This article is one in a series investigating the importance of modernizing and decarbonizing the electric grid. If you want to understand the issue in context, see our article, Grid Modernization. For a look at an innovative company spun out of Stanford University’s labs that have developed a battery with tremendous potential for providing grid storage, please see our article, Enervenue: The Batteries We Need for Grid-Scale Storage. For a big picture view of why grid evolution is such an important topic, please see my article Texas Energy Failure: A Prelude Of What’s To Come.
- Renewable energy represents one major pillar of our post-carbon civilization but covering Arizona in solar panels is a dumb solution (sorry, Elon).
- To preserve our standard of living, we must quadruple our electricity production and convert to 100% renewables by the time a baby born today can vote. This hurdle is impossible to clear using Industrial Revolution thinking; to succeed, we must take a page from the Internet Age.
- The Next Generation Grid will look much different than the one we have today — the next gen paradigm is organic, local, and highly distributed.
- An innovative non-profit foundation — LF Energy and its constituent programs like SOGNO (which was originally funded and supported by the European Union) — and a few new ventures — Swell (a California-based start-up) and sonnen, Inc. (the US branch of a German firm now owned by Royal Dutch Shell) are on the vanguard.
Solar Just Doesn’t Scale
For anyone past the denial stage of climate grief, the knee-jerk reaction to news about the increasingly obvious signs of how close the world is to catastrophic climate tipping points is to throw up a few gazillion solar panels.
But shading 21,250 square miles of the Arizona desert is dumb, no matter what Elon Musk might say. The tragedy of it is that Musk is a visionary thinker proposing a solution stuck in an Industrial Revolution paradigm of centralizing production and building out expensive distribution infrastructure.
Not only does Musk’s solution do a poor job of solving the problem of electrification today, it is guaranteed to engineer a civilization-scale faceplant if we try to satisfy tomorrow’s energy needs with it.
To cut carbon dioxide emissions enough to matter, we don’t just need to find a clean solution to generating current needs for electricity, we also need to…
- Electrify our entire transportation infrastructure,
- Convert our entire legacy industrial production infrastructure (e.g., steel, glass, and cement factories) to run on electric power (or use renewables some other way).
- Create an entirely new class of industrial infrastructure that does not exist yet — namely Direct Air Capture plants.
If we use the last century’s paradigm, each bullet point above represents essentially building another copy of today’s electrical system anew. Not only would the cost of such a project be enormous, building on yesterday’s paradigm, we could expect everything we’ve become used to the last few years to continue: rolling blackouts, financial failures, and susceptibility to increasingly frequent natural disasters.
Long story short, we can cover my old state of Arizona wall-to-wall with solar panels, but this would be like strapping a racing seat to a 20-year-old horse and calling it a Formula 1 racing car.
Taking a Page from the Internet Age Playbook
The Linux operating system started as a project to satisfy a master’s thesis requirement for a nerdy Finn in 1991. Flash forward thirty years and now Linux has the largest installed base of any operating system on the planet.
Every Android phone, over 96% of all web servers, the largest share of mainframe computers, and some of the most powerful supercomputers in the world all run Linux. This open-source hobbyware has displaced some names you might be familiar with — IBM, Sun Microsystems / Oracle, and Microsoft.
The key to Linux’s success is the concept of distributed workloads.
The original work of building out the nerdy Finn’s operating system was distributed to thousands of curious engineers who donated their time and expertise across the globe. Nowadays, distributed Linux supercomputers answer enormously complex questions by distributing simple, component questions to thousands of small, individually unimpressive computers running Linux OS.
One leading thinker in the Grid Evolution space, Dr. Shuli Goodman, believes that the success of Linux to transform the tech world can and should be applied to next generation electrical grids.
Dr. Goodman is the executive director of LF Energy, a young offshoot of the Linux Foundation (“LF”) that partners with prominent organizations to develop open-source software for utilities and grid operators to instantaneously understand and manage various new pools of energy supply (e.g. renewables, batteries, etc.). This software offers a single, common reference code base that all organizations can use as a base to build its own customized solutions. The advantage of the LF Energy approach is standardization and, more crucially, speed of implementation.
At this point, you may be asking the same question I asked Dr. Goodman: “Why do utilities and grid operators need software to run things anyway?”
The fact is that they never did. Back in the “good ole days” utilities were “communicating” with their customers in the same way someone with a megaphone communicates with an audience — shouting unidirectionally all the time. In this model, there is no room for complex multidirectional signals or need for software to manage the communication process.
Contrast that with the model that LF Energy is pioneering which, in our communication analogy, would be more similar to an Internet chat room than the old megaphone model. In an evolved, modern system, all parties are able to communicate bidirectionally in real time with every other party.
This added complexity requires management, management requires software, and software is most efficiently developed on an open-source model.
What the Next Generation Grid Looks Like
Asking experts about the future of the grid offered me some memorable images.
“The grid of the future will not be a grid at all,” says Goodman. “Rather, it will be closer to the mycelium communication networks underneath a forest. Getting power systems engineers to conceive that biomimicry might hold special insights into how to build an extremely complex system — the world’s largest machine — into a system closer to a living organism like a forest than a mechanical ‘grid’ is quite interesting. It is where I think we are going.”
Anto Monti, Ph.D., Professor and Institute Director at RWTH Aachen University, in Aachen, Germany, and scientist at Fraunhofer FIT Center for Digital Energy, sees the grid we have now as a rogue elephant. “Right now, we are trying to control the elephant by slapping it with our hands. It’s impossible!”
His vision for the next gen grid? “An army of ants that can organize independently and act flexibly.”
Lorenzo Kristov, Ph.D., an expert in electric system policy, structure, and market design who worked for the California grid operator (CAISO) for 17 years and who is an advisor to LF Energy has formalized Goodman and Monti’s images of an organic, ubiquitous energy network into an implementable model.
Kristov and colleagues at CalTech and the Pacific Northwest National Lab envision a base layer of resilient neighborhoods able to supply the lion’s share of their own energy needs internally (via rooftop solar, community wind farms, battery storage etc.) and keep power flowing when utility grid service goes down.
Resilient neighborhoods aggregate up to the next layer in the model — the resilient town. Resilient towns generate their own back-up capacity to supply neighborhoods when necessary and can tap into capacity at the next level up — the utility grid — in turn.
With this model, Kristov turns the current, outdated grid paradigm completely on its head. In his Next Gen model, “The Grid” loses its position of centrality and control and becomes a back-up to several levels of back-ups.
(David Roberts at Vox did several excellent, in-depth articles that articulate Kristov’s layered architecture — and the change in perspective he calls Open Access DSO that enables that architecture — especially in relation to the situation in California. Check them out: Article 1. Article 2.)
All this complexity — the coordination of Monti’s army of ants, the linkages between Goodman’s mycelial network, and the hand offs between each layer in Kristov’s concentric circles — require the kind of open-source software that LF Energy and its constituent programs like the European Union’s SOGNO project (the development of which Dr. Monti also played an instrumental role) are working on.
What does the increased complexity buy civilization? Three things:
- Hugely reduced carbon emissions by building out local renewable generation sources and allowing them to participate in the grid more efficiently.
- Speed of implementation through free market action built on a common, open-source development platform.
- Resiliency in an age of increasingly severe natural disasters.
Goodman believes that the third point is particularly important when thinking about society’s exposure to infrastructure failure. “We need to be reimagining what self-healing and cooperation look like when it comes to energy and power,” she maintains.
SOGNO was developed with public funding from the EU, which donated its software applications to LF Energy; LF Energy is a non-profit organization. From these two data points, you might get the impression that the field of grid evolution is an entirely public or philanthropic pursuit.
This is impression is, however, mistaken. There are some innovative companies building these kinds of Next Gen grid networks in the US right now. This article will highlight Swell and sonnen, but there are more that I will highlight in other articles to come.
Grid Innovation for Consumers and Investors
Swell, based in California and run by Suleman Khan, an alum of electric car company Tesla, is doing pioneering work in the field of virtual power plants (VPP) for existing homes and businesses in residential neighborhoods in California and Hawaii.
Swell’s VPPs are created when a number of small, solar powered batteries are networked together using a software overlay that allows them to function as a single energy storage resource. That networked storage can manage the process of balancing supply and demand for each of the network’s members and provide power and services to the grid at large as well.
VPPs are distinct from “mini grids” or “microgrids” because the individual batteries comprising a VPP are tied into the main power system along with other non-VPP customers and non-VPP generating resources.
VPPs are able to function similarly to mini- or micro-grids in that they allow the home or business to operate without loss of power during a wider outage and generally operate with less reliance on the central grid. However, VPPs go a step further: by operating as part of the larger grid system, VPPs also cater to the local grid’s needs. Because grids are a public good, VPPs contribute to a community’s welfare by lessening stress on the grid.
Khan says that his company’s mission is to democratize the energy landscape by removing the structural barriers to even more rapid renewable energy generation through the propagation of energy storage at residences and businesses.
Indeed, Swell’s services provide a bridge to three important players in the energy world: Consumers, Utilities, and Financiers.
Customers (especially those in sunny places) have come to love solar, but for grid operators, solar panels alone can be a pain. Solar panels generate energy when the sun shines, but utilities need to “dispatch” energy to consumers regardless of what time it is and whether it’s raining or not.
A VPP like Swell that arranges the financing and installation of a networked battery pack to a home or business helps solar-loving customers by allowing them to be more self-sufficient and even paying them a dividend when they supply power into the grid during peak times.
From the utility perspective, a VPP removes the headaches of variability that consumer solar creates and replaces it with a single virtual asset that has predictable power supply and demand characteristics.
Customers win. Utilities win. Chalk that up as a win-win situation.
That win-win turns into a win-win-win when you consider another important player in the utility world: investors. Swell finances its customer contracts in the capital markets as high-quality assets that collateralize asset-backed securities. This link to the financial markets helps both yield-hungry investors as well as battery buyers (who receive lower interest rates as part of a standardized group than they would individually).
Right now, Swell operates in California and, a few days ago, announced that it had gained approval from the Hawaiian Public Utilities Commission to establish a VPP in Hawaii for Hawaiian Electric. It has other deals in its pipeline, but I’m trying to convince Khan to test the market in the northwest suburbs of Chicago as well — with my house being the first installation.
Another Tesla alum, Blake Richetta is the chairman and CEO of the US branch of battery maker and VPP provider, sonnen. sonnen takes a turn-key approach to providing VPPs as part of new home construction. It partners with large multi-family builders and community developers, such as the Wasatch Group to build VPP functionality into projects from the ground up.
One of its flagship projects is the Soleil Lofts apartment community developed by Wasatch in Herriman, Utah. At Soleil Lofts, each unit comes with a sonnen battery already installed; the complex was designed and outfitted with photovoltaic panels from Auric Solar that feed the battery packs.
For Soleil, sonnen and Wasatch teamed up with Rocky Mountain Power, which manages the total of 12.6 megawatt-hours of solar energy storage held within the 600 individual batteries. Rocky Mountain Power uses Soleil’s excess storage capacity as emergency back-up power, a tool to manage daily peak energy use periods, and as a demand response tool to help balance the available supply with energy demand.
This arrangement has already proved to be value creative for the utility and for the local area. Richetta reports that the utility has been successfully aggregating capacity from the complex’s battery packs to decrease peak period congestion across the grid. Air quality in the area — renown for temperature inversion caused smog — has improved due to reduced demand for fossil fuel-based generation.
This anecdote encapsulates Professor Monti’s vision of a coordinated army of ants — these apartment-level battery packs, none of which are particularly powerful by themselves are working together to do the work the rogue elephant power plant struggles to do.
These innovators — Goodman, Monti, Kristov, Khan, and Richetta — all know what I know, that we must pioneer new ways of generating the massive amounts of energy and the goods and services that energy enables, all without burning more fossilized carbon. The task is an enormous one, but the rewards are similarly huge.
Intelligent investors take note.