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Globally, about a quarter of the energy produced comes from renewable sources – hydropower, solar, and wind most prominently, but also geothermal and biomass. Renewable energy is the fastest growing of all electricity sources, but there are significant challenges to bringing more renewable energy online at scale.
They’re challenges that a group of T-birds gathered recently to discuss with Thunderbird professor Michael Moffett, Ph.D. during an on-campus panel discussion. Dr. Moffett is an expert in the energy industry and one of three professors behind Thunderbird's world-renowned Advanced Management Program for Oil & Gas Industry Executives.
If you missed the T-bird Renewable Energy Panel Discussion, here's a recap of five of the most pressing challenges:
The number one challenge for renewable energy is the fact that, in most cases, it’s not always on. You get power when it’s sunny or windy and when it’s not, you don’t. That kind of intermittent generation wouldn’t be a problem if we had a cost-effective, reliable way to store power – but we don’t, yet. “Our biggest challenge is storage,” explained Michael “Mick” Dalrymple '98, director of sustainability practices at Arizona State University. “If we could store electricity we could solve this thing.”
Rex Stepp ’95, business development manager at First Solar, agreed that storage is one of the biggest challenges for renewable energy, but said that progress is being made. “For example, APS [one of Arizona’s public utilities] has one of the largest solar thermal systems in world (Solana). The heat from the sun is stored in salt, so APS can run the turbine [i.e., generate electricity] six to seven hours after the energy is produced.”
It’s as much a challenge for renewable energy producers as it was for Goldilocks: How much is just right? As Dalrymple put it, “Because we really can’t store electricity, we don’t want to build too big [and not use the energy that’s produced] but also don’t want to undersize because renewable energy generation is hard to build.” To mitigate the risk, ASU has 89 distributed solar installations that range in size from relatively small rooftop installations to the 40 MW solar plant run by APS and shared with PayPal.
“Because we really can’t store electricity, we don’t want to build renewable energy plants too big. But we also don’t want to undersize.” – Click to tweet
Getting electricity from where it is generated to where it is consumed requires a power transmission and distribution system: the grid. Where rooftop solar – when combined with battery storage – has the potential to allow homeowners to “disconnect” from the grid, for scale applications of renewable energy, the grid will be as necessary as it is today. “If you want power to be available all the time you have to believe in the grid,” explained James Baker '11, a real-time trader with The Energy Authority.
Problem is, the grid in most developed countries is woefully out of date. The American Society of Civil Engineers (ASCE) gave America’s energy infrastructure a D+ in its 2017 report, citing in particular the 3,571 power outages reported in one year alone. The problem is age. According to the report, “Most electric transmission and distribution lines were constructed in the 1950s and 1960s with a 50-year life expectancy, and were not originally engineered to meet today’s demand, nor severe weather events.”
“If you want power to be available all the time you have to believe in the grid.” – Click to tweet
Repairing the grid is going to become evermore critical as we get more electricity from intermittent renewable sources. As Richard Gray reported for the BBC, “One solution [to the storage problem] is to make the grids that distribute the electricity bigger – create so-called ‘supergrids’. The basic idea is that if energy is shared over a wider area, there is more chance that the sun will be shining or the wind will be blowing in one part of a supply network, if not another.”
Energy economics is notoriously complicated – even more so when renewable energy comes into the mix. “There’s a lot of market volatility in renewable energy,” explained Baker. “There’s volatility in generation and volatility in loads – wind and sun are unpredictable – such that prices can spike 10x within a day.” That kind of price volatility can make it really hard for utilities to manage their infrastructure plans.
With or without renewable energy, demand changes – based on the weather, the economy, etc. Yet no matter how much energy a home or business or city needs on a particular day, the utility has to build and maintain the infrastructure – power plants, transmission and distribution lines, and employees to keep it all running – to satisfy customers’ peak demand. To compensate utilities, customers pay what’s known as a “demand charge.” Separate from the price of the electricity that day, a demand charge enables the utility to “recoup its investment in the infrastructure,” Stepp explained.
“What do you do as a utility when you have a mandate to serve all customers but changes in behavior ‘behind the meter’ change the economics?” – Click to tweet
With an increasing number of customers turning to their own solar energy, the cost model for utilities becomes even more complicated. The utility doesn’t have control of demand, but it also doesn’t have control over energy supply “behind the meter” – for example, the solar panels a home or business puts on the roof. When customers decrease their dependence on the utility because they’re getting energy from solar panels on the roof, that means less revenue for the utility, even though the utility is still required to maintain the generation capability and the transmission and distributions lines to those customers.
Dalrymple said, “One of biggest challenges with renewable energy is complexity. It’s like playing 15-dimension chess.” Stepp added, “If you ask a question about solar and it’s a short answer, don’t believe it.”