economies and the grid

Most of the talk about “the future of the electric grid” has been focused on developed nations, where discussion of “smart grids” and advanced power systems are commonplace. That focus may be misplaced; the big markets driving the future of the modern grid may actually emerge in the world’s developing economies.

In previous blogs I discussed trends that motivate electric utility customers, residential and commercial, to seek some measure of grid independence and energy self-sufficiency (see part 1 and part 2). I discussed the possibility of a special case – DC-consuming loads (e.g., lighting, digital electronics devices for communications, information, education, commerce, health, safety, security, employment, entertainment) – that might be served by renewable energy sources that could improve reliability and possibly reduce costs. While that would be just a slice of residential and commercial utility customers’ total energy consumption, it would be a significant one. That is particularly true given the increasing importance of digital applications for life and business as well as metrics indicating declining security, reliability and power quality for electric utility service, which includes growing frequency and duration of outages due to extreme weather events and grid operational problems.

Likely power sources for these DC “nanogrids” include solar photovoltaic (PV) panels – and, eventually, battery storage and fuel cells – for which efficiencies are climbing and prices are falling. Americans haven’t begun to adopt solar PV at a pace that really affects its price. That’s partly due to historically low energy prices, the high cost of solar panels and resulting long payback periods and steady resistance by incumbent electric utilities to the concept of distributed generation.

In my view, the market driver for improved economies of production will come from outside the United States. Emerging economies, where the lack of a robust, reliable electric grid and kWh usage per capita is a fraction of the energy density in American lives, favor a nanogrid approach. A small solar PV array for modest DC-based electrical needs (e.g., lighting, telecommunications, Internet access) would represent a revolution in personal empowerment in economies that aren’t blessed with – or hobbled by, depending on your view –an existing electrical grid infrastructure.

There are more than a billion people in the world who don’t even have electric light at night and they won’t be getting it any time soon from centralized power grids. Billions more cannot get enough electric energy, or get it cheaply or reliably enough. Their countries by and large simply do no have the resources to deploy the kind of monolithic, centralized grid that we have in the U.S. and other developed economies. Their desire for quality of life and productivity of business will result in a huge market for alternative approaches that can be deployed more rapidly and economically. The silver lining could be that the hungrier economies adopt alternatives, including small, distributed DC systems at a pace that make them more affordable here in the U.S.

I recently came across an interesting company in China that sells DC microgrid systems under the tag line “Life does not stop after dark.” When billions of people all over the world seek affordable, sustainable electricity to join the global, digital economy, you’ll certainly see the enabling technologies dropping in price. In other words, it might be the emerging economies of this world that make it practical and economical for Americans be able to achieve in some degree of grid independence and energy self-sufficiency for applications deemed critical in an increasingly digital economy.

It’s tempting to digress to explore how emerging economies without extensive, centralized grids might fare with a substantially different model [Editor’s note: for a digression, see “Energy Poverty and Skinny Grids,” by Justin Guay]. Many have already bypassed the wired telecommunications networks that developed economies deployed in favor of wireless networks that can be deployed more rapidly, economically and flexibly. New kinds of providers were able to enter the market without the hindrance of existing telecommunication network limitations and regulations and in spite of incumbent “wired” providers’ resistance to the erosion of their markets. There could be big implications for global competition if the much larger populations of the developing economies “leapfrog” the developed economies. But we’ll leave that detour for another day.  

Consider that less than one-fifth of the people in the world (i.e., those in the developed economies) consume more than three-fourths of the electric energy in the world. As a direct result, this minority enjoys a quality of life and economic productivity far superior to the rest of humanity. This disparity won’t last – the rest of the world will catch up! The inherent challenge in that inevitable turn of events is that, even if improved energy efficiency cut electricity consumption to half of our per capita use, the resulting market will require an order of magnitude more electricity production.

Where’s that electric energy going to come from? China’s experience suggests that customers can’t breathe if additional sources all come from coal-fired power plants, at least absent revolutionary improvements in efficiency or emissions controls. Japan’s experience suggests that there are great risks in using massive-scale nuclear generating stations. It seems obvious to me that while human society the world over will continue to use carbon-based fuels in the short run, it must transition to renewables in the long run.

Can renewables meet the need? Answering that question presents another tempting digression. Ray Kurzweil’s Law of Accelerating Returns and Theodore Wright’s work – his 1936 paper, “Factors Affecting the Costs of Airplanes,” is a classic on economies of scale – and others, suggest that Moore’s Law is just a special case of a more profound principle. In my view, that principle might be stated as “all technologies evolve and improve at a steadily accelerating rate to a point of transforming an industry beyond recognition.” That digression would require its own article, so we’ll leave it for another day – though electric utilities surely are pondering its implications [Editor’s note: see “Electric Utilities Must Evolve or Die: Are They up to the Task?” by Jesse Jenkins].

For all the aforementioned reasons, I believe the “hungry economies” will pave the way for customers in the developed world to adopt the means to greater energy self-sufficiency. This eventuality could be a double-edged sword. On the one hand, the “hungry economies” will drive economies of scale that benefit all. Conversely, by doing so, the “hungry economies” could achieve a greater level of global competitiveness that challenges developed nations. Here in the developed world, after all, we’ve “got it made” – even though that means we’re using as much energy as we possibly can without economic hardship and with relative indifference to economics, environmental impacts and sustainability in the longer term.

We’re resting on our laurels when we should be seizing the day.

Photo Credit: Emerging Economies and the Grid/shutterstock