Renegade power users: ditching a crumbling energy system
Look at your electricity bill. It's way higher than the Levelized Cost of Energy (LCOE) you see on Lazard, EIA, or elsewhere. The obvious reason is price versus cost - the utilities and hardware vendors need profits. Fine, but there's more, and it should make us consider abandoning the large centralized grid system altogether. Here's an example from my last bill. The cost of of the electricity is less than half of the bill!
Kirstov [1] lays out two possible scenarios for a restructuring of power delivery that addresses potential complications from increasing distributed energy resources (DER) on a grid that has historically been powered by a small number of centralized large-scale generators. How will efficient markets be run with so many energy sources? The first scenario is the so called Grand Central Optimization, a top down scheme in which DERs participate in whole sale markets, and the centralized TSO sets market prices and directly controls all the DERs and perhaps even has a hand in controlling the demand side.[2] The authors find such a scheme intractable due to the high level of detail and control required by the centralized authority to meet its operational requirements. The problem is just too big and complex. It may be a case of “commies with computers” in which starry eyed advocates believe computational power and sensors will finally vindicate Marx. Instead, the authors favor a bottom up decentralized scheme called the Layered Decentralized Optimization in which each segment of the grid is lumped together at the DSO level, and DSO’s communicate with TSO through a single node. This makes each DSO responsible for delivering power to its users by balancing its DERs with imported energy from the TSO. A TSO would be unaware of all the DER data and demand within the DSO and would only need to respond to each DSO’s bids and asks. Essentially, the authors propose separate layers of the grid that have simple communication and separate responsibilities, knowledge, and decision making to make a tractable grid that can support increasing DER and could scale indefinitely.