Reimagining Grid Resilience in the Energy Transition
Principles for Ensuring a Secure Electricity Future in an Era of Transformational Change
The COVID-19 pandemic has forced much of the world to first shelter in place and then continue to spend significant time at home as outbreaks re-emerge. Reliable delivery of electricity to homes and essential businesses in this time of upheaval has been critical in maintaining any semblance of normality.
Yet this is only the latest reminder of the growing importance of a secure and resilient electricity grid for modern life. Even under previously “normal” conditions, the grid has been growing in importance for decades as a driver of economic growth, and recently as a key enabler for meeting economy-wide decarbonization targets through electrification with renewable energy.
However, historical approaches to ensuring grid security in the United States are proving to be poorly suited to the emerging, catastrophic threats facing the grid. They are also incongruous with the ongoing technological transition that is rapidly reshaping the electric power industry as we know it.
Developed with a centralized, 20th century power system in mind, today’s common, top-down approaches to strengthening grid resilience are increasingly at odds with 21st century realities. These include unprecedented weather events driven by climate change, among other risks, and 21st century technologies, such as wind, solar, and storage, that are capturing market share faster than anticipated.
Today, Rocky Mountain Institute released a report with an assessment of the current approaches to grid resilience in the United States, in light of the rapidly changing risk environment and technological landscape. The report also provides associated recommendations for policymakers, regulators, and industry participants. By embracing the present era of energy transition as an opportunity, not a threat, the report lays out unique and timely strategies to reimagine and improve grid resilience and strengthen a fundamental pillar of US economic health and growth for decades to come.
Grid Resilience in a Changing Risk Environment
For much of the 20th century, the US power system grew according to economies of scale for generating facilities–e.g., large, remote coal and nuclear power stations, and more recently large-scale, combined-cycle gas-fired generators. Following from these legacy economics, the US grid evolved into a one-way value chain, where primary fuel sources (e.g., coal, gas, uranium) provide energy to large-scale generators, which feed high-voltage transmission lines, then low-voltage distribution lines, and finally deliver power to homes and businesses.
Exhibit 1: Illustrative 20th Century Grid Architecture
The risks inherent in this one-way value chain have been apparent from the early days of the industry: disruption of any component of the value chain “above” the customer can lead to outages. Typical means to address these risks focus on “hardening” each component of the value chain against disruption: e.g., prioritizing fuel security, redundant generation capacity, and more-robust transmission and distribution infrastructure.
But the threat environment today is rapidly diverging from the situation faced by 20th century grid planners. In addition to unprecedented extreme weather driven by accelerating climate change, myriad other threats pose risks for power systems and the economies that rely on them: cyber-attacks of increasing sophistication, physical attacks on infrastructure, and electromagnetic disturbances caused by natural causes (e.g., solar storms) or malicious attack (e.g., high-altitude detonation of nuclear weapons).
Any of these threats has the potential to exploit the common-mode failure risks inherent in today’s grid infrastructure, and cause wide-area, long-duration outages unprecedented in modern US history.
Grid Resilience in an Era of Technological Change
Even as the threat environment evolves and high-impact risks become both higher-impact and higher-probability, the technological underpinnings of the US grid are also changing faster than ever. Current approaches to resilience, focused on hardening individual components of the centralized 20th century grid, are forced to adapt to the rapidly decentralizing technology mix that characterizes the grid’s 21st century evolution.
A salient example of this is the accelerating pace of coal generator retirements across the United States. Long characterized as the “baseload” backbone of the power grid, coal plants are now widely recognized by utilities as the most costly form of generation to keep running, especially as the ongoing COVID-19 pandemic continues to suppress electricity demand. As a result, coal power plants are retiring at a record rate across every region of the United States, well in advance of their originally planned economic lifetimes.
In their place, less-costly forms of generation, including new wind turbines and solar photovoltaics, are rapidly gaining market share. Having fallen in price by 70–90 percent since 2009, these renewables are being prioritized and deployed at record rates by utilities, corporations, and other investors as their economic benefits over legacy fossil resources becomes clearer by the day.
The United States is seeing a shift to a more decentralized generation portfolio, along with similar growth in market share of other distributed energy resources (DERs) including end-use efficiency technologies, internet-connected demand flexibility, and storage. This represents a fundamental change in power system architecture and a departure from the centralized model that has governed our approach to resilience to date.
Principles for Reimagining Grid Resilience in the 21st Century
Instead of continued prioritization of 20th century resilience approaches in a rapidly evolving, 21st century grid, our report lays out an opportunity to reimagine the fundamental approach to grid resilience, beginning with four principles:
- Address, don’t ignore, linear dependence. Current resilience approaches focus on reinforcing single elements of the grid value chain; emerging opportunities that leverage DERs address multiple failure modes with single investments.
- Leverage the market, don’t fight it. Common resilience interventions tend to lag the cost-effective opportunities presented by emerging technologies; tailored solutions can take advantage of market forces to lower the cost and improve the efficacy of resilience strategies.
- Prioritize critical loads. Typical approaches to energy resilience take an all-or-nothing approach to maintaining or restoring grid services; new tools can enable utilities to ensure that the highest-value, most critical electricity services are kept online or restored the fastest during contingencies.
- Maximize economic value from resilience investments. Most current approaches to grid resilience serve only as insurance and provide no value outside of contingency events. In contrast, emerging solutions leveraging renewable and distributed energy can provide economic value during normal operations, in addition to mitigating the impact of outages.
At their current pace of capital investment, electric utilities will probably invest approximately $1 trillion in the US power grid between 2020 and 2030. Given the magnitude of long-lived assets under consideration, there is a societal, economic, and national security imperative to invest in our grid in a way that promotes resilience by design, economically and from the bottom up, and not as a cost-adding afterthought years later.
The principles laid out here can serve as guideposts for investors, regulators, policymakers, and other stakeholders as they mobilize capital to reimagine the power grid in response to both emerging catastrophic threats and the market-winning technologies of this decade and beyond.
