Episode Summary
The United States’ aging electricity grid is a problem. Over 70% of the major transmission networks – which transfer electricity from power generation centers to endpoint users in homes and buildings, sometimes in other states – are at least 25 years old, and much of the grid was built in the 1960s and 1970s. As the number of renewable energy projects being built to meet clean energy goals increases, the problem of how to connect them to the grid is only growing larger, as transmission infrastructure projects can take decades to approve and build, and utilities navigate the energy storage landscape.
The US faces an existential question: as it looks ahead to a clean energy future, what should it do about its electricity grid? Should state and regional utility networks be rebuilt, or should they be replaced with more distributed forms of electricity production and storage—like microgrids with rooftop solar and local wind energy projects? Or does the solution lie in a combination of both?
Climate Now posed these questions to two experts whose work examines the future of electricity generation and storage in the United States. Paul Denholm is a senior research fellow at the National Renewable Energy Laboratory, specializing in the technical, economic, and environmental impacts and benefits of large scale deployment of renewable electricity generation. Bill Nussey is an author, CEO and venture capitalist whose 2022 book, “Freeing Energy,” examines the disruptive nature of distributed energy generation and its potential to produce cheaper and more reliable electricity, faster. Tune in to hear what they have to say about the future of the US electricity grid.
“And in the end, the market that matters the most is the people who are consumers and also people that are voters, which is why I'm confident this will eventually work itself out, which is that in the end, it's cheaper for consumers in almost every case to have solar on their house if they are fortunate enough to have a house, or on their buildings or in their community than it is to get it from utility scale.”
Key Questions
What are the advantages and disadvantages of both utility-scale and distributed energy generation and storage?
Why are utilities taking so long to fully transition over to renewable energy?
Which of the two approaches should the U.S. emphasize as it tries to reach its clean energy goals over the next decade?
Transcript
James Lawler: [00:00:00] Welcome to Climate Now, a podcast that is focused on accelerating solutions to the climate emergency. We explore and explain the key ideas, technologies, companies, and policies that can help solve the climate and energy challenges that we face today with the scientists, entrepreneurs, large corporations, investors, and policymakers who are making them happen.
I'm your host, James Lawler, and joining me as co-host today is our managing producer Emma Crow-Willard. Emma, welcome.
Emma Crow-Willard: Hi, James. Good to be here.
James Lawler: In today's episode, Emma and I are taking a look at the issues that surround the future of the United States clean energy generation and storage landscape. So the Biden administration has been very supportive, obviously, of the future of renewable energy, setting a target of a net zero power grid by 2035 and complete carbon neutrality by 2050.
Now, what we're going to look at today are two different visions for what the future of the power grid could be. So on the one hand, you would have [00:01:00] a grid that is dominated by large scale, like, utility scale generation. So imagine many, many, many thousands of acres of solar and wind generation, and storage and large-scale batteries.
With utility scale generation, the end user experience would stay more or less the same as it is today. The chief difference would be that an ever-growing portion of the power on a rate payer's monthly utility bill would come from solar, wind, and hydroelectric sources.
Emma Crow-Willard: And then another school of thought endorses a more distributed approach to clean energy.
Distributed Renewable Energy Resources, or DERs as they're also known, is essentially small-scale renewable power generating energy on the scale of a single town neighborhood, or even an individual home. Distributed energy resources include rooftop solar panels as well as micro grids by which solar rays, wind turbine networks, or small dams supply individual communities with power.[00:02:00]
The key being that distributed energy resources are located in the direct vicinity of where the electricity is being used.
James Lawler: So utility scale generation and distributed generation are not mutually exclusive, and of course, achieving a net zero power grid in the U. S. will require a variety of technologies and strategies, but there is a debate about which of these two approaches to emphasize as the U.S. tries to reach its clean energy goals over the next decade. So our guests today bring two different perspectives to the table.
First, we have Bill Nussey who is a tech entrepreneur and author of the book Freeing Energy: How Innovators Are Using Local-scale Solar and Batteries to Disrupt the Global Energy Industry from the Outside In.
So in that book, which I highly recommend, and in our conversation with Bill, he makes the case for how distributed energy generation could transform the power industry in the same way that cloud computing transformed tech.
Emma Crow-Willard: And our second guest shares a different view on the matter of distributed energy systems.
Paul Denholm is a senior research fellow [00:03:00] at the National Renewable Energy Laboratory, or NREL, where he and his colleagues research how to introduce clean power into existing grid infrastructure. He also led NREL's 2022 study, examining supply side options to achieve 100% clean electricity by 2035 in the U.S. and that informed the Biden administration's push for 100% clean electricity. Paul Denham argues that investing in renewable power at the utility scale is the fastest and most effective way to achieve a green energy mix.
James Lawler: Now, these two different visions would require different types of grids, and one might think that the answers should be obvious, that it's obviously utility scale generation that should win because if we do things in a big way, we benefit from economies of scale, et cetera, et cetera.
One of our guests today, however, will talk about why that's not necessarily true. And when you're talking about how expensive something is, It really matters that you be precise about [00:04:00] who is paying, so expensive to whom.
Emma Crow-Willard: I guess, can I just add that I think these two different perspectives, they kind of agree on the same thing that we're going to need both utility and distributed energy.
But on the one hand, we have the perspective of somebody who's an investor and a tech person and thinking about the economics, that's Bill Nussey. And on the other side, we have an engineer, a modeler who really did a model and looked at all these different pathways for 100 percent renewable in the U.S, and that's Paul Denham. And so he'll talk a little bit about his model and what that showed.
And with the challenges around building out large scale transmission, that's also why we wanted to have this conversation because that could pose a problem to building more utility scale.
James Lawler: Right.
Emma Crow-Willard: And getting it onto the grid and getting it connected, interconnection issues.
James Lawler: Right. So I think this conversation is really interesting that we had with these two folks, Emma, because you [00:05:00] know, ultimately this energy transition is about building things in the real world, right? What should be best in an ideal world, in an idealized world, right, is not actually necessarily the cheapest thing or the best thing, the most practical thing, or the thing that will happen in the real world.
And so we wanted to tease that out by, as you say, talking to someone who comes from the business world and from the investing world, and then someone who spent his career in a national lab looking at these things from, you know, the modelers perspective. So, we're excited to bring those two perspectives together today to think about what the future of energy production and storage looks like in the United States.
Before we dive in, we also wanted to share an update with our listeners about the Climate Now podcast. We are making some adjustments to the podcast format and schedule. We will be slowing our regular interview deep dive discussion series to biweekly once every two weeks with new episodes coming out every other Tuesday. That said, we'll continue to release our weekly news show [00:06:00] Climate News Weekly every Monday as a standalone episode in which co-hosts and I cover the biggest climate energy stories of the past week. And now on to today's discussion.
Emma Crow-Willard: Do you remember your landline phone having to plug it in to a specific spot on the wall to receive signal from a utility so ubiquitous that everyone just called it the phone company? Well, our first guest, Bill Nussey, believes that one day, paying a monthly bill to the power company could be equally as old fashioned.
Bill is now a partner at venture capital firm Engage, where he spearheads investments in climate and clean energy projects. He also wrote the book Freeing Energy about the potential of small scale, distributed solar power in the American energy mix. Before that, he specialized in cloud computing, including founding a company that eventually sold to IBM, and then he ran strategy for IBM.
Bill Nussey argues that distributed power generation [00:07:00] combined with battery storage has the potential to disrupt the power industry in the same way cell phones disrupted telecoms. Hi Bill, thanks so much for joining us on the podcast today.
Bill Nussey: Thank you. I'm really excited to be here. It's going to be a fun conversation, I'm sure.
Emma Crow-Willard: Definitely. So let's start out with what you do.
Bill Nussey: What I do is a long journey, but I currently work at a venture capital firm called Engage. And we're a pretty unique firm that was built by the CEOs of a dozen Fortune 500 companies. And one of their favorite areas to invest is in climate. And I come to that having published a book and doing a podcast on climate and clean energy for the last couple of years.
Emma Crow-Willard: That's great. Before we dive a little more into the book and the whole energy topic, how do you feel like your background in IOT, in business strategy, in investing has informed your work in this space?
Bill Nussey: I'm old enough to have been through several massive tech disruptions, [00:08:00] including the personal computer, the internet, mobile phones, and I have become addicted to these massive tech disruptions as a career.
And when I started to learn about the way the power industry worked and the role that solar and batteries were going to play on it, I decided this was the biggest tech disruption in the history of humanity. And it will not be the kind of tradeoffs we've seen, the internet certainly has its pros and cons, social media, all that.
But, uh, this one I think is all positive.
Emma Crow-Willard: Yeah, that's great. So you spent four years writing this book, Freeing Energy, and then it came out in 2021, what would you say are the biggest challenges and then the biggest opportunities during this energy transition?
Bill Nussey: Well, I started it with the thesis that everyone shared at the time, with the transition to clean, renewable energy was going to be substantial and [00:09:00] positive.
But as I got into it, I faced, I discovered what was in this intractable challenge, which is there is, there are good and artificially bad reasons why the transition will take a long time and, and much, much longer than it needs to. And the book ended up being a story about how entrepreneurs are embracing clean, renewable technologies to accelerate the transition in a way that's really off most people's radar. And people think that - I joke that people think of these small, renewable systems as the kids at the Thanksgiving table. Where all the adults are at the big table and that's the utilities and the grids and the utility scale power plants and there's little kids over there at the table and the parents like, oh, look, Johnny's eating with his fork all by himself.
And that's kind of how they look at the small systems as if they just really don't matter and it's cute. And the point I make with the book and one that I've become passionate about and so excited to share with you guys and anybody else, and I think I make a good case in the book, is that these small systems are actually a force to be [00:10:00] reckoned with, and when we look back in 20 years, we're going to realize that they were much more critical to the transition than anybody thinks today.
James Lawler: So Bill, in your book, you have a conversation with a utility provider, and I love this moment. He claims that energy generation is cheaper if it's done at utility scale because of the shared resources, economies of scale, et cetera, et cetera. But you make the case that distributed energy is actually the most cost-effective clean energy approach in both the short and the long term.
So, this is counterintuitive. Please explain, you know, why you made that argument, what that argument was.
Bill Nussey: James, I love that you brought this up. This is, I think, the most overlooked point of view around distributed generation that even its largest advocates miss. They, they sometimes say, well, we should pay more because it's democratizing and things like that.
But the, the second half of that conversation, which I recounted in the book was I said, it's cheaper for you. And he didn't know what I meant. And I said, well, if you build [00:11:00] a hundred-megawatt solar system at a two cents a kilowatt hour outside my city, will my electricity bill go down the next day? And, and he goes, well, well no.
And I said, but if I put up a 10-kilowatt system on my roof, my electricity bill will go down the very next day. So explain to me which one is cheaper. When you're comparing the massive scale of renewable, utility scale, renewable projects, you're really in a very different market. And in the end, the market that matters the most is the people who are consumers and also people that are voters, which is why I'm confident this will eventually work itself out, which is that in the end, it's cheaper for consumers in almost every case to have solar on their house if they are fortunate enough to have a house, or on their buildings or in their community than it is to get it from utility scale.
Don't get me wrong. There's a massive role for utility scale solar, but it's not the universal answer it's made out to be.
James Lawler: Why is that?
Bill Nussey: There's a lot of reasons one is the utilities are largely guaranteed [00:12:00] profits in most places so the incentives are not there for them to pass them along.
Second of all, because the utilities who play an incredibly important role in our power system and energy systems, even the biggest solar projects and wind projects are dropping the bucket compared to the legacy systems. So it's decades before the aggregate lowering of costs actually gets passed along.
So I think there's, from a practical point of view, even if utilities wanted to lower the price, and I think there's probably some utilities across in the United States where they have put up a lot of solar and the prices have gone down, but by and large, there's no economic incentive, given the policies that most utilities are governed by and just the general fact that it's a drop in the bucket, that the price, the price difference doesn't appear anytime soon for consumers.
I think there's one more really interesting part of why local scale can be cheaper, which is about one third to one half of the cost of your electricity bill is the transmission grid, which is what's required to take those giant, relatively less expensive per kilowatt [00:13:00] hour systems and to get it to your house.
So if you have it on your roof or in a community very near your house, or your apartment, then the delivery cost is fractionally smaller or zero, and that's just another giant part of the cost. So, when utilities and advocates of utility scale say that it's cheaper, they almost never include the cost of distributing that electricity from the power plant to your house.
Emma Crow-Willard: Yeah, and I just want to bring in the net metering conversation that happened in California, the whole idea of like, yes, my electricity goes down, but then does my neighbors go up because they don't have solar panels. And so, you know, we need to have a build out of electric grid because not everyone is going to get solar panels.
Some people don't have roofs that are right for solar panels, they're covered in shade or things like that. And so you have to have some kind of transmission. And added transmission helps make the grid more resilient as well.
Bill Nussey: There's this argument the utilities have made, and they made it in [00:14:00] California.
And it's what was the basis of NEM3 in California, which was that if I have solar around my house and my neighbor doesn't, somehow my neighbor's supporting that. There are incredible debates on that and there are dozens of PhDs writing white papers in techno economic analysis of both sides. I would say as a person who does lean towards local energy, but I could say, honestly, that is an unsettled debate.
It's not automatic at all that your neighbor who doesn't have solar is going to pay more, it's just not settled. What I can say is that the argument about cost shifting is what they call it, and, in my book, I call it the monster under the bed, it's a little bit over exercised. It's more in people's imagination than reality, but the entire electric utility industry model is about cost, cost shifting full on every single thing they do when they offer flat rate or a tiered rate for electricity is cost shifting.
And so for them to say, well, this particular cost shift, which [00:15:00] is relatively smaller compared to other cost shifts, but this particular cost shift is one that's somehow going to damage the industry, it's very- it's a red herring. For example, the cost shift between rural and urban customers is massive and that's one that they're not, that one benefits utilities, so they're not really, they're not worried about that one.
They’re picking on this one because in the longest term in the next 20 years with their business model, without any changes to their business model, they see it as an existential threat. But, you know, the, the point is that it's one of many cost shifts and once smartest utilities realize that this shift to distributed generation is to their benefit, several of them are going to lean into it, they're going to be really successful and they'll end up buying those that resisted the shift who have ultimately struggled because economics are just not in their favor.
James Lawler: Okay, and so for consumers, how much would average cost per watt change, assuming widespread adoption of rooftop solar, how much would it vary between regions?
Bill Nussey: It varies unbelievably for residential, which is, [00:16:00] and even for a commercial scale, because roofs face different directions, there's a lot more shading issues. Depends on where you are in the country. You know, if you're in Phoenix, you're going to get a lot more sun than if you're in Maine but I think a number that's more consistent and more telling is the cost to actually build the solar panel. And this is a number you'll remember James from the book. And this, this blows people's minds. As much as people talk about the economics of solar, can I make solar cells cheaper, are batteries going to get cheaper, this, these are all these are not the important questions, as much as they seem to be the important question.
The important question is how much does it cost to put solar on my roof? And in the United States, it's very consistent. It's about $3 a watt. So if you put, say, a 4 kilowatt system, that's going to be $12,000. Now, that's pretty consistent whether you're in Maine or in Phoenix. And what's crazy is if you take the exact same model of solar panel, and you buy it for the same amount of money and you take the same inverter and you build that system on an [00:17:00] Australian rooftop or a Japanese rooftop, same equipment, someone climbing on the roof, wiring it up, that 3 a watt goes down to $1.10 or $1.20 a watt for the exact same hardware.
James Lawler: And why is that?
Bill Nussey: It's red tape. It's red tape. And Australia had this crazy idea like, hey, let's get out of the way of this and let's just make some national policy on it. And all of a sudden, the cost goes down to a dollar, dollar twenty per watt on the roof. And that actually is really close to utility scale costs. So when I had the solar put on my house, the senior person that oversaw the team that did it had to wait in my driveway in his truck twice for an entire morning before the, the County inspector would come by the County inspector said, I'll come by on Tuesday.
And because the, the firm that installed it had no idea what the inspector might ask. It could be anything from the, I want to climb on the roof with you to, I want to look at this wiring. Say they had their top guy sit in my driveway and I paid for that, probably tripled the cost of the labor. And in my case, because of the county [00:18:00] and utility overlap, he had to come back three times and spend a morning in my parking lot, which was probably as many hours as the whole team was on site to put the system in.
James Lawler: So even if you can reduce that red tape, you're still asking people to make a long-term investment in expensive infrastructure rather than just buying power as needed, right? So for the person concerned about next month's bill, in what world does that make sense?
Bill Nussey: In the U. S., the way most people look at it is how long does it take for it to pay back? And, so if you go to EnergySage.com or some of the really useful sites for assessing it, it's, depending on where you are, it's going to take between three and eight years on average to pay it back. And, and people get really hung up on this, and I like to make two points.
First of all, the fact that it pays back means that at some point it's going to be cheaper. The point is, if you said it never will pay back, then it's never going to be cheaper, but it will pay back. It's a question of how long before it's cheaper. If you were going to pay a hundred dollars a month for eight years or three years, but the end of that three or eight years, [00:19:00] it's free. So there is always cheaper if you're willing to look over, say, 10 years, always, no matter what your policies are.
James Lawler: In his book, Nussey discusses solar microgrids, i. e. small, localized grids that can power a single neighborhood or a small town. Solar microgrids can provide remote communities with power independence, and they can work in tandem with the existing power grid, allowing one to serve as a backup for the other.
Solar wind and hydropower microgrids have long been employed in the global south to power remote villages and settlements. They also provide power stability in disaster prone areas such as Puerto Rico, where frequent storms, and to put it euphemistically, a subpar traditional power grid, have made extended blackouts commonplace.
Bill thinks microgrids could be the foundation of widespread distributed renewable power.
Bill Nussey: And the biggest irony for me is that today, even the largest computer systems like Google's cloud, for [00:20:00] example, it's not powered by giant mainframes. It's powered by tens of millions of tiny computers. And I think, I don't want to get too nerdy here but when personal computers became intelligent enough that it was better to use a personal computer than a terminal, which is what used to attach to a mainframe, those took off. And that exact parallel exists with microgrids.
And the utilities, who I think will always be here and always do a great role because the utility can talk to the microgrid, just like a mainframe can talk to a personal computer and say, listen, I don't just want you to be this dumb thing, I'm having to do all the lifting. I want you to help me do my job. And so I think that's actually going to make grids far more, the big grids, which we need, we need big grids for cities. We need big grids for factories. We need big grids for a lot of situations. We need big power plants for those, but for a surprisingly large amount of situations, we don't need them.
And great news is that the grids are better, smarter, faster, cheaper, more reliable, if you work [00:21:00] in concert with these small systems like solar battery, then if you today, the, the, one of the reasons that utilities don't like solar is it's, it's like a dumb terminal. You can't tell what to do, it's just going to generate power, not generate power, you don't have any prediction in it. But if you put a microgrid there like Hawaii and Puerto Rico, and I have batteries, solar and batteries in my house, then the, then the utility can say, listen, we're having a peak load right now, is there any way we can get you to turn your air conditioner down, discharge your batteries and send electricity back to the grid?
That's the best grid anyone's ever going to have. That's exactly what we did with computing. I think the grid will be the same. I don't know if it's going to be 15 years or 30, but I think it's inevitable.
Emma Crow-Willard: Our next guest, Paul Denholm is a senior research fellow at the National Renewable Energy Laboratory NREL in Golden, Colorado.
He also contributed to the laboratory's foundational study into the feasibility of achieving 100 percent renewable electricity in the United States by 2035. Paul Denham also feels that [00:22:00] distributed generation will play a role in our power mix but believes that it's utility scale generation that will take us over the finish line.
James Lawler: Paul, welcome to Climate Now. It's great to have you on.
Paul Denholm: Good. Happy to be here.
James Lawler: So, let's dive right into the big question of this conversation. And this is one that I'm very excited to hear a perspective on as someone at the forefront of America's clean energy rollout.
Paul Denholm: Sure.
James Lawler: It's about to what degree renewable energy integration will involve utility scale infrastructure and what degree will be more distributed energy production.
We've also heard from an entrepreneur and author named Bill Nussey who wrote a book, Freeing Energy. And he is quite bullish on the future of distributed energy generation. Solar on everybody's homes, distributed microgrids, etc. Now in his book, he recounts a conversation with an executive who works at a utility, the executive is arguing with him, saying that you just can't beat the cost of utility scale generation. That generating power on a residence-by-residence basis is just going to be way more costly. And Bill Nussey answers that by saying, [00:23:00] yes, for utilities that's true, because they have all kinds of costs, transmission costs, legacy costs. And the consumer is faced with paying those costs, plus the cost of generation, versus, say, just installing solar and battery systems on their own homes. which he thinks will win out in the medium and long term. So I'm curious, based on your modeling, what do you make of that argument?
What do you think the future is going to be in terms of how much distributed generation will have and how much utility scale generation will have?
Paul Denholm: Yeah, so this is a very, very difficult question. It's a fun question, and we talk about these issues all the time at work. I think one of the things is when people talk about distributed generation and distributed resources, it's like, what are we really talking about here?
At the end of the day, there aren't that many technologies that are quote unquote distributed. I mean, people- solar's obvious, storage is obvious, but what else is there? So where is the electricity going to come from?
James Lawler: Right.
Paul Denholm: And so there's a number of challenges in terms of, okay, well, does that mean we should try and do it [00:24:00] all with solar plus storage?
Well, what are you going to do in the winter? And what are you going to do about the fact that this nation has among the best wind resources on the planet and there are many places in the U. S. where wind is just cheaper, period. The Dakotas, the upper Midwest, Texas, just incredible wind resources and very, very cost competitive. You’re just not going to beat the cost of wind with solar in North Dakota, and that includes transmission.
And so there is this question of okay, what is the right mix of resources again to minimize cost. Now, solar is going to be a huge part of it, and we think it's going to be a huge part of it everywhere, so it's not like you're not going to build solar in North Dakota, because one of the things that's really cool is how well wind and solar work together.
So, solar is great in the [00:25:00] summer, but not so good in the winter. And we have reasonable wind resources. So we do get wind production during the winter and when you look at the, the kind of the balance of the resources, it makes a lot of sense to have significant amounts of both wind and solar. And so right away, you're, you're probably not talking about a huge amount of distributed wind.
I mean, that is a possibility. So there is, there is such a thing as distributed wind and there, there times where that makes sense, but the cheapest form of getting wind energy onto the grid is these large scale wind power plants. And these can be, you know, hundreds and hundreds of megawatts and have just incredible, uh, resource potential.
James Lawler: Yeah.
Paul Denholm: So let's talk about distributed solar versus central solar because that's another really interesting question about both the kind of the cost effectiveness and the kind of the technology capacity. So there's a number of different issues. Um, one is the relative resource quality as well as the availability of the [00:26:00] resources.
So if you were to put roof- if you were to put solar on every single roof in the country that had, uh, roof space available and was not in shade, you still wouldn't get a hundred percent of the nation's electricity - far from it. I mean, I've seen a lot of different estimates. We've done some estimates ourselves, but maybe a quarter, maybe a little bit more, but that still leaves well, 75%, so you're not going to get there with just rooftop solar.
James Lawler: And that assumes no storage, right? That's looking at demand and comparing with okay, you have solar on every rooftop, the output is very, very strong in the middle of the day. How is that comparison made, I guess?
Paul Denholm: Yeah. So if you didn't add any more utility scale solar, and you just put it on every roof, you'd, you'd be able to use most of that.
You wouldn't have to store a huge fraction, but you'd still have to store some of it.
James Lawler: Okay. And this assumes perfect transmission, getting power from where it's produced to where it's needed, which does not exist yet, but we're assuming that in the case of, for this exercise, is that right?
Paul Denholm: Yeah, and I mean, quite frankly, I don't think you'd need a [00:27:00] whole lot of transmission in these scenarios just because most of these roofs would be in places where you'd actually be using the electricity.
James Lawler: Okay.
Paul Denholm: So again, that's another advantage of, of rooftop solar is you don't need a whole lot of upgrades to your transmission system. You can use it locally; you can avoid losses in the system. So there's a lot of advantages of rooftop solar, but there are quite a few limitations, the resource availability being one.
And then there are significant cost issues associated with rooftop solar. First of all, when you put solar on your roof, your roof is probably not at the optimum orientation to collect as much sunlight as possible. So solar panels, when they're mounted in utility scale networks, they can, they can be oriented in such a way to collect as much of the solar energy as possible, as well as have what's called tracking arrays so that solar panels will actually tilt.
They'll start pointing east in the morning, and they'll over the day, they'll point west. You could have a pretty significant increase in energy yield from a [00:28:00] utility scale solar system as residential. And that, quite frankly, is going to more than offset the losses. So you're going to lose in transmission distribution, you're going to lose, you know, 7%-8% of the energy from a utility scale solar system that is significantly less than you're going to lose from the fact that you're putting it on your roof and you're not having that kind of optimum orientation. There's also of course, economy of scale in terms of installation. You're putting in megawatts of solar all at once, instead of kind of driving around house to house and putting solar on the roof again, I don't think there's so much that we shouldn't be doing. And I think there are a huge potential advantages of, of distributed.
It's just, I don't think you're going to be able to do everything with distributed resources. You're still going to need these other resources as well.
James Lawler: What do you make on the topic of distributed solar versus utility scale solar? What do you make of kind of the reality of the prevalent cost [00:29:00] bases of the companies that are that would be offering these things?
What I mean by that is, if I'm a electricity provider, then I've taken out all kinds of loans to finance power production, and I'm making a I'm paying those loans out of my revenue, which is the ratepayer dollars that are flowing into my account. So I'm going to charge ratepayers enough to cover the cost of debt on everything that I've built so far.
We can't just talk about cost as sort of what does it take to get these things in the ground, because that's ultimately not the cost that's going to, going to matter. Am I thinking about that incorrectly?
Paul Denholm: Well, there's a couple of factors. One is, I mean, quite frankly, a lot of those legacy costs are assets that you're going to continue to use.
I mean, a lot of the legacy costs that you're talking about is, is the cost of building the wires that go to your house and the cost of the transmission network and the cost of power plants that we're still going to use as we [00:30:00] make this transition. So those power plants will get old and they'll, they'll be retired and they'll be taken off the books.
But until we've got way more wind and solar on the power grid, we're still going to need a lot of those existing power plants. And so if you put solar in your roof, you're going to avoid a lot of the electricity that you use, and you're going to avoid a lot of the fuel costs. And that's, that's great because you're going to reduce carbon emissions.
But what you're probably not going to eliminate is the need for the wires going to your house. And, you know, in some cases you're going to be exporting PV back onto the grid and wires are needed to export that PV back onto the grid so your neighbor can use it. Um, and even if you have storage, you're still going to need the grid for, you know, those cloudy days and those other issues.
So a lot of the legacy costs are still needed, a lot of those assets are still needed until we kind of completely replace them. And hopefully that time those loans will be paid off, so you're not going to be paying those costs anymore. But [00:31:00] I tend to think a lot of this more in terms of the going forward costs and the comparison between a new- so you know what's the most cost effective a new wind farm, a new solar plant PV on your roof, you know, it's certainly going to be some mix of those.
And it's really important that we figure out what the most cost-effective mix is, because again I don't think it's just going to be one thing it's got to be a mix of these resources to take advantage of, of, you know, great wind resources great solar resources.
Emma Crow-Willard: As with Bill Nussey, we also asked Paul Denham for his thoughts on microgrids, especially in relation to the paper he and his colleagues published last year titled Getting to 100%.
The paper observed that in a theoretical transition to 100 percent renewable electricity generation mix, the last 10 percent would be exponentially harder to achieve than the preceding 90%. So we were curious whether localized microgrids, the [00:32:00] kind employed in Puerto Rico, could be a way to achieve that final 10%, especially in rural and remote parts of the country.
Paul Denholm: One of the things that I always like to talk about in terms of microgrids is let's, let's talk about you, you've, you've developed your microgrid and microgrids are reliable, um, generally, but they're not as reliable as the type of power that you and I are used to here in the United States. And so one of the things that we could do is we deploy a microgrid and, you know, one small town, and then maybe the next town over, we've also installed a microgrid.
What are the, what's, what's the easiest way to increase the reliability of those two microgrids?
James Lawler: Connect them.
Paul Denholm: Um, Exactly. Because if you know, one microgrids got too much solar generation, you can send it to the other. And if you keep doing that, you're going to increase the reliability, you're probably going to decrease the cost because you're going to be running these diesel gen sets less and less.
And next thing you know,
James Lawler: You have a grid.
Paul Denholm: You got a grid, yeah.
[00:33:00] So, huge fan, huge fan of microgrids for, you know, the specific applications, but at the end of the day, you know, in places like the U.S. where you've already got a developed grid, you've got wind, I don't, I don't see a way to avoid, you know, maintaining and even expanding the grid as we know it because of all the things that, that it can provide.
James Lawler: But as we've, as you've looked at analyses over the years and you've been looking at the grid for a long time, is it the case that the costs that you initially projected in terms of the cost of expanding the large grid like Capital G have fallen because we've seen more opportunities for local micro grids?
Because again, in that example that you described of a bunch of villages, each with their own micro grid, you would presumably not need is as robust a centralized grid if you had all these micro grids, right? Because you're, you're just talking about sort of more specific, like more limited times at which the connectivity is important.
So as we're looking at, like, what it will take to improve the [00:34:00] big grid, if we have more distributed generation and storage. Does that not take the load off a little bit?
Paul Denholm: Somewhat, yes. I mean, again, distributed resources will add reliability benefits and you can avoid some transmission upgrades. There's there's no doubt that you can avoid some of the transmission upgrades that you would otherwise need.
And we saw this in cases where in the 2035 study where we restricted the development of new transmission. What did we build? A lot more distributed solar and a lot more distributed storage and a lot more nuclear, because we ran into this problem where you can only go so far with solar plus storage until you've got these problems around, what are you going to do during the winter?
What are you going to do in places where, you know, it's not as sunny. So the model wanted to start building nuclear in those cases.
James Lawler: Yeah. That's interesting.
Paul Denholm: I mean, let me, let me make clear, because I don't think I've, I've stated this and I want to, I want to make this, this absolutely clear. So I've been doing this for 20 years and I, I do consider myself fairly old school and kind of a lot of my perspectives on, you know, [00:35:00] centralized versus distributed resources. So I want to be very, very transparent. Um, you know, I, I come out of the, the big steel in the ground type of perspective. And so I do try and temper that as much as possible. I do try and consider all these technologies, but there are these kinds of economy of scale benefits.
That's hard to get past as much as we try. But, but again, I mean, I certainly appreciate the improvement of these distributed technologies and again, I I'm a huge fan. I want to deploy as much of them as possible. I think my issue is I want to clean up the grid as much and as fast as possible. And I think the way to do that is just everything that's clean, build it right now.
Emma Crow-Willard: And that's it for this episode of the podcast. Thank you again to Bill Nussey, author of Freeing Energy and Paul Denholm of the National Renewable Energy Laboratory. To learn more about the future of renewable energy in [00:36:00] America, check out our other podcast conversations at climatenow.com. And if you want to get in touch, email us at contact @climatenow.com. We hope you'll join us for our next conversation.
Climate Now is made possible in part by our science partners like the Livermore Lab Foundation. The Livermore Lab Foundation supports climate research and carbon cleanup initiatives at the Lawrence Livermore National Lab, which is a Department of Energy applied science and research facility. More information on the foundation's climate work can be found at livermorelabfoundation.org.
Two views on the future of the US electricity grid