21st Century Grid Challenges

A new problem, don't be confused by what we solved

In the previous post, I attempted to share how I think the electric grid functions and why we should marvel that it works at all. In this post, I’d like to suggest that the solutions of the past will likely not solve the grid distribution problems and suggest one way that this might be addressed.

From 1900 to 2000 the world population grew 3.8 fold, while at the same time its energy use grew 8.5 fold. Considering these are worldwide statistics, and much of the world has not had the benefit of the energy use explosion, this is quite a change. From the U.S. EIA the energy change over that same period in the USA was from 2,700 tWh to a whopping 28,633 tWh while its population only grew 3 fold.

Over that same period a major transformation in the primary sources of energy occurred. Primary energy is the harvested source of the energy. For much of the beginning of the 20th century little transformation occurred from the primary energy form to a usable form. In 1900 the primary source forms were coal and wood. In the 1950s we were promised that nuclear power plants would provide us virtually free electricity. (It didn’t happen.) By the year 2000 what nuclear (8%) we had was supplemented by coal, natural gas, and with 40% being petroleum. Renewables (7%) at that time (primarily biomass and large hydro) were a relatively small portion of the energy mix. However, that is not the whole picture.

So throughout the 20th century coal, wood, natural gas, and petroleum were the predominant forms of primary energy. They were simply burned, converting their physical chemical bonds to heat.

If you are relying on the energy to heat and cook - that seems reasonable. However, as we started to use this energy to power transportation, provide light, and run modern machines, heat simply was not the most efficient form of energy to use. Electricity provided a more convenient and effective form. It seems obvious that rather than focusing on the primary source of energy, planning for the future we needed to focus on how the energy is distributed and consumed to do work.

Following our established pattern, we began converting those 20th century sources of primary energy to electricity. In most cases this was done by transitioning from chemical bonds, to heat, from that to mechanical engines, and finally to electricity. Each transformation step resulted in waste energy being released. From the Lawrence Livermore National Lab’s 2023 USA Energy Consumption diagram we see that of the 93.6 quads of primary energy sources tapped that year, 61.5 quads were rejected and never utilized to complete useful work.

When electricity was “nice to have” this was an inefficiency that could be tolerated. But today, even with us continuing to consume enormous amounts of fossil fuels for transportation and heating, electric energy has grown from consuming 0.1% of the primary energy to now consuming 22% of it. You can guess as buildings are electrified, with the introduction of electric vehicles, and even new processes for making steel; this transition is just the beginning.

So what’s the point?

We have been achieving amazing results in improving our efficiency in the use of energy. Our buildings are better insulated, lighting has moved from being 5% efficient to over 90% efficient, hybrid fueled cars are driving 50 mpg, and even aircraft and ships have made enormous improvements in efficiency in just the past 20 years. Yet our consumption of energy for all the things we want to do, and especially the intensity of electric energy use, continues to grow.

Several years ago I attended a board meeting of our local electric power provider. Each year here in California, load servicing entities (providers of electric energy and power) are required to report to the California Public Utilities Commission (CPUC) how they will ensure sufficient energy will be available for their future customer needs. At that meeting their model showed, as a result of efficiency measures, even with a growing population, that there was little growth in demand forecast in the future. Their assumption was that the savings achieved from more efficient technologies would keep up with the expansion of the number of applications that would rely on electricity as its usable energy source.

I believe that is now being rethought.

After improving our own home by insulating, reducing the appliance loads, and converting to an all-electric home, our electric energy consumption had doubled. Then we replaced our remaining car with another electric vehicle for our longer trips. At this point, as I reported in earlier posts, we had reduced our family energy use by 62%. That sounds great! But at the same time, our electric energy consumption increased close to 3 fold.

So what does this all mean?

Our 20th century assumptions simply will not work to support our 21st century reality.

In the past week, I met with someone in the building trade that questioned whether the grid can keep up with the growing demand for electric energy. In construction of new buildings and remodels, they are encouraged to use heat pumps and all electric appliances. His question was. “Where is all that energy coming from? It is really expensive compared to the existing [fossil fuel] options.”

I did have answers to that question and concern.

Where is all that energy coming from?

In 2024 the EIA identified of the energy proved from new production facilities some 58% were solar fields and 13% came from wind turbines. Nuclear is once again beginning to ramp while fossil fueled plants only amounted to 4% of new energy sources. In my local area new facilities are being built to tap advanced geothermal energy. These are facilities that can be basically constructed anyplace in the world and rely on the hotter temperatures found as you drill deep below the earth’s surface.

The above are just the utility scale additions to the energy portfolio. Again from the EIA, 62.8 gigawatts were projected to be added in 2024; this was 55% more additional capacity than the 40.4 GW added in 2023.

Basically, we are already starting to find ways to address the raw need to harvest energy sources that will not rely on burning materials. So the answer to the question of raw capacity seems to be being answered.

It is really expensive compared to the existing options.

This was an interesting comment and I kind of understand where it is coming from.

Electric energy costs in California are extremely high. After Hawaii, California has the second highest residential average cost at 30.72 cents/kWh. Contrast that with North Dakota at 7.42 cents/kWh and an average of states’ averages of 15.59 cents/kWh.

So how should I address this comment? Well there are two factors that say this long term will not be an issue.

The first factor is the forecast price change for the conventional alternatives to electricity. Primarily this is natural gas (methane).

I tried to find a source for projections for where natural gas prices might go over the next 25 years. I couldn’t find any. So I looked at the prices over the past 5 years and I learned how volatile natural gas prices are. In 2022, it was as high as $9.33/MMBTU (million BTU) and in 2024 it dropped to $1.63/MMBTU. Today it is at $4.31/MMBTU. But our local utility, PG&E, is charging us $6.70/MMBTU as of December 2024. Likely this up-charge is to address the basic volatility of the gas price.

But utility rates are broken down into a number of general parts; the energy, fees and taxes, and a delivery cost. Of the total cost to the consumer, our local utility also charges an additional $22.20/MMBTU to deliver the gas.

This brings up a point so often lost as we discuss utility rates. The cost of delivery of the energy most often determines the cost we pay as consumers. With natural gas this is obvious. So even if the gas rate varies by 100%, the consumer would still only see a 23% change in the cost, because the cost of the gas is such a small portion of the delivered price.

With electricity the picture is quite a bit more complicated. There are many different schedule rates; and variations even within them based on where you live. As well California utilities are required to shift their residential customers from tiered rates to Time-of-Use rates. So determining average costs is tricky.

As an example of this complication, the TOU EV-2A schedule has winter and summer rates. Each season has prices for peak, partial peak, and off-peak times. And these are adjusted based on the zone in which the building is located and whether or not the primary heating source is natural gas or electric. During the peak period in the winter, 67% of the cost of the electricity is the delivery cost, while in the summer it is less than 50%. So electric rates can be more sensitive to the energy costs than natural gas is.

I questioned why California electricity rates were so high compared to other states. In a large part it is our aging infrastructure and the cost of damages caused in wildfires triggered by the electric grid.

This was proven out in the past year as resulting from efforts to reduce the risks associated with transmitting electricity, PG&E has been able to reduce residential rates. The letter announcing this reduction included a promise to continue to focus on reducing rates.

So my fundamental response to the statement that electric energy is more expensive is, yes, for now! But looking forward through the life of the equipment being installed in the buildings, that will not be the case.

The question not asked.

I felt that there is a question that is often ignored. We are going to continue to increase the amount of electric energy we consume in our homes and workplaces. But as I suggest above, the challenge is not so much where to harvest that energy, but rather how to deliver it to the consumer (us). This brings the question of the distribution grid, that final mile to get to the consumer.

In The Maligned Grid post I explained how peaks determine the constraints that drive how the distribution grid is designed. It determines both the size of the conductors and the transformers, and I assume, also the extent of how large each branch can be. If each of us begins to triple the electric energy we consume (as my household did, even as it reduced the energy it consumes), the distribution grid will be under capacity to handle the change. As well, as described in previous posts, the definition of peak will need to be modified. Electric vehicles will hold peak levels for hours instead of for minutes.

The question not asked is ,
“How will we address the new distribution grid challenges without having to incur the cost of replacing those grid resources.”

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We can’t actually produce natural gas at home. In fact, it is not even practical to store it at home. As we all know, we do have methods to collect energy (from the sun) and store it at our residences (in batteries). So we can mitigate the impact (and arbitrate the Time-of-Use rates) for our growing number of electric appliances.

The subject of the next post will focus on that mitigation. It will review one approach that could be taken transforming the grid, while allowing utilities to avoid expending substantial capital attempting to support our growing electric energy consumption.

Hopefully that post will provide an answer to The Question Not Asked.