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Is All That's Green Good? Tackling Grid Congestion

While utilities and consumers understand the potential value of DERs, they aren’t fully sure of how to make them a friend

Utilities have always been driven by an ambition to deliver affordable, safe, secure and reliable access to products and services. In recent years, as people begin to understand the future implications of 90% of North America’s total greenhouse emissions resulting from energy generation[1], there has been a growing effort on the part of utilities to go greener. This has resulted in high levels of green energy innovation and adoption, particularly noted in the development of distributed energy resources (DERs); utility scale, renewable sources, but also assets operating at a consumer-level, behind the meter. DERs such as rooftop solar panels, electric vehicles and battery storage systems are being integrated into the energy mix and according to Bloomberg New Energy Finance, such small-scale generation assets will be worth more than US$2 billion by 2025 as U.S. electricity production moves from traditional generators.

T&D World recently asked its readers if DERs are a utility’s friend, foe, or ‘frenemy.’ The results pointed to the latter, suggesting that while utilities and consumers understand the potential value of DERs they aren’t fully sure of how to make them a friend.

This perhaps comes as no surprise when we consider how significant the physical impact of all this decentralized generation is to the distribution grid, and how largely ill-equipped that part of the grid is today when it comes to managing the complexity of bi-directional, intermittent energy flows.     

With more and more DERs connected to the grid, we have seen a surge in congestion creating unpredictable strain on the network. Congestion can be defined as violations of network constraints (voltage and frequency) due to too much electricity demand or due to too much electricity generation. In some territories, traditional grid reinforcement techniques cannot keep pace with this strain, which can lead to damage of circuit segment cables, fuses and transformers, as well as voltage variability and outages across the distribution network. If we really want to ensure that all that’s green is good, then we need to ensure we get in front of potential congestion issues now to avoid damaging consequences down the line.

At OMNETRIC we recently consulted executives managing distribution networks across North America to provide us with a better understanding of the implications and risks of congestion. The research, brought to life in our latest whitepaper, ‘Watch out! Congestion ahead,’ paved the way for us to create core recommendations for tackling the congestion problem head on.

Firstly, flexibility is key.
As power flows become more intermittent and more unpredictable, distribution networks – and how they are managed – will have to become more active and more flexible. Providers must consider assets, behavior and software-led solutions to ensure more flexibility at a process, technology and business model level.

Insight is also essential to utilities.
Having data-led insight is crucial to adjust and optimize the system on as frequent a basis as is required in a far more unpredictable schema. As is the case in most industries transitioning to a new digital landscape, data will become the distribution operators’ most valuable asset. Combining software solutions with customer-behavior insights and hardware has the potential to provide a distribution energy resource management solution that will enable direct or indirect control of assets to mitigate congestion risks. Data will also help to scale the solution by determining the focus and identifying key areas for investment.

Congestion is increasing due to the volume of new actors entering the market, often located at the edge of the grid. Each one comes with their own needs, motives and behaviors. In order to manage such a multi-dimensional landscape, utilities need to share the task of management with service providers and consumers, for example, the operation of virtual power plants by aggregators. However, utilities must maintain control by continuing to define the framework for this devolution.

Value-based approaches should emerge.
With the market transformation from a centrally fueled and controlled system to a network full of different entities that produce, consume and manage energy, most of us agree that reimbursing the energy consumed and leaving the cost of managing the grid to the utility is not viable going forward. Instead, value-based approaches should emerge, where every event is evaluated according to the positive or negative consequences it has on the grid. These events or activities will be enabled by far more granular, detailed information about transactions—where they occur and what they involve.

Finally, ensuring regulation keeps up with the pace of change is crucial.
The relationship between DERs and utilities hinges on the regulatory framework in which utilities operate, with the regulator determining the business conditions and funding priorities. Fundamentally, this sets the pace for utilities’ response to congestion risks. In order to ensure that DERs are a friend for utilities, the regulator must work fast to avoid a choke point in the battle against congestion.

By adhering to these recommendations and taking an active approach to congestion management, utilities have the potential to not only avoid the damaging impacts of grid congestion, but also to make considerable cost savings. In a fictional scenario, we projected that, by tackling congestion, utilities could secure average yearly benefits ranging up to $20,000 per MW of connected DER capacity, or $4.5 million over 10 years. See the report for the scenario modelling (www.omnetric.com/energycongestion).

For DERs to play a purely positive role in the new energy economy and be the friend of utilities, operators need to flip their linear and downstream perspectives to put consumer behavior at the heart of everything they do. Using newly optimized management systems and data will allow the utilities to capitalize on the new energy paradigm, ensuring their business benefits and that all that’s green really is good.

[1] Climate Watch for Canada: https://www.climatewatchdata.org/countries/CAN?source=33 and USA: https://www.climatewatchdata.org/countries/USA?source=33
https://about.bnef.com/blog/small-scale-solar-will-displace-2b-u-s-power-2025/

 

 

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