⚡ Decentralized Energy Networks
Signal #08 - Insights to rise above the sea of noise.
Welcome to Seagnal, a newsletter at the intersection of technology and sustainability. In this issue, we delve into the undercurrent transforming our power grids from centralized monoliths to more dynamic, decentralized networks.
We'll explore how this shift is reshaping our energy infrastructure, detail the rise of Distributed Energy Resources (DERs), examine the challenges these systems face, particularly in grid stability and interconnection, and look at innovative business models that are redefining the energy landscape.
Energy infrastructure
Electricity certainly is a unique commodity. One of its peculiarities is that it must be produced and consumed simultaneously. Insufficient production or consumption at any given moment can destabilize the grid, deviating from its standard frequency of 50 or 60 Hertz. Should this imbalance exceed safe thresholds, it poses a threat to electrical equipment, and requires automated systems to trigger localized or widespread blackouts.
Yet, governments and utility companies have been continuously adding more generation to the engineering feat that is grid planning and balancing for the past century. They developed hydroelectric plants, nuclear facilities, coal and gas plants, all large energy generation infrastructure ranging from hundreds of megawatts (MW) to several gigawatts (GW).
Left: Three Gorges Dam the world’s largest power station with a 22.5 GW capacity. Right: Bełchatów Coal Power Station in Poland, Europe’s largest thermal power station at 5 GW.
This centralized approach allowed for significant advancements in technology and infrastructure, providing reliable, cheap electricity over vast networks to consumers. But this model also meant that innovation and decisions were often top-down, and heavily dependent on governmental policy directions.
The advent of decentralized technologies
The development of modular, scalable energy generation and storage technologies like solar, wind and batteries, enabled businesses, communities, and individuals to generate their own electricity, and tailor solutions to their specific needs. For example:
A simple 200W solar panel with a 1.2kWh battery can power the Wi-Fi in an off-grid Nepalese trekking lodge.
A 100kW solar system on the roof of a supermarket can power lighting and refrigeration loads while feeding extra energy back onto the grid.
Communal batteries (100kW - 400kW) in Australia can store excess solar power and redistribute it during the evening peak load.
These types of installations are all different but fall in the category of Distributed Energy Resources (DERs): small-scale electricity generating and storage units located close to where electricity is used. DERs are not only enabling autonomy and resilience, they are changing the paradigm of electricity distribution from centralized generation to decentralized, interconnected networks.
Impacts of a decentralized grid
DERs are not only enabling autonomy and resilience, allowing individuals to produce their energy and reduce points of failure, but they are also fostering new technologies and business models.
Virtual Power Plants (VPPs), for example, aggregate the capacity of heterogeneous energy sources, to function as a single power plant. Through VPPs, individuals can sell energy at better rates than feed-in tariffs, and provide grid services for a fee.
Peer-to-Peer (P2P) energy trading, microgrids (localized grids that can operate autonomously), and communal solar, are more examples of business models that didn’t really exist 15 years ago but are getting traction in countries embracing decentralization as part of the energy transition.
Stability Challenge
One of the challenges of a decentralized grid is frequency and voltage regulation, the engineering feat that central planning excelled at for the past century. Indeed, most early solar and wind systems were using grid following inverters, to transform direct current (DC) power to alternating current (AC). Their “grid following” nature meant inverters synchronized their output with the existing grid frequency and voltage, endangering grid stability.
But this issue stemmed from a technological innovation, grid-making inverters. Led by companies like Tesla, these inverters are capable of providing grid services such as voltage and frequency regulation, but also virtual inertia (like a mechanical fly-wheel would) contributing to a resilient decentralized grid.
Interconnection challenge
A back-of-the-envelope calculation, using an average coal plant size of 500MW / 50% utilization, and an average solar plant size of 50MW / 20% utilization, tells us we will need to connect 25 solar farms to replace one coal plant. And the connection process, which we call interconnection in the industry, is outdated and time-consuming. It is not suited for the glut of smaller interconnection applications we are seeing today.
Many start-ups are solving part of the interconnection issue by, for example, writing better grid simulation software. However, the issue is not simply a regulatory or technical challenge, it also has logistical roots. Increased connections have led to a lack of transformers, essential equipment for adjusting the voltage levels of the electricity generated to match the requirements of the main grid (and reduce losses).
Illustrating the function of inverters and transformers in the grid. Side note, the colored transformer illustration on the right is for a pixel-art energy transition game I am working on.
Conclusion
In this edition of Seagnal, we've explored the transformative journey of our energy infrastructure from centralized behemoths to nimble, decentralized networks—a paradigm shift driven by technological innovation and a rethinking of energy management.
Distributed Energy Resources (DERs), such as solar panels, wind turbines, and batteries have empowered individuals, businesses, and communities to produce their own energy, tailor-made to their specific needs. This transition is not without its challenges, such as maintaining grid stability and connecting large-scale DERs to the existing grid infrastructure.
As we move forward, the journey from centralized to decentralized grids will continue to evolve, driven by technological advancements, business innovations and shifts in policy. It is an exciting era for energy, marked by rapid innovation and a collective move towards sustainability.
How is your local energy system adapting to these changes? Are there opportunities within your community to engage with or even initiate energy projects? Share your thoughts and experiences with us.