ADAPT, OR DIE? SWIMMING AGAINST THE DEATH SPIRAL
Many countries are experiencing huge increases in distributed generation. Utilities are wondering whether it’s a blessing or a curse.
Electricity customers who have the funds and space to install distributed generation can reap direct benefits. Governments are variously over- or under-incentivising the growth of distributed generation, particularly solar PV on rooftops or in backyards.
There’s talk of death spirals and the weakening or undermining of the electricity supply establishment. Although I don’t buy all of the hype around the death spiral, it is real to an extent, and its implications present both opportunities and pitfalls.
Let’s look at the death spiral …
The ‘death spiral’ is the idea that as distributed generation and storage (such as solar PV and battery technologies) become cheaper, it becomes expedient for customers to disconnect from the electricity grid. As more customers leave, the sunk cost of the grid infrastructure must be borne by fewer customers. And so, it becomes expedient for a wider set of customers to disconnect, and so on until (potentially) no customers are connected and the asset owners are left with a huge white elephant.
This hypothesis of the death spiral is sound so long as the following assumptions hold:
- all customers can afford to leave the grid
- the electricity supply industry is a monolith that can’t adapt to changing market conditions.
Can all customers afford to leave the grid?
It’s hard to imagine that people living in high-density housing could get access to enough high-yield solar surface area to be able to be energy self-sufficient. This is especially true in less sunny climates with long periods of time in which proper access to sunshine cannot be guaranteed.
Additionally, can we imagine a time when the owners of rental properties install solar PV and batteries to attract tenants, especially at the low end of the rental market?
What about the high-volume users who supported or provided the impetus for the development of the centralised generation model in the first place? While they can choose to relocate to other regions for more competitive electricity tariffs, it is unlikely that they can go off-grid to any large extent.
Is the electricity industry really incapable of adapting?
Time will tell. This is complicated by government regulation and conflicts of interest or conflicting policies. Just as it is easy to accept that an economic imperative will drive off-gridding, isn’t the converse true? Off-gridding creates an economic imperative for the electricity supply industry to adapt. So that should convert the death spiral to some sort of controllable glide path for most.
What’s happening with load growth?
We can see that neither of the assumptions supporting the death spiral are as true as the doomsayers would have us believe.
But there’s another issue we must consider: load growth. Australia is in a period of flat or negative load growth at the moment, perhaps due to the decline in manufacturing, the increased adoption of energy efficient appliances and other responses of consumers to price signals such as reducing use.
Manufacturing can only decline so far. Unless our demand for electricity can sustainably decline as well, energy efficiency can only decrease demand so much. If we imagine that our population will continue to grow, it is reasonable to assume that eventually demand will trend upwards again.
Can we imagine a future with no electricity grid?
We can and have removed the need for fixed-line telecommunications, but energy is a trickier beast.
While we still have large industrial power users remote from generation sources, and until all customers are able to generate and store according to their own requirements, some need for a power grid remains.
The grid of the future may not look like the one we have now. It may not be as reliable as the one we have now. The convenience and efficiency of sharing the cost for reliable reticulated power, however, is the one thing that the grid provides that distributed generation and storage may not.
What does this mean for the electricity industry now?
It means that we need to develop the ability to adapt.
This adaptation cannot be a purely defensive approach that tries to entrench the status quo. We must turn the challenges that confront us into opportunities to do business better.
Some concrete examples of successful adaptation could include:
- using distributed generation and storage to reduce network extension costs to new loads
- using our knowledge to inform regulators and governments of the implications of existing or proposed policies
- strategising about what enabling technologies could mean to our existing market offerings
- staying relevant by adopting and embedding these technologies to add value to our customers’ lives or businesses.
Adapting in practice
Specialist power and water consulting firm Entura has already demonstrated its innovative approach to some of these issues through the King Island Renewable Energy Integration Project and other small grid and off-grid projects. This work has given us practical experience of many developing technologies such as dynamic battery charging control, distributed or device-level demand-side management.
As part of Hydro Tasmania, Australia’s largest producer of renewable energy, we’ve also directly experienced how renewable generation can maximise benefits.
In my next article, I will explore the network benefits that may be realised from working with, rather than against, embedded and distributed generation. Subscribe to our newsletter to receive my next article.
If you would like to find out more about how Entura can help you swim against the death spiral and adapt successfully to the rapidly changing market for electricity generation and energy services, contact Donald Vaughan on +61 3 6245 4279.
About the author
Donald Vaughan is Entura’s Technical Director, Power. He has more than 25 years of experience providing advice on regulatory and technical requirements for generators, substations and transmission systems. Donald specialises in the performance of power systems. His experience with generating units, governors and excitation systems provides a helpful perspective on how the physical electrical network behaves and how it can support the transition to a high renewables environment.
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Reliable, renewable energy now powering South Africa
In many developing nations, governments and utilities are scrambling to bring much-needed power to their people and industries to improve quality of life and drive economic growth.
Small hydro (around 40 MW or under) from run-of-river schemes is an ideal solution to contribute to growing and greening the energy mix in developing countries, providing clean and reliable power from a country’s rivers without the significant environmental or social impacts of large dams or the economic and environmental costs of fossil fuels.
The Neusberg hydropower project – a run-of-river small hydropower project near Kakamas in the Northern Cape of South Africa – is one small but effective step towards South Africa’s ambitious goals of raising the living standards of its growing population and supporting vital economic activity through encouraging the development of renewable energy by independent power producers.
What is the Neusberg hydropower project?
Using the power of the mighty Orange River, the Neusberg hydropower project creates electricity by diverting some water for a short distance as it runs downstream from the existing Neusberg Weir, returning the water back to the river after it runs through the hydroelectric plant’s three 4010 kW turbines.
The Neusberg project is highly efficient, producing 10 MW of reliable and sustainable baseload power for the equivalent of up to 5000 homes with no adverse impacts on irrigation, fish or environmental flows.
Success through collaboration, innovation and expertise
The Neusberg project needed a particularly innovative design solution and effective planning and collaboration for it to meet the needs of the region, satisfy the requirements of all major authorities and stakeholders, and still achieve the objectives of the developer.
And that’s where specialist power and water consulting firm Entura drew on its extensive experience in hydropower development to find the right answers to move the project towards successful completion.
For example, developing all the necessary tender and contractual documentation and negotiating and achieving regulatory approvals are critical administrative steps but can prove challenging. Entura’s owner’s engineer services helped the Neusberg project overcome these development-stage hurdles – such as helping to achieve the vital water use licence by proposing suitable designs for the project and then working through a collaborative process to modify the designs to meet the authority’s requirements while still achieving the developer’s objectives.
Tailored solutions for tricky challenges
A major challenge for the Neusberg project was to produce economical and reliable power to relieve pressure on the electricity network at the same time as ensuring adequate water supply for irrigation by local fruit-growers throughout the construction and operation of the project. Other specific local requirements also needed to be met, such as maintaining the ability of the Neusberg Weir to meaningfully measure river flow, maintaining the aquatic environment and minimising the impacts from construction activities.
- To guarantee an uninterrupted supply of water to the local irrigation scheme, construction of the hydro project called for clever planning. Since an existing irrigation canal ran through the powerhouse site and needed to remain in operation, a temporary diversion canal was created to allow the powerhouse and forebay to be constructed in two stages without interrupting irrigation supply.
- To ensure that the flows into both the hydroelectric project and the irrigation canals are sufficient, a weir was placed at the offtake for the hydro project providing passive protection against the water level in the reservoir being drawn down. The level of the top of the weir was carefully designed so that the length of the weir was reduced – lowering construction costs while providing the protection required for the irrigation canal and allowing sufficient flow into the headrace canal.
- The Neusberg Weir is a very important flow measuring structure as it provides accurate information on the flow in the Orange River to both South Africa and Namibia. The hydro project takes water away from the weir, so to restore the ability to measure flows, two devices were installed – an instrument in the canal upstream of the powerhouse, and the weir in the tailrace. The measuring weir in the tailrace provided an extra benefit for the aquatic environment, by acting as a barrier to fish movement and enabling fish to find their way to the existing fish ladder to travel upstream.
- To minimise costs and impacts of construction, the design of the Neusberg project dispensed with the typical aboveground powerhouse structure. Instead, the concrete roof of the powerhouse has a removable hatch allowing equipment to be lowered through the roof by crane into the turbine chamber.
Community benefits both now and into the future
The Neusberg project has brought an ongoing social and economic boost to the local community that goes well beyond providing an important source of electricity. During the construction phase, it created much-needed local employment in a region in which opportunities are scarce, and supported local and national businesses through spending on goods and services.
But the benefits keep flowing long after construction is finished, as the local community has a
15 per cent ownership stake in the hydropower scheme and an 8 per cent stake in operation and maintenance contractors, ensuring that the community trust will share in the project’s success for many years to come.
Entura’s role in the Neusberg project
Entura has played a vital role in the successful civil design and was also responsible for the electrical and mechanical construction of the Neusberg project by drawing on our day-to-day experience of owning, operating and maintaining hydropower assets for more than 100 years as part of Hydro Tasmania, Australia’s largest renewable energy producer and water manager, and an equity stakeholder in the Neusberg project.
If you would like to discuss how Entura can help you develop a hydropower scheme that can meet your power needs in a cost-effective and sustainable way, please contact Christoff LeGrange on +27 21 202 2231 or Shekhar Prince on +61 412 402 110.
+61 412 402 110