Risky Business – Removing barriers to Free Energy

It is no secret to readers that I think we can best balance energy supply and demand using pure economic transactions. Whatever you feel about flash trading, those markets with millions of 14 millisecond transactions prove that we know how to run markets fast enough to manage even the most demanding decision making on smart grids. Free energy, that is energy markets unencumbered price and reliability arbitrage, is certainly the fastest path to the technologies we need to balance supply with the increasingly volatile supple we foresee. But today’s utilities serve a social justice purpose that I have been unable to reconcile in my mind with free energy until now.

We need free energy because we need to unbundle two of the most significant services provided alongside today’s energy delivery; availability risk arbitrage and price risk arbitrage. These services create a moral hazard we can no longer afford. Availability risk arbitrage removes performance incentives for end nodes to install systems for energy storage and generation. Price risk arbitrage reserves all economic incentives for energy storage and generation to the grid, where it is too expensive and innovation adoption is, of necessity, to slow to support the type of venture creation we have seen in high tech.

The basic problem is that our electric grid operates with lower margins for error than it ever has before, and current policy is to reduce them further. No community is clamoring for more power lines in its back yard even as our houses are filled with ever more energy consuming equipment for computing, telecommunications, and entertainment. It is becoming too expensive, in generation costs, infrastructure capacity, and social will to maintain constant oversupply of traditional energy. We wish to use new energy sources that are unpredictable and episodic. Attempts to smooth out supply volatility at the grid re too expensive or too few. (Ask me some time why natural gas sales went up when gas generation was replaced by wind in Colorado.) The ability of the grid to supply availability arbitrage is failing.

With fixed prices, the economic incentives for end nodes to participate in energy generation and storage are non-existent. The most basic market rule is buy low and sell high. Without dynamic pricing, the rule for homes and commercial buildings is sell low (wholesale) and buy high (retail). Efforts by local regulators to repeal that rule are as artificial as efforts to repeal gravity.

Dynamic pricing changes all that. With the volatility of energy supply fully exposed, end nodes will buy technologies to manage their risk. With the volatility of energy prices fully exposed, end nodes will find the business case to manage their power purchases. Bottlenecks in the power grid will result in local congestion pricing, letting the true costs neighborhood infrastructure decisions to be seen by the public.

Utilities today must play not to lose rather than to win. They cannot adapt new technologies quickly because they must always be reliable. Market actors that cannot accept risk, cannot afford to innovate. End nodes can voluntarily accept risk, and so can afford to adopt new technology. If Denver, where we met this month to form the Smart Grid Interoperability Panel (SGIP), is plunged into darkness for a week, it is a dire outcome; if my home fails for a week, is provides entertainment to my neighbors. The difference between grid-level innovation and end-node innovation is the difference between tragedy and comedy.

Smart grids will transfer risk to their end nodes. Economic agents which assume risk will expect to be paid for it. These payments will be the fertilizer for an untold number of new technologies. The best way to transfer risk and payments together is self-balancing, self organizing free markets in energy. Systems that can participate in these markets for us as well as systems that can store or generate energy on-site, will be the reward.

A Microgrid of One

The target of smart grid communications, particularly in collaborative energy space, should always be the microgrid. Some microgrids may contain a single home, or commercial building, or and industrial site—those are irrelevant details. Microgrids have a number of systems inside them that must work within the economic environment of that microgrid—and I am thinking of old economics, before the distinction of economics and ecosystem arose. Some microgrids may have a single entity inside, say a legacy BAS (Building Automation System), but the unitary microgrid is merely an artifact of the way we have always done it. The energy services interface is the gateway to a microgrid.

Microgrids contain collections of systems that may not share common technology. Some of these systems are small, self contained, and serve special purposes, such as appliances. Some are large and complex and span significant space, such as HVAC or an industrial line. Some look alike, are built from the same components, but have different missions; the laboratory fume hood and the air conditioning system are run for different purposes and have different constraints. Some may rely on different energy markets to do the same work; heat may come from electricity, gas, or solar thermal in the same building. Some systems may store generate energy used by other systems. All of these coexist in the ecosystem of the microgrid.

Diversity is the source of resilience in the economy and ecosystem. Monocultures fail badly in either. The diversity of systems in a microgrid is a source of stability. This is as true of the microgrid spans a campus or spans a high-rise. One source of diversity is diversity of response, which is tied to diversity of business service provided. A unitary system all too often has too few response options. Without expensive and non-standard integration, these simple systems are unable to expose nuanced and diverse services for manipulation by the humans, and human processes, they serve.

Diversity within kind (read Darwin for a definition) in building systems can come from multiple technologies (hard to maintain), or from multiple systems programmed quite differently (expensive to integrate) or from identical systems responding to different users. Diverse systems can be much more agile, just as individuals can be more agile than a committee. I posit that a collection agile systems is better able to respond to heterogeneity of environment, including unpredictability of power supply, than is a single committee of systems.

Diversity of services can provide new assets to the commercial building owner. Green leases seek to tie technology, capital, and performance together to please the tenant. Green leases require separate metering and operations for each tenant to be credible. Green leases in a high rise might work best with a number of identical systems, one for each tenant, rather than a monolithic system that responds only to all. Diversity is an amenity that enhances tenant service and leas ability.

How do we distinguish a microgrid from a grid? The external interface should be the same. Inside, microgrids are more intimate, they are the safe neighborhood the kids can go out and play in. Alternately, they may be more dangerous, the prison society in which no inmate must reveal anything. A microgrid defines a security context and a security posture. Intimacy and sharing and collaboration are all a part of some contexts—and not of others.

To me, the most interesting question of the week is what information do the systems within a microgrid need to share as they support their divers purposes and work within their mutual constraints. I know it starts energy usage, and predictions of energy usage, because that is the common resource they share within their environment, the basis of their economy and their ecosystem. I suspect they need currency, to negotiate their access to resources within the constraints of the microgrid—although I am not sure that currency is always expressed in legal tender. Some systems may only be able to buy at certain stores, or sell to certain buyers.

I’m not sure what else they share.

Plumbing and the Man about the Net Zero House

Maybe the ongoing attempt to over-domesticate males is a barrier to sustainable energy. Maybe Swedish feminists are simply insensitive to carbon issues. Maybe Gaia just needs a man about the house. Maybe the essential appliance needed for the net zero energy (NZE) house is a urinal.

A report last week from Ohio University describes a catalyst capable of extracting hydrogen from urine. More efficient generation of hydrogen would be a great step to more effective energy storage, one without the major shortcomings of today’s batteries. Hydrogen storage would not wear out through regular re-charging the way today’s chemical batteries do. Hydrogen storage combined with transfer technologies such as micro-beads might solve the fast re-charge problem for vehicles that do not use carbon-based fuels.

More efficient multi-purpose energy storage is the most important single issue for the smart grid. Want to shift load to reduce the requirement for new generation? Want to manage peak transmission? Storage is essential. Current social and political decisions mandate the use of more unreliable power sources in the grid. Providing instant remediation of gaps in power generation at the grid-level is difficult and expensive; there are reports that efforts to use fast starting gas generation to backstop wind have used more natural gas than if the wind had never been hooked up. Efficient storage, especially distributed storage in homes and buildings, would be offer a profound benefit to grid operation.

Efficient local storage would also make site-based generation more sensible. Selling electricity back to the grid rarely makes economic sense. Expensive grid upgrades can be needed to improve monitoring and guarantee power quality; these costs are usually foisted onto other rate payers. Because the grid cannot rely on the local storage when it needs it, utilities may still need to build the generation to support peak capacity.

With efficient local storage, site based generation would be placed in storage rather than sold back to the grid. Solar generation would go into storage all afternoon. Wind generated electricity, no matter what speed the wind is blowing would simply go into storage. Expensive-to-fix issues in power quality and availability could be simply eliminated.

So what if urine is part of the answer? The problem, of course, is that we typically dilute urine into a lot of water before flushing it away. If the approach in the report pans out, perhaps each home should have urinals to enable the storage system.

Our society’s on-going war against nature has been trying to re-write the old riddle "What does a man do on two legs, a woman do sitting down, and a dog do on three legs?" Man’s ability to stand while micturating has been declared aggressive, oppressive, and unsanitary. Sitting and standing, and whether a teenager preferred the former was recently a critical issue in a custody battle. Legal discussions of this case have been surprisingly impassioned. Maybe they have not been impassioned enough.

Maybe we should be planning for urinals in homes. Water-free urinals are an effective if controversial means to reduce water consumption. Up to 40,000 gallons per year in water savings are claimed for each public urinal that goes waterless. Home urinals could be the foundation for home-based hydrogen generation and storage.

You should install a home urinal. It’s for the planet, after all.

Natural Gas and Perfect Power

We are misusing natural gas in our power plants. Guided by strong emotions and the search for the quick fix, we are reducing the long term reliability and sustainability of our energy infrastructure. When well meant but bad decisions reduce the common good, we call it the tragedy of the commons. Technology and modern public interest groups let us recreate the tragedy of the commons on a larger scale.

Perfect Power is what Kurt Yeager and the Galvin Electricity Initiative call their version of the smart grid. Perfect Power assumes that the national power grid will not and cannot be made reliable enough for the digital world. Attempts to make the grid reliable cost a lot of money and waste a lot of power. Attempts to make the grid reliable interfere with the grid being the most efficient market place of energy possible, and able to accept innovation, diversity, and change. Perfect power reliability starts in the home and building, which must be responsible for their own reliability and quality. Groups of homes and buildings can band together in microgrids to enhance that reliability and provide each other with robustness. These microgrids can then buy from the grid when their needs and desires warrant, and when the prices are good. The grid, freed from the mandate to do what it cannot, will become easier and less expensive to operate.

Net Zero Energy and Distributed Generation are different perspectives on the perfect power vision. Buildings that are able to store, generate, recycle, and convert energy, can buy when they want, can sell when they can, and are reliable whatever the grid provides. Microgrids expand the options for energy storage, recycling and re-use even we add distributed generation. Distributed generation can get us past the restrictions of the regulated “natural monopoly” of power.

I have written before that I wanted my home heating system to see gas as well as electrical prices. Regular readers know that I recently installed a hybrid system that switches from heat pump to gas furnace based upon outdoor air temperature. This automatic cut-over is based on computed heat-pump efficiency. The cut-over should be based upon the current price of each energy source, factored by each system’s internal performance diagnostics.

At my annual Caroling Party, conversations naturally turned to the new purchase, who installed it, and was I satisfied. One party-goer was concerned that the high efficiency furnace was still producing greenhouse gases. I mused that even if the power company was better than the 95% condensing furnace, the local fuel did not suffer from the inefficiencies of converting heat to electricity, and of then transmitting it for many miles, and then converting it back to heat. Local efficiency numbers, from local energy use, are simpler and easier to understand.

Another guest, a long time gas company engineer, pointed out that natural gas has its own Demand-Response system. Demand-Response refers to the approaches and technology used by the electrical providers to manage peak capacity by seasonal, daily, and emergency communications with its customers. During periods of peak use, the pressure in the natural gas distribution system can drop to low levels. If it drops too far, pressure valves automatically shut off in homes and businesses. These brown-outs are much more expensive to recover from than electrical black-outs. Utility employees must turn off each gas meter before a local loop can be restored lest appliances with pilot lights become explosion hazards. Gas companies handles these low pressure incidents by calling large industrial customers and negotiating reduced use.

All of the same AMI/AMR conversations of the power grid apply naturally to natural gas distribution. The costs savings and efficiencies of automated cut-off of service can offer even greater benefits, when needed, to the gas company than they do to the electrical company. Gas distribution can benefit from dynamic pricing for capacity management just as does electrical distribution. If I had dynamic pricing, then I could factor it automatically, along with electrical pricing, into my home heating operations.

All of the concepts above apply to generation as well. Perfect power and E-tech will include conventional generation as well as exotic technologies such as gas-based fuel cells. Natural Gas will need many of the same service interfaces as electricity.

Stability and robustness in ecosystems comes from diversity of species. Stability and robustness of energy in the home and office will come best from diversity of energy sources, including those from outside the building as well as those generated internally. There are few sources of energy that are easy to transmit to each site of final use. We should not waste them all in central generation plants. We should use them to expand the robustness and diversity of energy in each building and in each microgrid.