Wrangling Renewables and the Smart Grid: How Can the Federal Government Change the Future of Electricity?

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The commissioner of the federal agency responsible for electricity supply in the U.S. explains the ongoing transformation of the energy sector

By David Biello

Offshore wind turbines will line the Atlantic coast; vast solar arrays will cover swaths of the southwestern desert; transmission towers will cradle high-voltage direct current lines and take electricity from the windy Great Plains to the populated coasts. That is the renewable future for the U.S. that the Obama administration seems to envision and, certainly, what Jon Wellinghoff forecasts. And as chairman of the Federal Energy Regulatory Commission (FERC) Wellinghoff has a better than even chance of making his vision a reality.

Already, FERC is rewriting the rules for new transmission lines, potentially making it easier to permit new electricity-carrying capacity—and, as a result, unleashing the development of more renewable resources. The commission released a new rule on June 17 that would require that mandates for renewable energy—enacted in 36 states nationwide—be taken into account when determining where and when new transmission lines get installed.

Wellinghoff's goal is to enable a near total transformation of the electricity sector, allowing for renewable resources, such as the sun, wind and flow of rivers, to meet a greater proportion of U.S. electricity demand. The benefits, according to Wellinghoff, range from "green" jobs to cutting by 80 percent emissions of the greenhouse gases causing climate change by 2050. And, ultimately, electricity harvested from the wind may be the cheapest form of electricity generation, saving money for consumers.

Renewables offer just 10 percent of total U.S. electricity generation at present, according to the U.S. Energy Information Administration, a proportion that drops to just 4 percent when the dams built from the 1930s to the 1970s are not counted. And even FERC cannot get its landlord—the federal government's General Services Administration—to invest in energy efficiency.

ScientificAmerican.com spoke to Wellinghoff about how and why the federal government—and his agency—are pushing for this energy revolution.

[An edited transcript of the interview follows.]

How do you see the mix of electricity generating resources in our energy portfolio over the next 30 to 40 years?

The mix is changing substantially. If you look at, you know, 30, 40, 50 years ago, we had a system where you had primarily local utilities that were serving local loads with local generation. So, it was very balkanized and it was very specific to certain areas that that particular utility would only serve that area with their own generation and to the extent that they may have some excess, yes, they have a little line that was going to the neighboring utility, and maybe they would share. But right now we are starting to build up a system that's moving away from that, primarily because we are trying to lower our carbon footprint in this country and lower it for the world. We are trying to reduce the use of fossil fuels, and we are trying to do what we can to ultimately ensure that we have clean green energy in this country. To do that we have to go to the sources, and those sources are mostly located in remote locations far away from loads, [so the power] ultimately has to be transmitted to those loads on long [transmission] lines. So, if you are looking at the Midwest where there is a substantial amount of wind—all the way from the Dakotas down to Texas—or if you are looking at the solar availability in this country in the Southwest, in Arizona or Nevada, or even the offshore wind in the Atlantic, you have to build lines from those sources to the loads, and you have to have a much more robust system that can support that. It's not simply the local utility with the local generator to serve the local load, it is now a nationwide grid. To do that we have to look at a much different system that is operated in a much more sophisticated way that hands off from region to region in a very efficient manner, so that these new green resources can be delivered where they need to be delivered.

How close are we to getting that?

We are moving there pretty quickly in the sense that last year we put in 10,000 megawatts of new wind [turbines] in this country. The only country that did more was China, and they only did a little bit more than we did. I think we are still ahead of China in the total amount of wind we have in this country. We have about 35,000 megawatts of wind in this country. So, the wind development in this country is really driving [the] need to change the grid to a smarter, more intelligent, more efficient grid to allow for deliverability of those resources to the loads—and the more and more of those renewable resources that are put in the system, the faster it is going to be driven.

How tough is it to get new transmission put in though?

Well, it is tough, there is no question. The siting of transmission is a difficult issue. Nobody wants to put a transmission line in their backyard. The cost allocation—who is going to pay for the transmission—is not an easy issue either, and also we have in this country a split between how those two are done. The cost allocation for large transmission lines is done by us, by FERC. The siting is usually done by the states and in some instances, it is even done by the counties, so we have that disconnect that causes issues, which is unlike, for example, the natural gas system in this country. FERC sites the natural gas pipelines. We determine the cost allocations of those natural gas pipelines. We are sort of a one-stop shop. Whereas someone who is going to do a transmission line has to concern themselves with state siting and with cost allocation at the federal level and sort of split between the two, so that makes it more difficult. There are some bills in Congress now to try to alleviate those issues and give the federal government more siting authority—ultimately, sort of backstop authority—if the states can't move forward with the siting. But I think we can address those problems. I think they can be overcome, and I think we can build the transmission in this country that we need to develop the wind and the solar, the geothermal, and hydrokinetic systems—all those renewable systems that are available to us, and we have vast resources in this country.

How critical is this transformation of the grid to getting the amount of renewables we need to be on track to make significant cuts in greenhouse gas emissions, the kind of cuts that we need to forestall or minimize global climate change?

To get as many renewables as possible operating on the grid, these renewables are much different again in characteristic than the current generation mix in that we have primarily base-load plants that are operating over long periods of time that don't vary much, like a coal plant, for example. The wind system is going to vary throughout the day as is a solar system. So, because of the differences and also because of the fact that you have to stabilize the grid and keep it in frequency perfectly all the time, we are going to need ways to do that; and one of the ways to do that is to upgrade the grid and make it smarter. To make it smarter in ways that will allow consumers to ultimately be full participants in the grid, and that is going to be a big key. The big key is going to be allowing consumers to use their loads to actually make the grid more efficient and to also at the same time allow more renewables to be integrated in the grid.

You need something in the grid called "regulation service" which stabilizes the grid. As each little increment of load comes in you have an incremental supply that has got to come in to meet it so it is stabilized. Another way to do that would be if an incremental load came in, you need perhaps to drop a little increment of load from another place. You could do that. If you did that as opposed to put in supply, it would be the same. It would be equivalent to the grid but you could do it with somebody coming in and, say, turning off the defrost cycle on the refrigerator at a given time. If you had the communications and control equipment in that refrigerator the grid could signal and allow it to do it. As long as that refrigerator got defrosted at the end of the day, you, as a consumer, wouldn't care but ultimately the grid could operate more efficiently. You get more wind in the grid by doing that and at the end of the day; the consumer might get paid for allowing his refrigerator to do that. So you could ultimately have all that working together and make that operate in the way that you got to get much more wind into the grid, because you need those kinds of services. And if you didn't do that with the refrigerator you would have do that with the coal plant or combustion turbine running up and down, and doing that makes that unit run much more inefficiently. So if you can do that with the refrigerator or you can do that with a car battery they can actually operate as grid support, and they are doing that on a daily basis.

Do you think Americans are going to be okay with that? Do you think they are going to be willing to have the utilities getting involved in those decisions?

Well, it is a matter of the consumers having a choice. Whether they are happy or not is for the consumer to decide. If I don't want my refrigerator controlled, I don't have to get paid. You know whatever money gets paid, a buck or two a day. If I don't want my car, my electric car controlled, I don't have to get paid what these cars now getting paid in Delaware: $7 to $10 a day per car. They are getting paid over $3,000 a year to use these cars to simply control regulation service on the grid when they are charged at night. So it is up to the consumer to decide. You don't want that to happen, say, "Fine, don't do it to me." You want to control your cost, you want to lower cost by getting paid to use some of your appliances to be grid stability systems as well, [then] do it. It is up to you. So, ultimately this is going to be a consumer choice, and there are going to be companies like the IBMs and the Googles and others who will get behind it and put the equipment in the cars, in refrigerators. I know Whirlpool right now is installing into their refrigerators these types of smart chips that will allow these types of controls to happen, but again it will all be at the consumers' choice. It is not like Big Brother is going to come in and say, "We are going to control your refrigerator. I am sorry, you don't have a choice." This is not that type of a country. This is a country where people will have choices, will have free markets, and those markets will allow consumers to do this if it's their economic benefit.

A common refrain in this country is that as long as you keep increasing wind and solar, we are going to need storage, otherwise there are never going to be major factors in our energy portfolio. Does this smarter grid change that?

Well, it helps, because we have to think what storage really is. There is more storage in the water heaters in this country than there is in all the pumped [water] storage in the entire United States. So all you have to do is be able to control those water heaters and you have storage just like that. So, there is storage in the buildings. Think about all of the wholesale refrigeration warehouses that are in this country. All you have to do is vary the temperature in there by a very small amount and you have huge amounts of potential storage that would not affect the stored commodities in those warehouses but yet allow that system to functionally act as storage. All we have to do is control it. We have to put in the controls and the communication equipment, and we have effectively huge amounts of storage that is available to us in this country, which we just have to go and get it. … It is called demand response, and you can use it in ways that will ultimately make the grid work better and put more and more wind and solar and other renewables onto the grid at the same time.

What role does distributed generation play in this vision that you are outlining, like the Million Solar Roofs initiative in California?

I think distributed generation has a large role to play. It plays a role certainly to the extent that it can relieve congestion at the local distribution level and allow then better deliverability of these remote resources like wind and also remote solar. But to the extent that local distributed generation can also provide support into the grid and also sell into the grid, it has to role to play as well. There may be services that distributed generation can provide just like an electric car battery can provide. I think it needs to be a total part of the mix but ultimately what we need to look at in this country is how many clean resources we can gather from both areas—both location constrained remote resources like wind and also distributed generation like rooftop solar. I think we need to do both, we need to look at both and certainly to the extent we can put on more smart communication technology at the local distribution level, we will make those distributor resources work even better and more efficiently.

What does this mean for traditional generation? You are talking a lot about renewables and wind. What does this mean for the ways we traditionally generated power?

Well, really what it means is that we have to look at how we deliver power differently. I don't think we can look at large central station generation the way we have in the past. Certainly, it is going to be needed to some degree, we have substantial amounts of coal and nuclear and natural gas—central generation currently in this country—but because of the distributed generation from wind, solar, geothermal and hydrokinetic, I think we are going to have to develop a different grid that can accommodate that in a much more efficient way. So, the central generation—traditional generation—will still play a part, will still play a role in the future, but I think that role will be much different one and it will be a diminished one as more and more of these renewable resources come on line. And we are seeing that accelerate very quickly.

What kind of scale of transformation are we talking about in order to—as far as the electricity generation transmission goes—effect this change?

Well, it is going to be incremental ultimately. But we are talking about a transformation across the entire country. So we are talking about potentially tens of thousands of miles of new transmission lines to ultimately move large amounts of wind, solar and other resources to loads. We are talking about in the scale of billions of dollars of investment in smart-grid technologies all the way from the consumer level up through to the transmission and generation level. So the scale is very large but, fortunately, you know, it is something we can do incrementally, and it is something that we have already started to do with the stimulus money and with efforts by individual utilities and other private entities as well.

What will it mean if we don't do this? What will that mean for the U.S.? If we don't make the investments that you are talking about, if we don't build a smarter, more robust grid and different source of generation?

Well, quite simply, if we don't do what I am suggesting—and that is look at the lowest cost, most effective renewable resources that need to be developed, and then allow them to be developed, and also allow them to be delivered to the highest cost areas of our country—we are going to pay more for electricity. That is all it means. It means that we will put in place much more expensive electric systems…. A nuclear power plant is $10 billion a pop—that means that you are going to be paying 15 cents a kilowatt hour. You can deliver a lot of wind for that. You can deliver probably lot of concentrating solar [power] for that as well. I know you can deliver geothermal energy all day long for half of that. So if we don't start looking at how we are going to deliver these resources that are ultimately at a lower cost, we are going to pay a lot more for it. That is all. We are going to pay a lot more for the energy if we don't figure out how to deliver it to the loads.

But the U.S. has a lot of coal and, currently, coal is even cheaper.

Coal may be cheaper if we don't capture the carbon and sequester it, but I think everybody understands we can't do that anymore. So, ultimately, if we have to capture the carbon and we have to sequester it then we are starting to talk about coal power prices ultimately that may be close to the ones for that $10 billion of nuclear power plant. So, again, let us look at the lowest cost thing to do. The number-one lowest cost thing to do is energy efficiency. We need to do that everywhere in this country, and there have been large barriers to doing that for long time. We need to reduce those barriers. The first barrier is cost of capital. The other barrier is information. Another barrier is the disconnect between landlord and tenant where you have commercial buildings that you have the landlord who has no incentive to improve the efficiency and the tenants want to do the efficiency. We are in a building right here, we are sitting in one today, that is just like that because FERC doesn't own this building. I want to do the energy efficiency, the landlord doesn't. So, ultimately, you know we can't get it done. So let us break down the barriers of doing energy efficiency. After we do the energy efficiency, let us do the next least-cost thing we can do: I think that is wind. Wind is the next least-cost thing that we can do in this country. Geothermal, hydrokinetic, solar—let us start looking at what our least-cost resources are, and let us get them developed and let us get them delivered to loads.

Editor's Note: David Biello is the host of a forthcoming series on PBS, titled "Beyond the Light Switch." The series, produced by Detroit Public Television, will explore how transformation is coming to how we use and produce electricity, impacting the environment, national security and the economy.

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