October 2013 Brief: Volume 20, Number 28
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Distributed Generation and Storage May Be an Answer
by Deborah D. Thornton
This brief reviews electricity distribution issues, including generation, management, and storage. Local distribution is generally where most end-customer problems occur, generally weather related. In Iowa either wind or snow knocks out the power. Occasionally lines are damaged by general aging issues. Significant improvements were completed in the mid-1900s through the installation of automatic switches, which better control weather-related outages. Newer and buried lines also have less damage. However, the recent average growth rate of spending on this part of the system is less than 2 percent, and has declined since 2006. This is not sufficient, according to American Society of Civil Engineers (ASCE) estimates.
On average all U.S. customers were without power for 112 minutes in 2011, a miniscule amount of time. However, this is the “highest level in 10 years.” Nationally, approximately 500,000 people lose power for an hour or more every day. The estimates of economic impact of this power loss range from $80 to $188 billion per year.  A power outage costs the average commercial business $1,000 per hour, with industrial costs of $4,000 per hour.
Potential solutions include distributed, or customer-owned and controlled, generation, storage, and backup systems. The U.S. Energy Information Administration (EIA) predicts that distributed electricity will grow by almost 17 percent per year through 2035. This is significant growth, a “36 fold increase from 2012.” The EIA expects this rate of growth to be “considerably” higher than that of any other source. These “micro-grid” systems are most commonly solar panels, driven by large tax incentives.
One of the problems with solar generation is that peak generation (noon) does not correlate with peak usage or demand (evening) in homes. Net metering, where power is sold back to the main grid, partially addresses this issue. In net metering the extra energy generated during peak solar times is fed back into the overall system and the owner of the solar panels is paid (credited) for generation. There are discussions about capping the amount a consumer could be credited for the generation in order to ensure that something is paid toward overall system costs. A better solution is increasing distributed storage to go along with the distributed generation, keeping the electricity generated at that location for future use.
Most households do not have sufficient distributed storage equipment available. The primary means of storage is through batteries, either lead-acid or hydrogen. Your typical 9-volt battery will, unfortunately, not suffice.
A complaint about electric cars is that once the battery storage capacity falls below 80 percent, it can no longer power the car. These advanced lithium ion batteries cost from $650 to $1,000 per kilowatt hour, with a 24 kWh battery being required, and add significantly to the cost. However, at 80 percent storage, or about 19 kWh, which is the amount of electricity used on a daily basis to power a home, these batteries can be re-purposed after their useful car life is over to provide distributed storage, according to a study in the June 2012 Journal of Energy Engineering. The Purdue University study determined that a 4-kW solar panel backed up by a 0.5-kW battery, smaller than that of an electric car, could save over $5 a day in electricity costs during August. This would save about $150 in real costs to the consumer, as well as relieving peak demand. Other solutions include new “utility-scale lead acid battery” technologies, such as that developed by ZBB Energy Corporation in Wisconsin.
For a largely rural state, such as Iowa, distributed generation and storage might be useful for our large farms and homesteads – populated by highly independent and self-reliant families in the first place. It is also possible that a group of households with solar panels might be able to establish their own micro-grid system, feeding the solar energy into a single battery. This co-op system might work very well for residents in small towns, a clustered neighborhood, or an apartment complex.
Another relevant idea is “smart-grid” technology. Smart grids are “computer-based, automated systems” which improve overall system management. Automated electronic sensors, gathering data and communicating between the end user and central operations, are important components of smart grids. These sensors control millions of devices and are able to optimize both supply and demand to increase reliability and respond to spikes in demand or damage to the system. For most consumers, the smart-grid technology is unnoticeable. It may consist of computerized control of air conditioning on the hottest days or automated bill reading. Currently over 116 million households nationwide have smart-meter units.
As part of the American Recovery and Reinvestment Act of 2009 (ARRA) the Iowa Association of Municipal Utilities (IAMU) won a $5 million grant to install 32,000 advanced thermostats in homes and businesses. These thermostats included “smart meters,” programmable communicating thermostats, and “direct load” control devices. Using these technologies, end-use customers can control their own electricity use via the web, while the utilities can control demand reductions during peak periods.
One weather solution is burying the lines, which many companies are doing as they upgrade. Benefits include less maintenance, unobstructed views, and reduced risk to animals. However, these lines cost more to install and have up to five times longer repair times. The lines are more “complex” and “time consuming” to repair, even if repairs were done less often. Underground lines also have a shorter overall lifespan. Buried lines are also more likely to overheat because the heat cannot “dissipate into the air.” One solution might be installing water lines parallel to the electric lines to take advantage of the heat.
A 2012 Edison Electric Institute (EEI) study shows that construction costs for underground lines are five to ten times more than overhead lines. It is most cost effective to install underground lines during new construction, versus retrofitting – which can cause significant property (trees, walls, and fences) and traffic disruption, as well as re-wiring costs. While one out of four customers are willing to pay as much as 20 percent more for electricity as a result of burying the lines, virtually no one was willing to pay the more “realistic” 100 percent estimated cost increase. The EEI recommendation is that communities look at the issue on a case-by-case basis.
Consumers may protect their families by working towards electricity self-sufficiency. We must address emergency preparedness and have a personal generator, with fuel. These units would pay for themselves in a crisis. We should investigate and potentially purchase solar panels for our homes or offices – and acquire the proper battery to store excess power.
Public Interest Institute’s POLICY STUDY, Electricity – Make It, Use It – 24/7/365, can be viewed at http://www.LimitedGovernment.org/ps-13-5.html.
Deborah D. Thornton is a Research Analyst with Public Interest Institute, Mount Pleasant, Iowa. Contact her at Public.Interest.Institute@LimitedGovernment.org.
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