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A Potential Power Industry Pivot Point Arises in Harvey, Irma and Maria's Wake

The nature and structure of much of Florida’s electricity grid and services infrastructure will be determined in coming weeks and months as utilities, government and regulatory authorities rebuild in the wake of Hurricane Irma. The ripple effects may extend nationwide, and beyond US borders.

Coming at a time of rapid technology-driven market and regulatory change, public and industry stakeholders have a once-in-a-generation opportunity to fundamentally reinvent the way electricity is produced and distributed, and create a new power and energy market and industry model in the process. Or they can invest those many billions to rebuild along conventional lines. 

Plus ça change... 

Next Era Energy-owned Florida Power & Light (FPL) is Florida’s largest electric utility. In 2013 it was awarded $3.4 billion dollars in Dept. of Energy smart grid grants under then Pres. Barack Obama’s American Recovery and Reinvestment Act to strengthen its grid infrastructure so as to enhance its resilience and efficiency. The utility is able to earn a regulated return of between 9.6 and 11.6 percent on those investments via the revenues it brings in from customers. 

FPL management is touting that its smart grid investments have enabled it to restore electricity services to nearly all its customers much faster than would have otherwise been the case. Yet, Irma, as well as Hurricane Harvey in Texas and Maria in Puerto Rico, wiped them out. 

It seems it should be very clear that a fundamental flaw in conventional utility industry wisdom, that there is a deep fault in the fundamental conceptual approach they take to electricity generation and distribution. Going head-to-head, strength against strength against the forces of nature is a losing proposition. 

Even the latest in storm-hardened, disaster-proof, smart grid systems and technology cannot withstand nature’s most powerful, destructive phenomena. Perhaps it’s time to take a different approach, and though some of the technological components are still at a fledgling stage of evolution and integrated systems are yet to be proven long-term across various scales, one is readily at hand. 

A Grid Outage for the Record Books

In a Monday morning, Sept. 11 press conference, FPL President Eric Silagy reported that more than half of Florida’s grid-connected energy consumers lost grid power. That would have amounted to some 10 million-plus people – about two-thirds more than the record-setting number (6.2 million) across the Northeast that lost grid power during Hurricane Sandy, The Atlantic’s Alexis C. Madrigal reported in a Sept. 21 feature article.

“We’ve never had that many outages. I don’t think any utility across the country has. It is, by far, the largest in the history of our company,” Silagy said. 

As the Miami Herald’s Nicholas Nehamas and Nancy Dahlberg wrote in a Sept. 21 news report: “Tens of thousands of customers suffered a week or more without power. Overall, nearly 4.5 million of Florida Power & Light’s 4.9 million customers had their power fail, including 92 percent of accounts in Miami-Dade County and 85 percent in Broward County.”

Nehamas and Dahlberg point out what can be viewed as the folly of the conventional  approach to producing and distributing energy throughout the nation, all the more so given expectations of more frequent and more intense extreme weather events as global climate continues to warm. 

“The widespread outages happened despite FPL spending nearly $3 billion over the past decade to ‘harden’ its electrical grid against the next monster storm. The investor-owned utility — which by law makes a guaranteed profit for shareholders between 9.6 and 11.6 percent — says it responded quickly to restore outages and that its storm-hardening efforts are working,” they wrote.

“The damage totals from Hurricane Irma are still being tallied, but early numbers are in: As of Tuesday, the storm is estimated to have caused between $42.5 billion and $65 billion of damage. That's according to a Tuesday release by Irvine, Calif.-based analytics company CoreLogic”.

A Grid of the Future Today?

It’s one thing, and much easier, to highlight the faults and missteps, and lay blame, in the wake of disasters, and quite another, much more difficult, undertaking to identify, much less craft and enact plans to improve our ability to withstand and recover form them – in this instance reduce our vulnerability and enhance our resiliency, in other words. 

Fortunately, power and energy industry developments over the past decade and more leave us in a position to take an alternative, more flexible, environmentally “in-tune,” strategic approach, one that also holds the potential to address longstanding socioeconomic issues from the local to the national.  

One of the longest standing and most reputable advocates of increasing energy efficiency and the use of local, distributed renewable energy resources in the US, the Rocky Mountain Institute (RMI) on Sept. 22 laid out the case for taking this new tack and direction in an editorial entitled, “The Importance of Distribution-Scale Solar for Grid Resilience.” 

“As cities and utilities rebuild, there’s an option to look toward solutions that provide grid resilience, such as distributed energy, especially solar and battery storage sited on distribution grids. 

“In fact, a growing body of evidence suggests that states and countries that replace old, costly fossil-fired generators with renewables, efficiency, demand response, and other distributed energy resources (DERs) have found greater reliability and resilience at lower costs,” RMI’s Titiaan Palazzi and Laurie Guevara-Stone wrote.

A Technological, Society-Wide Leap of Faith 

Going further, Palazzi and Guevaras-Stone assert that taking this alternative approach need not come at a high cost.

“In fact, distributed generation can be cheaper than the alternative, as illustrated by Bandera Electric Cooperative (BEC) in Texas. Bandera, on the outskirts of San Antonio, is home to Bandera State Park, a popular summer spot for people who want to cool off in the Medina River. The area receives throngs of tourists over the 4th of July weekend.” 

BEC CEO Bill Hetherington explained that the transformer that feeds electricity on an average day operates at around a 70 percent load factor. It doubles, to 140 percent, over Fourth of July holiday weekends. 

BEC determined that replacing the transformer would cost several hundred thousand dollars, according to RMI’s researchers. Spending that much to safely and securely meet peak loads for one weekend a year isn’t an attractive economic proposition, or in any way efficient in terms of balancing electricity demand and supply. 

“The reality is, if we upgrade the transformer, we’re overbuilding for this peak,” RMI quoted Hetherington. “We would spend a lot of capital for a handful of hours per year.” Instead, the utility installed a 1.9 MW solar array through a power purchase agreement (PPA). BEC sold 100 kWh blocks of solar electricity to its customers who wanted to support solar but could not put it on their own roof.”

This is the same situation as we move up in scale, from site-specific to local area, town, city and region-wide power and energy generation and distribution. Fortunately, based on mounting evidence to date, the same combination of local, distributed renewable energy resources and advanced energy storage solutions integrated with intelligent smart energy management and distribution systems, such as mini and microgrids, are proving to be equally scalable. The multi-billion-dollar question is whether the wherewithal exists to take that evolutionary leap of faith.

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