Thursday, June 4, 2015

Demand Response - The Not so Holy Grail of Renewable Energy

The variability (i.e. the sun isn't always shining and the wind isn't always blowing) of wind and solar is a big problem, which is why cheap, scalable and efficient energy storage is often called the holy grail of renewable energy, and with good reason.

Que the inspiring music.

Indeed if such a thing existed I wouldn't feel so concerned about the future and as a consequence would probably not be writing blog posts about energy, but I'm not going to be talking about energy storage with this post.  Instead I'm going to be talking about demand response the... well lets call it the not so holy grail of renewable energy.

It comes with one of those little umbrellas.  How bad could it be?
Perhaps I'm being a tad over dramatic here. Demand response just means for people or businesses to stop using electricity when the utilities want them to. I'm not against demand response on principle. It could help save a lot of money. My problem is that the people pushing for this the most are wind and solar advocates who want to help match demand to the wind and sun. If they want to use this to make our demand match in that way they are going to have get control over large part of people's lives.

As I see it there are two major issues that need to be considered. One is that demand response for households creates the risk of electricity rationing which would likely have a larger effect on poor people. This both posses an issue of social justice, and an issue over a reduction in the benefit that people get from 24/7/365 electricity. Being able to flip a switch to create light wherever you need it is one of the best things about modern life. Losing such utility is not something that should be taken lightly. I mean do we really want to live our lives at the mercy of the weather and seasons?

I'd love to turn up the thermostat, but today isn't very windy or sunny.  As a ration consumer I have to respond to price signals.   
Another issues has to do with manufacturing and the price of stuff.  Some of the cost of manufacturing is in the form of costs that don't vary by the amount that is made.  These costs are refereed to as fixed costs.  An example of fixed cost for a factory would be machinery or the building.  These are things that have to get paid for regardless of how much the factory produces.   If you produces a lot then the fixed cost gets divided up between all the stuff you've made and fixed costs becomes less per unit produced.

Imagination that you had a fixed cost of 5,000,000.  If you produced only a single item then the fixed cost for that product would be 5,000,000.   If you produced 5,000,000 items then the fixed cost for each of those items would be one dollar.

It's easy to see that  the effect fixed costs have on the cost of producing an item can vary a great deal.  With that in mind imagine that you had two identical factories.  The only difference is that one factor operates 24 hours a day and the other factory is solar power so it only operates when it's sunny enough.  Let's say the solar power factory operates 20 percent of the time.  From this we can tell that the fixed cost for items produced by the solar powered factory will be 5 times more than the fixed cost for items from the factor that runs 24 hours a day.   Depending on what's being made that could be a substantial difference.   Also, some manufacturing processes can't be stopped in the middle and taken up again whenever it's convenient because doing so would damage machinery and/or wasted materials, time and other resources.

After reading all this you might think I'm against demand response, but that isn't true.  Demand response could be useful, just not for matching electricity use to the wind and sun.  The best use of the technology would be to make up for small seasonal, and peak electric use, variations.  For example it would make a lot more sense to shut down a factory (one that can take that kind of start and stop) for 5 hours a year then it would be to build a natural gas plant (and all it's required pipelines and power lines) that is only needed for 5 hours a year.    At any rate weather this article changes you mind about anything I hope it at least makes you think.

Until next article.

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