean energy sources.
Overall, the integration of renewable energy technology is complex and challenging for utilities to manage. It requires significant investment in new infrastructure and technologies, as well as changes in the way utilities make and justify asset investment decisions. Copperleaf can help by supporting the development of a value-based decision-making framework with which power producers can quantify the benefits of investment decisions on assets that improve operational flexibility.
The energy transition presents several challenges, but also offers opportunities for innovation and growth. Energy providers that can navigate these challenges and adapt to new technologies and energy sources will be well positioned for future success.
To learn more about how Copperleaf can help your organization optimize asset investment planning for the energy transition, download this white paper: