The electricity conundrum, present and future

Predicting electricity supply and demand is proving to be problematic.  Vox reports:

Demand for electricity is stagnant.

Thanks to a combination of greater energy efficiency, outsourcing of heavy industry, and customers generating their own power on site, demand for utility power has been flat for 10 years, and most forecasts expect it to stay that way ... This historic shift has wreaked havoc in the utility industry in ways large and small, visible and obscure.

. . .

Utilities have been frantically adjusting to this new normal. The generation utilities that sell into wholesale electricity markets (also under pressure from falling power prices; thanks to natural gas and renewables, wholesale power prices are down 70 percent from 2007) have reacted by cutting costs and merging. The regulated utilities that administer local distribution grids have responded by increasing investments in those grids.

But these are temporary, limited responses, not enough to stay in business in the face of long-term decline in demand. Ultimately, deeper reforms will be necessary.

. . .

Only when the utility model fundamentally changes — when utilities begin to see themselves primarily as architects and managers of high-efficiency, low-emissions, multidirectional electricity systems rather than just investors in infrastructure growth — can utilities turn in earnest to the kind [of] planning they need to be doing.

There's more at the link.

In one sense, this is good, I suppose.  We're using more electrically powered things than ever, from smartphones to computers to TV's to electric cars.  However, most of them have gotten much "smarter" at how much electricity they need and how economically they use it, so the explosion in devices has not increased the demand for power.  Kudos to the engineers involved.  (Frankly, I'm surprised.  I'd have thought the increasing number of electric devices, particularly electric cars and their charging stations, would have had the opposite effect.)

However, it's also a real problem for all of us for the future.  Basically, new electricity generating plants are paid for by the profits made by electricity suppliers.  (Sure, they'll usually take out loans or sell bonds to pay the construction costs, but they pay those off using future profits, so it amounts to the same thing.)  If they can't be assured of ongoing profit (let alone profit increases), sufficient to both pay off old debts and incur (and pay off) new ones, how are they going to afford to replace older, less efficient plants - and those that are simply wearing out - with new ones?  The new technology of electricity generation is supposed to be more efficient and ecologically friendly, but it's also expensive.

To make matters worse, "green" energy sources such as wind turbines, solar energy, etc. are subject to wind and weather.  If they can't provide power because there's no wind or too much cloud, there have to be "traditional" (and expensive) generating plants available to take up the slack.  Alternatively some form of storage (for example, Tesla's Powerwall) to retain (and later use) power generated during windy and/or sunny periods will be needed.  Such storage has to be paid for by home and business owners, putting the cost burden on their shoulders rather than the generating utility's.  That's not going to be popular.

There's also the issue of what happens when distributed generating systems are affected by disasters.  A hurricane will take down wind turbines, solar panels, etc. in the blink of an eye, and also disrupt power lines bringing in power from elsewhere.  A solar flare might affect such generating facilities, whether domestic, commercial or industrial, over an entire continent, particularly things like solar panels.  What happens if we get used to generating at least some of our power needs locally, only to find those facilities suddenly damaged or destroyed?  Will a distant utility have the reserve capacity to supply our needs, and even if it does, will the power distribution network still exist to get it to where it's needed?  At present, that's largely the case.  In future, with the disruption that stagnant or decreasing power demand is likely to cause in the industry, it can't be guaranteed.

This issue has opened a very large can of worms.  Definitely food for thought.

Peter