Article originally published on Dallas news in July 27th 2015.
HOUSTON — In the more than 130
years since Thomas Edison released the electric light bulb on the world,
households have more or less gotten electricity one way. Build a power plant,
string power lines in all directions until you’ve connected as many homes and
businesses as possible, repeat.
But in a nondescript white brick house a few miles
outside downtown Houston, there is no need for a distant power plant spinning
on a steady burn of coal or maybe radioactive uranium.
One moment the lights and home appliances are humming
along like those in any building. Then, for a fraction of a second, the lights
dim and the room goes quiet. Joe Coffey, an engineer with NRG Energy who spends
his days testing out devices like portable solar panels and water heaters you
put on your roof, has cut the house off from the power grid.
Only, the air conditioner is still running, as are the
lights. In place of the grid — or the standard gasoline-powered backup
generator — is a battery array in the garage and solar panels on the roof. On
the patio, where the grill should be, sits what is essentially a 5-foot-tall
miniature power plant hooked into the natural gas line.
“A lot of this stuff, it’s going to be years before it
can be delivered to customers cost-effectively. But it’s like anything. There’s
going to be early adopters, and we want to be ready,” Coffey said.
The U.S. by and large runs on a network of more than
7,300 power plants, including 1970s-era coal plants, wind farms in
West Texas, the Hoover Dam, nuclear reactors at Comanche Peak and more. The
facilities are large and often away from population centers, each supporting on
average 20,000 customers across millions of miles of power lines.
But what if each of those 146 million U.S. electric
customers could generate his or her own electricity?
Historically, generating electricity was expensive,
and there were cost savings in size. But with the advent of new technology —
known as “distributed generation” within the industry — the prospect of
cost-effectively generating electricity at home is moving beyond the realm of
science fiction.
Solar panels, for a long time so grossly expensive
only hard-core environmentalists would buy them, are now being mass-produced in
China. With government incentives, solar power can now compete with the power
grid in 10 states, according to analysis by NRG.
And then there are home battery systems, potentially
upending the need for a constant flow of electricity from the grid. Tesla
founder Elon Musk is building a battery factory in Nevada so large he calls it
a “gigafactory.” Fuel cells, which can be powered by hydrogen, natural gas and
other substances, are no longer just for space missions. They’re finding their
way into talking points of forward-looking CEOs.
“Distributed generation is already in California. It’s
not the future; it’s real,” said Michael Webber, deputy director of the Energy
Institute at the University of Texas. “Instead of building large power plants,
we’ll install solar panels and battery systems. It’s not today, but 10 years
from now it will be.”
Solar heating up
Locales including Germany, Hawaii, California and
Arizona have been inundated with rooftop solar systems, prompted by a
combination of high power prices and generous subsidies for renewable energy.
If predictions hold true that solar panels are only
going to get cheaper, that same growth trajectory is expected to spread across
the U.S.
Right now solar power represents about 2 percent of
the nation’s electrical capacity, both through rooftop installations and
utility-scale farms.
If current growth rates continue, by 2025 there should
be 90 gigawatts of solar power in the U.S. — more than 8 percent of current
capacity — according to the financial services firm UBS. That will hold even if
the U.S. government lets the solar tax credit expire next year.
Batteries and fuel cells remain firmly stuck in the
development phase, with no clear timeline for mass adoption. But were one of
those technologies to prove cost-effective, homes and businesses could quickly
be generating their own electricity.
Texas’ grid operator, the Electric Reliability Council
of Texas, is not taking the potential for a shift away from the grid lightly.
After watching the sudden onslaught of solar in other states, the agency
launched a study to determine what steps it could take to prepare, said Paul
Wattles, a senior analyst at ERCOT.
“Other than Austin and San Antonio, we haven’t had the
strong incentive programs that encouraged a massive adoption rate,” he said.
“But the price of [solar panels] is so low, it’s approaching the point where
we’re going to start seeing massive adoption rates.”
The power of green
Environmentally speaking, this is all good news. Power
plants, particularly those that burn coal, are responsible for more than 30
percent of U.S. greenhouse gas emissions.
At IKEA in Frisco, planners have cut demand on the
grid by covering the store’s roof in solar panels — about two football fields’
worth.
The almost one-gigawatt system is one of the largest
in Texas and supplies about 20 percent of the store’s energy demands, as
throngs of customers a day go in and out to shop for Pöang chairs and Caja
tablecloths.
“If you go back to 2010, we’ve cut our energy costs by
35 percent,” said Tim Smythe, operations manager at the store. “That’s
everything: the solar system, switching to LED light bulbs, automating our
temperature and lighting to use less power when the store is closed.”
In the U.S., electricity is a $377 billion-a-year
industry, employing hundreds of thousands of people.
Already the boom in solar panels is cutting into
traditional sales, along with a housing stock that is vastly better insulated
and more efficient than it was just a decade ago. Since peaking in 2007,
electricity sales have fallen by 1 percent, according to the U.S. Energy
Information Administration.
Oncor, Texas’ largest transmission company, warned
investors in its annual report this year, “to the extent self-generation
facilities become a more cost-effective option for certain customers, our
revenues could be materially reduced.”
By and large, the sentiment within the industry is
that while distributed generation will cut into profits, it is far from the
game changer some have made it out to be. The government regulators who run the
power grid must ensure a stable electrical supply. Any change to the grid and
the markets upon which electricity contracts are traded would probably be
rolled out slowly and cautiously, Webber said.
Branching out
Already, the power industry is lobbying in statehouses
across the country to reduce the rate they pay for their customers’ excess
solar power, to better account for the cost of maintaining the grid.
“This is going to be negative headwind to power prices
for the foreseeable future. But let’s not overemphasize this,” said Julien
Dumoulin-Smith, an energy analyst with UBS.
Not everyone in the power sector anticipates a modest
shift.
In a letter to investors last year, NRG Energy CEO
David Crane warned that not only was distributed generation growing but the day
was coming when homeowners and businesses would generate “most of the
electricity they consume on the premises.”
Already, NRG is branching out in an “if you can’t beat
’em, join ’em” strategy. It created a new Home division last year that will not
only install solar panels on your roof and a vehicle charging station in your
garage, it will sell you a device to charge your tablet while sitting in the
bleachers of your child’s soccer game.
A house outside downtown Houston serves as a lab in
which to test new products. Touring the facility last month, NRG retail
president Elizabeth Killinger said that while revenues for the new venture were
modest, she expected one day they would help mitigate the anticipated drop in
power sales.
“We can help make the complex simple. Sure, we might
sell less power, but at the end of the day the customer is going to use less
anyway. Someone’s going to help them,” she said.
Sun is rising
In some parts of the world, rooftop solar
installations have become so prevalent they’re already forcing a rethinking of
how electricity is transmitted.
In Hawaii, which has some of the highest electricity
rates in the world, there are so many solar systems that the local utility
warns it is losing its ability to maintain the delicate harmony of electricity
generation and demand across the grid. Last year, Hawaiian Electric Co.
announced it was in negotiations to build utility-scale batteries in hopes of
easing the strain.
In Arizona, utilities have complained the high rates
they are required to pay their customers for their unused solar power —
combined with the loss in sales — are threatening to send them into what some
have termed a “utility death spiral.”
It’s too early for any such issues to have arisen in
Texas, said Wattles, the ERCOT analyst.
With no state subsidy and the decision on what to pay
for distributed power left to the companies, Texas has one of the lowest
per-capita rates of solar in the country. But with so many sunny days, developers
continue to watch the state as the next big market.
Among the early leaders, Adam Stetson, with
Austin-based PSW Homes, is selling what he calls “sustainable” houses for which
one of the primary selling points is a rooftop solar system capable of supplying
about 40 percent of a household’s daily electricity needs.
So far, PSW only has four homes built in Dallas. With
seven housing developments in development across the city, Stetson says more
than 270 homes should eventually get built.
Assuming they use the standard size, that should work
out to around 3,200 solar panels.
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