An outdated cliché says that a man’s house is his castle. Not sure exactly what it means or how it came about – but the phrase suggests that homeowners are entitled to certain privileges within the boundaries of their personal property and can do more or less as they please.
This suddenly takes on new proportions in the context of the debate around distributed generation. As the cost of self-generation, energy efficiency and storage continues to fall, a home – or for that matter any building or dwelling – can increasingly be viewed as a source of power.
This new reality is reinforced by zero net energy (ZNE) buildings, independent bio villages and a growing number of university campuses, hospitals, shopping malls, commercial office buildings and entire communities operating as virtually zero net energy micro-grids, generating most if not all their energy service needs from localized self-generation.
Unless there is a major change in policy, zero net energy buildings will become mandatory for all new residential buildings by 2020 in California – a mere 5 years away – and for all new commercial buildings by 2030. A growing number of city ordinances now require new construction to be solar- ready or in some cases mandate a minimum level of solar generation, as in Sebastopol and Lancaster in California, previously covered in this newsletter.
When the ZNE concept first emerged, it was dismissed by many as another unrealistic, expensive and unnecessary craze – another silly wishful thinking.
But as architects, engineers and builders started experimenting with more efficient building designs and as windows, appliances, lighting and buildings became more efficient and affordable, a new reality emerged: ZNE buildings are not just feasible but in fact elegant and affordable – in fact economical considering the energy savings and enhanced comfort levels they provide in the long run (box below).
Equally rapid progress in micro-grid technology has made it possible for large campuses, military bases, hospitals and shopping malls to become power houses that not only meet most of their energy needs and operate independent of the grid, but in some cases provide added resiliency to the grid when it is stressed (box below). In most cases, such systems can deliver more reliable service at lower cost – a fact that does not bode well if you are in the traditional “utility” business.
Not your father’s micro-grid
Not long ago, micro-grid would refer to an island or isolated community that had to survive on its own because it was too remote to be connected to a proper grid. Not anymore. An increasing number of universities, hospitals, shopping malls, military bases and entire communities are finding that they can manage their own micro-grid with little reliance to the grid. In some case, the grid relies on the stand-alone micro-grid more than the other way around.
A special report on energy and technology in the 17 Jan 2015 issue of The Economist provides a case in point.
“Some organizations, such as military bases, may have specific reasons to want to be independent of outside suppliers, but for most of them the main motive is to save money. The University of California, San Diego (UCSD), for example, which until 2001 had a gas plant mainly used for heating, changed to a combined-heat-and-power (CHP) plant which heats and cools 450 buildings and provides hot water for the 45,000 people who use them. The system generates 92% of the campus’s electricity and saves $8m a year. As well as 30 MW from the CHP plant, the university has also installed more than 3MW in solar power and a further 3 MW from a gas-powered fuel cell. When demand is low, the spare electricity cools 4m gallons (15m liters) of water for use in the air-conditioning—the biggest load on the system—or heats it to 40 ̊ to boost the hot-water system. Universities are ideal for such experiments. As autonomous public institutions they are exempt from fiddly local rules and from oversight by the utilities regulator. And they are interested in new ideas.”
“Places like UCSD not only save money with their micro-grids but advance research as well. A server analyses 84,000 data streams every second. A company called ZBB Energy has installed innovative zinc-bromide batteries; another company is trying out a 28 kW supercapacitor—a storage device far faster and more powerful than any chemical battery. NRG has installed a rapid charger for electric vehicles, whose past-their-prime batteries are used to provide cheap extra storage. And the university has just bought 2.5 MW-worth of recyclable lithium-ion iron- phosphate battery storage from BYD, the world’s largest battery manufacturer, to flatten peaks in demand and supply further.”
“In one sense, UCSD is not a good customer for the local utility, San Diego Gas & Electric. The micro-grid imports only 8% of its power from the utility. But it can help out when demand elsewhere is tight, cutting its own consumption by turning down air-conditioners and other power-thirsty devices and sending the spare electricity to the grid.
“UCSD is one of scores of such micro-grids pioneering new ways of using electricity efficiently and cheaply through better design, data-processing technology and changes in behavior. The IEA (International Energy Agency) reckons that this approach could cut peak demand for power in industrialized countries by 20%. That would be good for both consumers and the planet.”
The ZNE and micro-grid concept is gradually moving mainstream. As reported in same issue of The Economist, Petromina’s new sky scraper in Jakarta,
Indonesia operates as a virtual power plant. Apple’s new
massive headquarter building under construction in
Cupertino, California is also designed to operate as a zero net energy building. The new campus of the National Renewable Energy Laboratory (NREL) in Golden, Colorado is also a ZNE facility, as is a new addition to University of California, Davis called the West Village.
More important is that new buildings, residential, commercial and industrial, are increasingly being built with solar panels on the roof and with many energy efficiency features included in the original design – not as an afterthought or add on.
This is not good news for any incumbent utility or power generator whose business model is predicated on delivering bulk commodity kWhrs with the assumption of growing demand and stable or falling prices. Which explains why utility executives everywhere, but particularly in mature OECD economies, are pondering what their future might look like, if in fact they have a future.
Perry Sioshansi is president of Menlo Energy Economics, a consultancy based in San Francisco, CA and editor/publisher of EEnergy Informer, a monthly newsletter with international circulation. He can be reached at [email protected]