RISK ADJUSTMENT IN TRANSACTIONAL GRIDS
There are multiple technologies - such as simulation studies, forecasting, and storage - for anticipating and mitigating the risks to renewable energy supplies of very rare but consequential weather events. The 21 August total solar eclipse in the United States suggests similarly that while rare, such risks are neither “uncontrollable” nor “unpredictable” to policy makers. However, some of the utilized risk solutions seem to start by assuming a centralized electricity grid, where energy supplies are optimized to meet demands. As such, they overlook new possibilities of risk management in transactional electricity grids.
On 21 August this year, a total solar eclipse will pass over the United States. The first in 99 years, the eclipse’s impacts on the country’s solar electricity generation and the electricity grid have been under close scrutiny. The U.S. Department of Energy's (DOE) Office of Energy Efficiency and Renewable Energy reports that moon’s shadow will partially affect 1,900 utility-scale solar photovoltaic plants -- the sun will be totally blocked over 17 such plants. A study funded by a Federal solar initiative approximates these effects: in the worst-case scenario, a bright and sunny day that morning, a drop of 5 gigawatts (GW) in solar generation levels may happen during the 2 minute eclipse. In the United States, this corresponds to the power need of some 1 million homes, clearly a notable impact.
How this particular event will confront energy provision, and how the fall in generation will be compensated by other resources, remains to be seen. The North American Electric Reliability Corporation, for example, does not foresee reliability issues for the bulk power system. But as a blog by a solar energy technologies director for the DOE makes clear, the eclipse relates to a longer-standing energy issue: which energy solutions are fit for dealing with the known intermittency issue of renewable energy, amid weather events whose impacts may be increasingly difficult to foresee?
A total eclipse of the sun has a low probability but high consequences to certain energy supplies, suggesting challenges to anticipation and mitigation. Decades of research on risk have scrutinised the difficulties that low-probability high-impact events bring to risk assessment. A notable example is the insurance business, which depends upon calculating probabilities and financial losses through statistical analysis of past archives.
As the same research notes, though, a low probability does not preclude forecasting and prediction by other means than risk assessment. The DOE and its scenario models are a case in point -- while there is clearly no extensive knowledge archive of a similar event, scenario studies were still able to estimate the time of the day of its greatest influence, the generation drop, and the geographical distribution of these impacts.
Rather than challenge prediction, these activities seemingly centre on improved prediction of energy supplies. As the stated aim, “solar forecasting technologies allow grid and solar power plant operators to predict when, where, and how much electricity will be produced -- thus developing the best strategy for balancing supply and demand”.
Complementing this, the second key solution to the DOE lies in energy storage. With the intermittency of solar generation, energy storage is expected to act as a buffer where solar can be diverted and dispatched when needed by utilities, all the time.
Forecasts and optimizations of the current energy system are clearly important for anticipating and mitigating risks. Yet, they have a sharp scope: while proposing new technologies, the above solutions both start and end with an energy provision system that optimizes supply to meet demand. What could risk management look like in energy systems that differ from these traditional centralized electricity grids?
To address these kind of issues, energy experts have developed the concept of “transactive energy” over a number of years. GridWise Architecture Council understands transactive energy as a bidirectional system where power flows in multiple directions, between generators and customers, enabled by decentralized control techniques. The company Faraday Grid has argued for example that “facilitating storage fails to address the fundamental technical inadequacy of the system”. Certainly available and worth pursuing, energy storage does not necessarily challenge the foundations of modern power grids, but rather optimizes how the grids operate all the time.
Some commentators suggest that the mitigation of low-probability high-impact events in energy supplies is a strategic investment in the public interest -- even when such events occur highly infrequently, these investments may “pay off” if they do occur. The weather events in the United States do suggest considerable efforts to anticipate and quantify electricity risks. Going further, however, they cause curiosity on the underpinning electricity grid unto which risk solutions are applied. We already know how centralized electricity grids may withstand rare but consequential risks -- but this leaves considerable space for opening up new possibilities, such as asking how well risk-adjusted transactional grids would be able to resolve the same kinds of issues.