Okay, reality check.
This month in Texas, a severe weather event followed by extreme cold overstressed the grid to the point of failure. Last year in California, abysmal system maintenance led to catastrophic and deadly wildfires. During the PJM polar vertex of 2014, the current Texas scenario happened, but the system kind of survived. And during the Enron scandal in California in 2000, a company manipulated and exploited a recently changed market and caused rolling blackouts.
These aren’t just unfortunate coincidences. The entire system is broken. The issue is not a market issue, and it is not a technical issue.
The issue is that the whole system — inclusive of the state laws, state regulations, state oversight, federal laws, federal regulation, federal oversight, monopoly utility capture, independent power producer technical issues, market issues, financiers, new technology, technical issues with protections and controls, and the twenty or so other interrelated factors that comprise the modern power grid — has not been holistically thought out.
The modern power grid is a horse built by committee over 100 years. The result is a 17-leg camel with a stock portfolio.
The power grid of today was built based on large centralized thermal generation, installed near population centers with one-way power flow, with the transmission system as the sole reliability backbone.
It was built almost entirely above ground using a 100-year-old genius idea to stick wooden poles in the ground and hang wires on insulators on those poles. As a form of modernization, someone added metal poles. The system was built with the original vertically integrated monopoly utilities in mind.
The reality is that today we have a grid that is rapidly decentralizing, is pulling huge amounts of renewable energy from unpopulated parts of the country to more to populated areas, and those oh-so-innovative wooden poles with wires keep failing during ever-increasing severe weather events. We have a largely free market grid where, during the brightest hours of the day, the distribution system is supporting the transmission system. We have the wrong grid.
If I announced today... that I'd discovered... infinite free energy, it would still be generally worthless for at least a decade.
If I announced today that I’d discovered magical zero-carbon unicorn-waste-based cold-fusion technology, and that I could produce infinite free energy, it would still be generally worthless for at least a decade. And it would take at least twenty or more years, if (and only if) there was a new federal-government-mandated transmission program to get the free energy to everyone in the US. By the time the energy reached the consumer, the “free” energy would still cost 7-9 cents (15-20 cents in California) per kWh, due to various market players getting a guaranteed cut for their role in moving the energy along the way. (If you don’t believe me, look at any utility distribution rate case.)
When the power grid works, it is a marvel of the modern world; when it does not, people die, and billions of dollars disappear.
If one more billionaire says that they are going fix the power grid by investing in nuclear fusion I am going to lose my mind. That’s like me saying I am going to build a better internet by investing in a better keyboard. It is 100 times more complicated than that.
It should be noted that I’m an expert in energy, and am part of the 0.01% of the population who understands the power grid, and I still do not fully understand it.
The last two weeks of #energytwitter have been spent beating up on the market design of Texas grid operator ERCOT, or arguing that it wasn’t the market design at fault after all. I respectfully submit that this is entirely the wrong conversation. Both capacity and energy markets have failed, and both will fail again. Instead of discussing things we can add to the camel, we should be talking about how to get back to designing a horse.
The power grid has become so complicated and inefficient that the whole entire thing needs to be reimagined from scratch. The new administration wants a clean power grid — I want a working power grid first. The reality is that you will never get a clean power grid until you have a working power grid.
We need to rethink the transmission system, the distribution system, the role and regulation of all parties involved, the concept of for-profit “natural” monopolies, the energy finance system, and the way electricity markets work. The mere fact that we consider it to be established precedent that there are natural monopolies needs to be challenged.
If we decide that we are going to build a free-market grid, we need to tell everyone — from manufacturing plants to residential customers — that they need to have their own Plan B when the market fails during times of peak stress.
The reality is that you will never get a clean power grid until you have a working power grid.
If we decide that reliable energy is a human right, then we need to build a restricted market where market participants can take risk, but consumers are shielded from wild swings.
We need a market where participants can be compelled to behave in a certain manner with respect to design and operation to ensure reliability. Yes, lots of regulators will argue that we currently have the latter, but it is clear that we do not. We merely have the illusion of it. (Cough… Texas, California, PJM, Enron.)
The most frustrating part of this entire scenario, as an expert, is that I am not even sure who to blame.
Right now, I do not know who is actually responsible for the power grid. By responsible I mean completely, without-any-ability-to-evade-or-shift-blame responsible.
It is not the Department of Energy – they don’t regulate the grid other than host FERC as an independent agency.
It is not FERC or NERC – they don’t oversee retail transactions, transmission siting, or the decision to plan, build, or operate generation resources. It is not state regulators — they don’t oversee wholesale transactions, transmission, or generator interconnections.
It is not regulated or de-regulated utilities — they are charged with maximizing shareholder value. It is not the ISO/RTO — they don’t have regulatory powers; they just try to operate and plan for markets and transmission that compel action.
There is no one person or group to point to and say they are completely responsible for what happened in Texas, PJM, or California. And there absolutely is no one group that is responsible for stepping back and building the power grid that’s ready for the next 100 years.
If the Biden administration wants to build a cleaner future, they need to appoint a single organization, with unprecedented authority, to design and build the new power grid. They need to start from scratch and then see what, if anything, from the current grid has a place in the future.
They need to make sure that we do not spend a single dollar of new rate base on systems that do not have a place in the reimagined grid. Over the next 30 years, America needs to methodically build a 22nd-century power grid.
It’s going to be exceptionally hard and it’s going to upset existing market participants, transmission owners, state regulators, and a myriad other current special interest groups.
Change always upsets those who like the status quo. But as we have seen, the status quo is not working. We need to get people excited about building a new marvel of the modern world because continuing to patch and repair the old one is not working.
If the power grid was properly designed from scratch, you could have all the renewables you wanted on the grid.
America could produce wind and solar energy where it is the cheapest and move it thousands of miles with a network of direct-current lines. America could have an overabundance of green energy that would self-balance and not be holistically intermittent. America could have wide adoption of distributed generation.
America could have gas plants located where they had dedicated gas supplies, and would no longer be subject to gas transmission risk. America could use smart meters to their full capability and enable hundreds of millions of residences to participate in the market with full information and risk protection.
America could build an underground distribution system that didn’t catastrophically fail every time a major storm hit.
If the power grid and market were designed properly you would not need the Clean Power Plan or the Green New Deal. They would happen naturally.
America could build a resilient, reliable, clean, and cost-effective grid if we were willing to throw out the current system and upset the status quo. On 27 January, John Kerry said, “it’s now cheaper to deal with the crisis of climate change than it is to ignore it…We’re spending the money, folks. We’re just not doing it smart.”
I’d argue the same logic applies to the power grid.
Alas, trying to solve this problem from scratch like an engineer would upset the 100-year-old entrenched incumbent monopolies and the system that keeps them comfortable at the expense of innovation.
So sure, let’s celebrate that we are installing more renewables to feed a broken system while we wait for a billionaire to invent cold fusion, and pretend that’s a win.
Jereme Kent is chief executive officer of One Energy Enterprises, an Ohio-based company that specialises in wind power for industry.