Article | April 16, 2021
The evolution of smart grid and the transformation in the power sector?
The concept of a Smart Grid has taken centre stage with an evolution of Solar, Wind energy sources, advanced technologies such as AI/ML , Energy storage , introduction of Electric vehicles, sensors that transmit real time data all of which make a smarter, more efficient electrical power grid possible.
In contrast the Existing grid is facing some complex challenges that include integrating renewable energy, Cyber security, high losses, unable to support large Electric vehicle penetration and empowering consumers to become power producers.
It is time for India to make this paradigm shift that touches right from Generation, Transmission, Distribution and consumption. So, the first step would be the installation of smart meters and Advanced Metering infrastructure which is a key component of the smart grid. The roll out of smart meters has already started and integrating other pieces into this smart meter value chain and other building blocks. This new metering system enables two-way flow of information between consumers and utilities and improve the overall grid operations, cost efficient and support large scale penetration of Electric vehicles. A major transformation is underway and utilities need to develop their roadmap for creating a modern Smart Grid.
Solar is seeing low tariffs and what one can interpret from these solar tariff trends?
In the last one year, more than 10GW worth of solar projects are auctioned and tariffs discovered are between Rs2 to Rs 2.5. These low tariffs are result of many factors that include aggressive bidding, entry of foreign players, and expectation that module prices will further fall. Also this Covid pandemic has shrink the economy, thus there are fewer tenders from the govt. with more developers chasing fewer tenders to stay in the race.
These low prices put enormous pressure on EPC companies and Module suppliers to deliver at these rock bottom prices. These bids take into account the low prices of Chinese imports, now with BCD (Basic custom duty) in force from April 2022 it will be challenging for power producers to continue executing projects at such low prices.
Another concern is the delay in signing PPA’s (Power purchase agreements) by Discoms. PPA’s once signed are valid for the entire term of PPA which is usually 25 years. But given the tender tariffs falling every few months, Discoms prefer to wait and delay the signing or renegotiate the existing PPA, dampening the investor confidence and threatening the viability of the Projects. In these circumstances the role of regulatory oversight increases to protect the interests of all the stakeholders. However, in the coming years technology improvements with addition of energy storage and better forecasting techniques, Solar would become the major source and also the cheapest source. So sunny days ahead of solar.
The decentralized solar and innovative business models and financing?
In the current system of centralized power system, a large power plant produces power, transmits, and distributes it among industries and homes. This process is inefficient as some of the electricity is lost in transmission and distribution.
A De-centralized solar is more efficient to generate and consume power locally. It also helps create small businesses and technicians to build and maintain these solar plants. Also as Solar and battery systems increase and become more economical Peer to Peer energy trading is possible where consumers become prosumers (both producers and consumers) and sell their excess power to their peers.
This next generation Energy Management and Peer-to-Peer Energy trading facilitates buy and sell orders just like share trading stock exchange. The Energy trading platform maps the buyers and sellers as per their bids and settles the trades. By introducing Block chain technology for energy trading further reduces the transaction costs. The possible business models would be Community based Solar plants where rooftops and open spaces could be used to generate power and trade. All of this result in less losses and brings the much needed dynamism in the distribution of energy.
Role of AI and data analytics in the energy sector?
The Power sector generates large amounts of data from various nodes on the grid and unfortunately most of this data go unanalysed due to lack of infrastructure and domain expertise. But now with the maturity in data management systems and two-way communication enabling real time data from various components of the grid giving latest and integrated snapshot of the entire power system, it is possible through the application of AI to provide services such as Fault detection, Predictive maintenance, Power quality Monitoring, and Renewable energy forecasting.
Many discoms are plagued by theft of power and Cyberattacks. The recent Cyber attack on Maharashtra power grid is an example that caused massive power outage in Mumbai last October plunging the city into darkness. By using the power of AI/ML, algorithms can be trained to detect any attack based on certain attributes. As soon as the attack is detected an alert is sent to the security engineers to bring the system to safety mode. In addition, Smart meters with pre-paid mechanism are expected to be deployed for remote meter reading and accurate billing thus preventing revenue loss.
AI/ML has the potential to cut energy waste, lower energy costs, and bring more operation efficiencies for the utilities.
Strategies in EV charging and integration with smart grid?
EV’s are promising solution to cut greenhouse gas emissions, reduce the cost of transportation and improving the health of citizens. The emerging business models are Public charging stations, third party owned operated charging station, and owner operated charging station.
However, the ground reality is far fewer EV’s are running on road due to higher cost, Range anxiety, and long charging times. So, there is need to work closely with all the stakeholders right from utilities, Regulatory bodies, Car manufacturers, charging station operators to expedite the process of EV related infrastructure and incentivize customers to adapt to EV’s rather than convention vehicles.
In your question you asked about integration with smart grid and this is a term that captures the shift from basic to smart charging. A smart grid is key to smart EV charging as large number of EV charging at same time can degrade grid performance causing voltage and frequency fluctuations and cause peak power demand or sudden drop in demand. With smart grid in place it is possible to do load balancing, adjust charging patterns and avoid peaking of power.
Also one more challenge is there are 3 competing standards and India should define its own standards and enable charging of any vehicle at any charging station. This interoperability is possible by developing standards for front–end and back-end communication and signalling process between Electric vehicles and charging stations and the grid that supplies the power. Smart grid is essential for large deployments of EV’s.
Investment opportunities and job creation in this transformation to clean power?
Covid has changed the entire investment paradigm and made all of us Environmentally conscious. This is wake up call to prioritize a more sustainable approach to investment in companies that are high on Environmental, Social and Governance score.
The recent momentum in ESG investment with more than 3,300 ESG funds is an indication that businesses that demonstrate business ethics, transparency, Sustainability benefit companies and investors and attract best talent too. The spectacular rise of share price of Tesla is a clear message from investors on clean energy and EV transportation. As the world is getting serious India has a catching up to do from the findings of Refinitiv on ESG.
As Asset managers, Pension funds, Oil and Gas companies evaluate their exposure to fossil based energy sources and switch towards clean energy this is going to create new Green jobs. These new Green jobs range from retrofitting homes with solar panels, providing home based charging stations, energy efficient appliances, Solid waste mgmt, e-waste mgmt. Similarly, Smart cities, Green buildings, greening of enterprises can be achieved by training the work force on these new concepts and driving investments towards job creation and sustainability.
In summary, power sector is in for a major transformation and utilities, industries need to tap the right talent to deal with this disruption and reap immense benefits.
Article | March 11, 2020
Renewable energy is here to stay. It’s becoming a much larger part of the United States’ total energy production, and it supports a more diverse energy network to give customers control over how their energy is produced. However, the importance behind this relatively new way to produce energy doesn’t stop there. Below are some of the most impactful areas renewable energy supports, specifically our infrastructure, economy, and environment, and how City Electric Supply is expanding into this growing market.
Article | April 20, 2021
Energy is an important feature in the economic and political development of a country. In developed nations like the USA, energy expansion has now reached a point where renewable energy sources also play a large part in the production of electricity.
To meet the energy demands of the country, most production of renewable energy comes from fossil fuels and other non-renewable energy sources.
Around 25% of the world’s energy is generated with renewable energy resources- mainly solar, wind, hydropower, and in some cases, geothermal. It is one of the fastest-growing electricity sources.
Renewable energy is collected from resources that are abundantly available in the environment, like the sun or wind. There has been a growing interest in renewable energy production as fossil fuels are depleting. In most parts of the world, renewable energy has become a primary source of energy production.
Renewable energy is preferred as they produce fewer greenhouse gases than non-RE sources. There are several other advantages to renewable sources like lower carbon emissions, reduced air pollution, and other socioeconomic benefits.
However, unlike non-RE sources, there are challenges in renewable energy like economic, political and regulatory barriers, structural, social, and technical challenges which require advancement in technology, and a heavy investment with a proper understanding of obstacles it faces. Some obstacles are due to technology associated with renewable energy, whereas others are because of policies, marketplace, regulations, and infrastructure.
Impact of Covid-19
The Covid-19 pandemic has brought the world to a grinding halt. It has severely impacted individuals and businesses alike, with many of the latter being closed down permanently. Similarly, the pandemic has also impacted the expansion of clean energy systems by forcefully curbing any investments.
The technology and adoption of renewables have been making uneven but sure progress. The global pandemic has slowed down this development. According to International Energy Agency, the global share of electricity supply from renewables had reached 28% in 2020 from 26% in 2019, but the growth is expected to slow down further. The total energy supply is set to reduce by 13% from 2019. This substantial decline can be attributed to supply chain disruptions, lockdown, and emerging financial problems. Transport biofuel production and renewable heat consumption are projected to decline due to lower industrial activity.
Governments have an opportunity to promote and accelerate the use of clean energy by incentivizing building, technology, and infrastructure across the country. This would be crucial to rebuilding the economy, create jobs, and build efficiency.
Capital Costs and Investment
The most obvious challenge of widespread adoption of renewables is cost, predominantly infrastructure costs like building and installing solar and wind power plants. Although it is quite cheap to operate and maintain solar and wind power plants, installation becomes more and more expensive.
Over the last few years, even though the prices of installation of solar panels has fallen significantly, it remains higher than non-renewables. On average, a 2-kilowatt solar panel system costs $4,159 after tax credits, whereas the capital cost of a gas-fired power plant would cost lesser than that.
In the last two years, investment in renewables has increased, but that is only because the investments in fossil fuels have been rapidly falling. Clean energy investments still fall short of what is necessary to convert into a more sustainable future. To ensure continuous investment in sustainable energy, policymakers have to focus on short investment turnaround, focus on rapid environmental gains favoring cleaner energy generation.
Power on demand
One of the most significant challenges of renewables is the ability to provide power on demand. In the case of solar power, you only get energy during the day and only when it is sunny. As for wind energy, power is generated only when it is windy. There is an intermittent generation of power in renewables which wouldn’t be a problem if there were appropriate energy storage solutions. The biggest test in providing power on demand is storage. Even if homes, businesses, or states install wind energy systems or solar panels, storing the generated energy is still an unsolved issue.
Opponents of renewable energy highlight the reliability factor on solar and wind to augment support for coal, gas, and nuclear plants, which provide baseload power. This argument is used by lobbyists to drive out investment into renewables, thus becoming a barrier to widespread adoption of wind and solar energy.
Renewable energy plants have grids that require a large area of land. It can be unappealing to customers to switch to renewable energy sources as it is conditional depending on the size of the land. Not all states and regions are apt to build solar panels or have wind turbines as they are dependent on the geographical location. For example, building solar panels in California makes more sense than building them in New York as the former has an abundant supply of both sun and land.
Renewables operates on what is known as a decentralized model. In a decentralized power plant, small generating stations are spread across a larger area that works collectively to deliver power. In the case of coal, nuclear power, or natural gas, they are highly centralized and depend on fewer high output power plants.
Decentralized systems prove to be a problem for siting and transmission of energy created by solar or wind. Siting is needed to move blades or solar panels to large pieces of land. To do so requires to draw up contracts, negotiate, acquire permits, or build community relations; all of this can delay or kill a renewable project even before it begins.
Businesses can incur additional charges due to demand and delivery which seems like a significant challenge for them. Utility services apply these charges to recover costs of purchasing energy and maintaining power lines and energy lost in the transmission system. Moving power sources closer to your business will help you avoid such preventable expenses.
The next challenge to overcome in renewables is the transmission of generated electricity. Transmission means the transfer of electricity from where it is generated to where it is consumed. Most transmitters that exist in this day and age are built for coal and other fossil fuels and not renewables. To make things easier for transmission of clean energy, there needs to be a significant infrastructure and technological development, which cost a lot of money.
Making the economics work with financing and siting can prove costly for developers and customers alike.
Policies and Regulations
Unfortunately, the fossil fuel industry is backed by multi-billionaires who wield a considerable amount of political influence. This severely affects the chances of expansion for the renewable industry. Industry experts estimate that the USA spends upwards of $60 billion on subsidies for fossil fuels every year. The taxpayers have helped fund the industry’s research and development, drilling, mining, and generation of electricity. Renewables like wind and solar enjoy much lesser subsidies and political backing. The fossil fuel industry has used its enormous power to spread misinformation about climate change.
To increase public interest and investment in renewables, there need to be clear and concise legal procedures and regulatory policies. Having proper regulations in place creates a stable environment for investment and overcome hurdles and can anticipate the revenue streams. Large-scale renewable energy projects require a large amount of capital which is hindered by the failure of proper policies that fail to attract private players.
Frequently Asked Questions
What is a major challenge with using more renewable energy?
Renewable energy is competing with fossil fuels and nuclear technology. Other major challenges include underdeveloped infrastructure and lack of economies of scale.
What are the benefits of using renewable energy?
Some benefits of using renewable energy are lower energy costs, reduction of emissions, massive positive impact on environment, and marketing opportunities for businesses.
Is renewable energy cheaper than fossil fuels?
Fossil fuels are subsidized which makes it cheaper at the beginning. However, renewables get cheaper to maintain over the years hence making it cheaper than fossil fuels.
What is the cheapest source of renewable energy?
Solar PV and on site wind are the cheapest sources of renewable energy sources.
"name": "What is a major challenge with using more renewable energy?",
"text": "Renewable energy is competing with fossil fuels and nuclear technology. Other major challenges include underdeveloped infrastructure and lack of economies of scale."
"name": "What are the benefits of using renewable energy?",
"text": "Some benefits of using renewable energy are lower energy costs, reduction of emissions, massive positive impact on environment, and marketing opportunities for businesses."
"name": "Is renewable energy cheaper than fossil fuels?",
"text": "Fossil fuels are subsidized which makes it cheaper at the beginning. However, renewables get cheaper to maintain over the years hence making it cheaper than fossil fuels."
Article | February 27, 2020
Electricity is a unique kind of commodity— although it is not perishable, it is (still) hard to store on a large scale. Electricity must be generated relatively close to where it is demanded and at the time it is demanded. Therefore, operators must constantly keep an eye on the use of electricity. When demand is high, operators will signal the generators to increase their output; if less, generators get the instruction to generate less electricity. Roughly, this is how the grid works. The devil is in the details: the flexibility of power plants is unique to its type. Nuclear and coal power plants take the longest to start up and shut down, followed by oil/diesel power plants.