Leveraging Grid Edge Integration for Resilience & Decarbonization

Modernizing the U.S. Energy System: Opportunities, Challenges, and the Path Forward
Find out more about the briefings in this series below:
June 04	Towards the Energy System of Tomorrow
June 11	Modernizing America’s Transmission Network
June 25	Leveraging Grid Edge Integration for Resilience & Decarbonization

The Environmental and Energy Study Institute (EESI) invites you to view our briefing series about the climate benefits of modernizing the nation’s energy system.

The energy system is rapidly transforming, especially at the “grid edge” where “smart” building technologies, electric vehicles, and distributed energy generation combine and interact in new ways. These innovations provide opportunities to re-envision the nation’s energy system and how we use, store, and move energy around the country. They also create new ways to increase the resilience of people, communities, and the system itself without increasing greenhouse gas emissions. Briefing panelists discussed policy opportunities such as a federal energy efficiency resource standard, state level efforts, and the nexus between buildings, transportation, energy storage, and the grid.

HIGHLIGHTS

Opening remarks by Representative Peter Welch (D-Vt.)

• There is immense economic opportunity that will be generated by the transformation that our country, environment, and world need. Facing the challenge, rather than denying it, is the way to create a stronger economy.
• As a Member of Congress, I focus on how to address the challenge in a way that is effective and creates stronger communities and better local jobs.
• Bipartisan support exists for some of the measures we need to take. For example, Rep. Welch is working with Rep. David McKinley (R-W.VA.) on our HOPE for HOMES effort [introduced as the HOPE for HOMES Act of 2021 (H.R.3456)], which aims to make homes more energy efficient using tax incentives, while also providing the know-how.
• We need a renewable energy standard. Rep. Welch introduced legislation with Rep. Yvette Clarke (D-N.Y.), the American Renewable Energy Act of 2021 (H.R.3959), which will create incentives for utilities to engage faster with renewable energy.
• There is increasing interest from policymakers to support the policies that will make better use of the grid edge to reduce carbon emissions and help us to aggressively address climate change.

Monica Neukomm, Technology Manager for Grid-Interactive Efficient Buildings (GEB), United States Department of Energy - Building Technologies Office (BTO)

• The Department of Energy recently released A National Roadmap for Grid-Interactive Efficient Buildings (GEBs).
• What are Grid-Interactive Efficient Buildings (GEBs)?
  • GEBs are energy-efficient buildings with smart technologies that are characterized by the active use of distributed energy resources [primarily renewables] to optimize energy use for grid services, occupant needs, preferences, and cost reductions in a continuous and integrated way.
  • GEBs need to be connected to the grid, enabling two-way communication. A building is able to receive a signal from the grid and then respond back. This smart system allows for optimized services based on different preferences or needs to allow for the shifting or shedding of energy use.
• Why are GEBs needed?
  • The Building Technologies Office (BTO) has been focused on energy efficiency, and in the last five years the office has broadened its energy efficiency work by also considering load management. This means that BTO is interested in the timing of energy use, the amount of energy used, and when energy use can be modulated or quickly shifted. BTO started expanding this work based on stakeholder feedback.
  • In addition to the rise of renewable energy, there are also increasing trends toward decarbonization goals and greater electrification through vehicles and building equipment. These will require better demand side management.
  • There is also a focus on the overall ability—through demand flexibility and energy efficiency—to reduce costs and improve system infrastructure and reliability.
  • Demand flexibility requires more control of equipment, enabling consumers to have smart buildings that can better meet their preferences and needs.
• GEBs could save up to $18 billion/year in power systems costs by 2030, or roughly $100 to $200 billion between 2020 to 2040.
  • The range in benefits is driven by different assumptions about future adoption rates and future energy and capacity costs. The report, A National Roadmap for Grid-Interactive Efficient Buildings, looked at low-, mid-, and high-adoption rates. Most findings focused on the mid-adoption perspective.
• Nationally, GEBs could prevent 80 million tons of carbon emissions annually by 2030, or six percent of all power sector carbon emissions.
  • The primary driver of emission reductions is a decrease in fossil fuel-based electricity generation due to lower overall electricity demand. Additionally, changes in the timing of electricity consumption through demand flexibility measures and technologies can result in proportionally more electricity being consumed during hours with lower emissions.
  • The report also found significant regional variations. For example, regions that are more reliant on carbon intensive generation resources, such as the upper Midwest, will provide greater opportunities for emission savings through energy efficiency and demand flexibility.
  • Emission benefits were somewhat conservative because demand flexibility measures were controlled and dispatched to reduce system costs.
• Recommendations for GEB adoption include:
  • Advancing GEBs through research and development;
  • Enhancing the value of GEBs to both consumers and utilities;
  • Empowering GEB users and operations; and
  • Supporting GEB deployment through state and federal enabling programs and policies.
• The Department of Energy has a goal of tripling energy efficiency and demand flexibility in residential and commercial buildings by 2030, relative to 2020 levels.

Eilyan Bitar, Associate Professor, Electrical and Computer Engineering, Cornell University

• Electric vehicles (EVs) will have an impact on the grid as we transition to greater reliance on them for transportation.
• There is enormous potential for EVs to serve as assets to improve the efficiency, reliance, and sustainability of our power systems.
• Electric vehicles are coming. Various automakers have pledged to completely electrify their fleets in coming years. GM has pledged to go all electric by 2035, and Volvo has pledged to do the same by 2030. Many others are investing heavily to increase their ability to electrify their fleets.
  • Today, EVs represent roughly two percent of all new vehicles, but the rate of adoption is accelerating, driven primarily by declining costs, specifically for batteries. Battery costs have decreased from roughly $600/kilowatt hour to $137/kilowatt hour from 2013-2020. EVs are expected to reach price parity with internal combustion engine vehicles by 2025-2026.
• The big question among policymakers, utilities, and others is if the grid is ready for the increased electricity demand EVs will bring. The short answer is, it depends on how we manage this increase in demand.
• The OptimizEV pilot that New York State Electric & Gas recently completed in upstate New York explored various scenarios for residential EV charging.
  • The pilot was a real-world study of residential EV charging patterns for 35 participants from January 2020 to May 2021. Participants were equipped with level two charging stations in their homes, rated at 7.5 kilowatts max power. For reference, that is roughly three times the peak power of an average U.S. household.
  • Three scenarios were studied:

1. Unmanaged EV charging: customers were allowed to charge their vehicles anytime they wanted.
2. EV charging based on time-of-use pricing: customers were charged different prices at different times of the day to incentivize them to shift load to times when prices are cheaper.
3. Optimized EV charging: utilities could control when EVs drew power, making it possible to optimize charging.

• In the first scenario, load peaked at around 120 kilowatts in the evening. People tend to plug their cars in when they come home from work, around five to seven PM. People then unplug in the morning, when they leave for work. The current distribution system could struggle to meet such an increase in peak load.
  • When people begin charging in the evening, they tend to complete charging before their departure time the following morning, which reveals some underlying flexibility. It shows they do not need to charge their vehicles immediately. Can we therefore provide incentives for customers to charge during off peak hours?
• Many utilities have explored this idea using time-of-use pricing, in which higher prices are charged during peak hours (scenario two).
  • In principle, customers who are flexible could shift to charging at off-peak hours. This occurred in scenario two, but the peak energy use was actually larger due to the synchronizing effect that time-of-use pricing has on the load. Everyone would plug in their vehicles as soon as off-peak pricing began, instead of plugging their vehicles when they arrived home, at various times during the evening.
• To address this challenge, it is possible to instead ask customers when their cars need to be charged by (scenario three). The longer they are willing to wait, the less they pay for electricity. By knowing customer deadlines, utilities can coordinate when EVs are charged and minimize the impact on the grid while still ensuring the vehicles are charged in time and peak load is managed.
  • Scenario three eliminated the effects of EVs on peak loads.
• A big driver behind the push to electrify transportation is the promise that the transportation sector’s impact on greenhouse gas emissions will decrease.
  • In the United States, the majority of energy that supplies the transportation sector comes from petroleum, which results in greenhouse gas emissions. If we were to displace a large fraction of this petroleum with electricity, the extent of emission reductions would ultimately depend on the mix of electricity generation.
• If we are going to truly realize a transportation sector that has zero emissions, we need to increase the share of electricity coming from renewable energy.
  • However, there are challenges. Solar and wind power are highly variable and can be difficult to forecast. This complicates the challenge of balancing supply and demand. Because of this intermittency, there is a need to back these resources up, either with conventional generation like natural gas or with energy storage. The latter is a very costly proposition, but as we electrify our transportation fleet, we are essentially transitioning to a system that looks like a large bank of batteries, or energy storage devices.
  • It becomes possible to coordinate batteries through optimized charging, to absorb supply intermittency. This will give rise to a symbiotic relationship between EVs and renewable energy.
  • EVs are clean if their electricity is supplied by stable, renewable energy resources like wind and solar. EVs are also flexible, so they can promote the integration of renewables.
• If left unmanaged, EVs will stress the grid, potentially requiring costly infrastructure upgrades
• However, EVs are flexible. We can use this flexibility to mitigate impacts through optimized charging. Also, EVs can be used to balance or help support the integration of renewables.
• The ability to discharge your batteries back into the grid would allow you to potentially ride through blackouts for several days—or potentially indefinitely, if you also have solar panels. EVs can increase resilience by providing emergency backup power during outages.
• There are risks. As we increase the ways in which we measure and control the power grid, using cellular communications networks with the internet, the risk of cyberattacks also increases. It is crucial that we harden cyber infrastructure to ensure resources are available when we need them and not at risk.

Janet Besser, Managing Director, Smart Electric Power Alliance

• The Department of Energy (DOE) defines a microgrid as a group of interconnected loads and distributed energy resources within a clearly defined electric boundary that acts as a single controllable entity with respect to the grid. Microgrids give the ability to generate power within a defined boundary and then island off from the rest of the system when there is an outage.
• Microgrids are being looked at increasingly by communities, customers, and utilities as a way to manage resilience on the grid in the face of increasing storms and other natural disasters.
• A key difference between microgrids and other distributed energy resources is the ability to island—they can provide backup power during an outage or event.
• Microgrids provide multiple benefits. Customers want to avoid outages and have control over power quality. Communities want to make sure critical services are not interrupted during a storm. Utilities want to maintain safe, affordable, and efficient operations.
• In order to make microgrids work:
  • The value streams of customers, communities, and utilities must converge to make microgrids economic;
  • Gaps that relate to standards and common terminology need to be addressed;
  • The utility business model that makes sense for deploying a microgrid needs to be understood;
  • The compensation mechanisms for either the microgrid provider or developers and customers need to be laid out; and
  • There needs to be a regulatory framework under which all of this operates.
• With regard to the lack of standards and common terminology, organizations like the National Institute of Standards and Technology (NIST), run through the Department of Commerce, provide resources to advance standards and framework interoperability.
• There are a number of really helpful federal programs. There are DOE-funded pilot and demonstration projects geared toward exploring “regulatory sandboxes” to understand what works and what does not.
  • The key thing to understand about microgrids is that they are all about partnerships.
• Microgrids have been around a long time. In the past, they have used diesel generation, or maybe natural gas or oil. There is an increasing focus on renewable energy and clean microgrids that provide support when the grid goes down or make it possible to decarbonize with greater power quality.

Dana Cabbell, Director, Integrated System Strategy, Southern California Edison

• The Pathway 2045 Roadmap explores what is needed to enable a green energy future in California. An in-depth analysis found that three profound changes are required to achieve 100 percent carbon neutrality by 2045:
  • Decarbonization of the electric sector. As we electrify our load, moving to more transportation and business electrification, the analysis showed a 60 percent increase in energy demand, with a 40 percent increase in the peak load base. To meet demand, the transmission and distribution grid will need to be able to integrate gigawatts of renewable energy and energy storage. Costs include about $170 billion for clean energy sources and $75 billion in grid investments by 2045. The electrification of transportation and buildings will need to grow more than 70 percent.
  • Hard to electrify industrial applications will need to switch to more low-carbon fuels, like hydrogen and renewable natural gases. Low-carbon fuels will also be needed for backup generation, to ensure grid reliability if there is a major system disturbance.
  • Sequestration of remaining carbon through natural processes and engineered solutions, so that we can really achieve a 100 percent clean energy future.
• A systematic approach to reimagining the grid to meet greenhouse gas reduction goals begins with understanding the grid's purpose and challenges, including what customers will need from the grid, how the supply mix will need to evolve, how regional climate change affects the grid, what will need to be endured, and what will need to evolve.
• To develop grid options, we looked at the unique needs of different southeast California regions or portions of the grid and identified local grid challenges. We prioritized specific grid objectives and required capabilities and determined which technologies and solutions, both new and existing, would best address those objectives.
• Reimagining the grid comes down to more customer-centric thinking. We must think differently about how we design and operate the grid.
• When trying to find ways to achieve Pathway 2045 goals and withstand climate change impacts, a host of challenges arose, including urbanization, demographics, and local factors affecting the economy and electricity use. There is a need to adopt new technology and enable control of how and when customers store and generate energy.
• Power quality is going to be very important, as well. Because of all the robotics or inverters that are being put in, we really need to pay attention to ensuring that the electricity coming to customers is of the highest quality. Customers' reliance on electricity will continue to increase and evolve.
• Moving forward, grid planning, design, and operations will need to shift from a focus on systemwide standards to one that meets multiple objectives based on specific and localized needs.
• Changes in practice should include:
  • Strengthening our “forward radar,” or our ability to increase visibility and track upcoming customer supply and climate trends;
  • Moving from a deterministic planning approach to more of a risk-based, multi-scenario approach;
  • Greater integration of generation, transmission, distribution, and customer resources to optimize planning and operating decisions;
  • Recognizing the heterogeneity of different regional needs, moving from uniform grid architectures to region-specific, “modular” designs; and
  • Incorporating flexibility into future grid architectures with technologies that can rapidly reconfigure and isolate portions of the grid while using storage, distributed energy resources, and controllable loads.

Q&A

Q: Innovation, interconnectedness, and integration at the grid edge are rapidly picking up speed. But we are not quite where we need to be. How would you describe the main challenges ahead? Policy or regulatory, technological, human behavior, or something else?

• Neukomm: From the Grid-Interactive Efficient Building perspective, technology is really important, but we can continue to develop technology and much of it already exists. The challenge is really more on the regulatory side. Today, there are not many incentives for people to contribute with demand flexibility. We need to increase incentive options. Also, it is critical that we put continued and new focus on the workforce angle. More people need to be comfortable with the technology we discussed today.
• Bitar: There are three challenges: regulatory, behavioral, and security. From the regulatory perspective, we need to change utility business models and unbundle the distribution system. In order to allow these resources to perforate, they need equal access. We also need to focus on equity and ensure these transformations do not adversely impact certain segments of society. From the behavioral perspective, the ability to control distributed energy resources owned by individual consumers requires you to engage with these customers, whether through new markets or incentives. There is a need to ensure the response is reliable enough to displace conventional generation or infrastructure. Finally, security is crucial. The challenges need to be treated as a forethought, not an afterthought.
• Besser: A major challenge is the lack of incentives for customers, particularly around grid-efficient buildings. Regulatory practices do not provide enough incentives to utilities for deploying new technology and making investments in grid modernization. The other big issue is behavioral. Educating customers and engaging with them needs to take place. There is a need for a better understanding of how costumers interact with and use electricity.
• Cabbell: From a utility perspective, we need to look at how we are going to become partners with our customers to ensure they are willing to join in all of this. They need to be educated on why it is important and what it all means with different devices and communications coming into their homes. Better and continued communication and education are needed.

Q: What are the types of incentives we need and what are the information gaps that are preventing incentives from being deployed effectively?

• Cabbell: Providing initial financial incentives through different types of programs will allow costs to go down. Continued understanding of how customers behave is important. Some of the gap is in customer communication and education.
• Besser: The gaps center on understanding customers and what they want, and to make sure they have tools to respond to incentives. When it comes to something like time-of-use rates, if they do not know there are better times to use electricity until after the fact, it is hard for them to respond.
• Bitar: Most importantly, incentives need to be structured in a way that is easy for customers to understand. Also, different customers are motivated in different ways. Understanding how to construct a diverse array of incentives that target different customer segments is crucial.
• Neukomm: There is a need for customer segmentation. Customers respond to different incentives, based on different pilots that have been conducted.

Q: What would you say to someone who questions whether grid-edge advancements could truly make our energy supply more resilient and more reliable? What would you say if they claimed that grid-edge integration inadvertently creates haves and have nots?

• Neukomm: From an energy-efficiency perspective, we are looking at changing the paradigm and having a more dynamic approach. We have seen in pockets and small pilots that pushbacks or doubts on performance do not hold true. We want to document that on a larger scale with a national perspective in different regions to actually show that these demand-side solutions will show up when needed.
• Bitar: One possible path forward to ensure resilience and equity in terms of access is to share these resources, for example through innovative financing networks where multiple households contribute to funding construction of shared storage or shared solar. So, if there is ultimately a blackout or outage, the value those resources would bring would be shared across a much broader population in a more efficient way. There are multiple ways of ensuring equity in terms of access.
• Besser: The key factor is to integrate these resources. Customers are already adopting new technologies in increasing amounts, and will continue to do so. Unless we have policy support and a regulatory framework, there will be haves and have nots. The key is to put a policy framework in place that enables utilities to integrate these resources and use them alongside individual customers. That's how we will benefit all customers and decarbonize the grid.
• Cabbell: It is important to focus on the needs of different areas within the power grid, and understanding what those specific needs are. If there are areas that are more disadvantaged, what can we do specifically within those communities to provide them with the same advantages for resilience? We need to look at the grid and come up with different architectures and designs so that all customers can take advantage of these grid-edge technologies in order for them to be resilient in blackouts, wildfires, etc.

Highlights compiled by Ashlyn Devine