Gauging the Real Integration Costs of Renewables

The success record of smart grid renewables integration is a mixed bag, with European countries boldly plowing forward while many utilities in the United States exhibit what a former California state regulator called “electrotrophobia” – the fear of change linked to greater reliance upon intermittent renewable energy resources.

Massive amounts of new transmission lines will be necessary in the U.S. to access the best wind resources, yet the biggest buzz is about advances at the distribution level. The truth of the matter is that the integration of renewables is not a reliability issue, as these resources are integrated around the world at penetration rates 10 to 20 times higher than in the United States, without major catastrophes. It is really all a matter of costs to ratepayers and of reducing the environmental impacts of the current reliance upon natural gas fired generation — along with a massive build-out of new transmission infrastructure — to solve the integration problems. As renewable deployments increase, integration costs are expected to go way up (see Figure 1.1 below) – at least from the perspective of U.S. utilities.

In isolated cases, such as Denmark, real and rapid progress on smart grid renewables integration is already reality. While Europe (especially Germany and Spain) appears to be in the lead, the U.S. and Asia Pacific are also making big strides forward. Instead of integration costs going up with higher solar PV penetrations, smart grid experts in Germany suggest the opposite could occur with the right low-voltage distribution network technology, highlighting the lack of consensus on how increased renewables will impact utilities.

The synergy between smart grid and renewable energy seems intuitive, but where the rubber meets the road, much more validation needs to be done. Technologies have come a long way over the past five years. Today microgrids, demand response, and wind and solar forecasting technologies are all reaching commercial status. As a result, the tools on the grid side to better manage the variability of renewables are now increasingly available. These technologies will begin displacing the current reliance upon gas-fired generation at the transmission level over the next six years. This, in turn, will minimize the environmental impacts of grid integration of solar and wind, reinforcing the value of the smart grid.

On the renewables side, equal if not greater progress has been made with new and improved technology and innovative business models. The fact that state-of-the-art wind turbines and solar PV systems with sophisticated micro-inverters can self-provide many of the ancillary services that utilities and grid operators worry about speaks to how far this industry has come in responding to integration issues. Determining the business case for the integration of these renewables through the smart grid is, by necessity, a matter of speculation. Safe to say Pike Research believes the world will be a very different place six years from now.

Article by Peter Asmus, appearing courtesy the Matter Network.

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