The Evolution of “Just-in-time” for Utilities

Published: Mon 25 Aug 2014
A blog entry by Christine Hertzog

Contributed by:

Christine Hertzog
Managing Director
Smart Grid Library

Christine Hertzog's Blog

The electric utility sector has been quite successful at managing power on a just-in-time basis. It had to be just-in-time, because since the days of Thomas Edison and Nikola Tesla, there were very few cost-effective ways to store energy, and those options were mostly limited to solutions like pumped hydro. The investments were substantial, and could only be deployed where the ideal geographical and hydrological conditions existed. The workaround was to build more generation that remained in a stand-by capacity until needed for power, voltage, or frequency regulation – a just-in-time scheduling practice. It’s still the workaround today. It has been effective, but it is also relatively crude and expensive, as some generation capacity may only be activated for a few hours per year to address peak electricity usage.

Over time, progressive utilities and regional independent system operators (ISOs) developed policies and practices to schedule the just-in-time production of negawatts – a reduction in electricity usage – in the form of demand response (DR) programs. Negawatts should have equal financial value to kilowatts from a wholesale market perspective, and realistically, the avoided kilowatt (the one you never use) is not only the cheapest form of energy, it is also the cleanest. This was the first evolution in the definition of just-in-time scheduling and generation sources.

There are three Smart Grid technologies that will force another evolution in the just-in-time scheduling concepts and sources of electricity. Clean renewable energy technologies – at utility scale as well as small to large residential and commercial are rapidly proliferating on the grid. Renewables like wind and solar are freely available and carbon-free too, which makes them very attractive for electricity generation sources.

The continued downward slide in solar PV prices and the increase in new market entrants offering affordable rooftop solar means grid parity and the rise of the prosumer in residential and commercial customer categories. The market potential is estimated to be 16 million homes across 20 states in the USA, and year over year growth projections are as high as 22%.

The intermittency of these sources, however, triggered concerns and objections on the part of grid operators. Just-in-time electricity sourced from intermittent renewables is harder to reliably schedule and ensure steady grid voltages and frequency.

There are two complementary technology answers to the intermittency challenge of renewables. One is the deployment of existing solutions that deliver dynamic voltage support on a broader scale and further down and across the distribution grid to manage additional generation sources. The other technology category energy storage that complements or “firms” renewable energy sources. In five years, solutions like the combination of Tesla battery storage with Solar City renewables generation will be matter-of-course, and perhaps even required in certain circumstances.

When you factor in energy storage, the challenge of just-in-time scheduling of renewables across the grid becomes an additive issue – scaling up existing grid management systems to address scheduling of energy storage devices with predictable levels of power for local or grid use. Without energy storage, just-in-time scheduling is instead approached as a predictability issue solved through creation of extremely complicated algorithms that predict solar and wind generation in every possible combination and permutation, and places greater reliance on more generation or DR.

For grid operators, the adoption of one or all of these technologies will force another evolution in their thinking and management practices for just-in-time electricity delivery. It’s just one of many shifts triggered by Smart Grid technologies in the power sector.

Christine Hertzog

Smart Grid Library