Author: Ayan Kanhai Aman, Policy and Markets Lead, Electron
I recently came across an article by Canary Media, which highlighted some of the challenges that the US grid faces in integrating clean energy into its power systems.
While grid expansion is both a challenge and a solution to the points raised, so too is making better use of the flexible distributed energy resources (DERs) available on tap.
Challenges of the US grid
So, first up, let’s take a look at some of the challenges of the US grid.
1. Loads are growing exponentially and unevenly, particularly as the concentration of data centres varies across states.
This is leading to some US utilities resorting to more fossil fuels, rather than using the abundant renewable energy already available.
2. More renewables are ready to connect – but facing queues and high costs.
As Canary Media notes, “In a world where grid congestion wasn’t a problem, clean power could meet most, if not all, of that near-term growth in demand.”
3. Those connection queues are caused by the need to upgrade the grid.
Investment is high – and growing – but often used in local projects or to upgrade existing lines rather than expanding transmission lines across the country to connect more renewables to the areas of dense population, for example.
All of this affects grid reliability and affordability.
Whether meeting peak demand or protecting against the impact of extreme weather, how can grid operators keep the lights on and costs low?
Flexibility means that these challenges can have a positive outcome.
The role of flexible demand assets
Power flows are now bi-directional. DERs can use electricity yet can also often offer it back into the grid – think batteries in electric vehicles (EVs). Those DERs therefore have an abundance of flexible capacity.
Energy flexibility – such as demand response – can help balance the new demands on the grid. With flexibility, grid operators can ask users to turn up or down their use of DERs in different times and locations.
That capacity simply needs to be managed in the right way, to help grid operators better control power flows and meet the demands of their energy systems.
Coordinating flexible DERs
This can be done in different ways. Tariffs can help encourage some residential flexibility in an “implicit” way. Programs and bilateral contracts exist for bulk demand response requests.
A more coordinated approach is markets run on a neutral market platform, as grid operators in the UK tend to use. Markets incentivise flexibility through “explicit” price signals. Some platforms – such as ElectronConnect – can even help balance demand and supply in near real time, at the local level – important to ensuring reliability at times of peak demand.
Flexible connections can also help speed up connection queues. DERs don’t need to wait before connecting if they occasionally accept curtailment through a flexible or non-firm connection. Markets can then help give those DERs more control over their curtailment obligations.
Electron is working on project BiTraDER in the UK, for example – in collaboration with grid operator Electricity North West Limited, AFRY, and LCP Delta – enabling DERs to exchange curtailment obligations to avoid down time. Price signals coordinate the whole thing, between DERs, leaving the utilities to simply request curtailment and accept the offers.
Building smarter
Yet, the crux of the matter is that the US needs to build more grid. That will always be the case; flexibility isn’t a single solution on its own, demand will continue to grow. This is where flexibility becomes a superpower for grid operators and electric utilities.
Markets running at near real-time can enable more DERs to participate, bulking out the flexible capacity available to buy. That gives utilities more visibility over the DERs in their region.
The insights and data from running markets can help utilities better allocate necessary funds and prioritise where to invest. That investment becomes more targeted, giving better evidence of cost prudence for rate case reviews, among other benefits.
In the UK, network operators have started to develop system operation capabilities supported by flexibility markets, to address the similar grid challenges they face and reap the rewards of a fully flexible energy system.
Learn more about system operation in the UK and how flexibility is incentivised – plus, you can read our response on the next price control framework in the UK.
