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A technology race to curb peak energy demand

Grid operators are looking at efficiency, solar, and energy storage to supply juice to the grid during high-demand summer afternoons.

It's summertime but the living isn't easy if you work for a utility. High heat, leading to heavy air conditioning loads, puts a strain on grid operators' ability to keep electricity flowing to the grid, as happened earlier this month in the Northeast region of the United States.

A report from Lux Research released on Wednesday says this peak demand time has given an entry point for three types of technologies to curb electricity usage: demand response, solar, and storage.

Because each technology has its own limitations, continuing with the current method of using natural gas "peaker plants" is still a possible path for utilities, said Lux analyst Ted Sullivan.

Demand curve on a hot day: faced with the possibility of not meeting projected demand (orange line), grid operator PJM earlier in July called in emergency demand response contracts to reduce energy load (blue line). PJM

"The verdict is that it's really going to be a mix because of the limitations and capacity factor," Sullivan said. The capacity factor is the amount of time per year that a power-producing resource is available.

"Demand response is the absolute winner when you look at low costs, but it's really only limited to one or two percent capacity," he said.

Demand response systems curtail electricity usage primarily at commercial and industrial facilities. By temporarily adjusting the temperature or lighting in a retail story or factory, demand-response providers lighten the load on the grid for a few hours. The method is cost-effective but is limited to about 100 hours a year, Sullivan said.

Centralized solar plants have a higher capacity factor and their output tends to coincide with hot, sunny days. However, without storage, solar becomes difficult to justify because centralized plants often require stand-by power generation and construction of transmission lines, Sullivan said.

Meanwhile, utility-scale storage, particularly with batteries, remains very expensive and projects are often tricky to advance under current utility regulations, which are now being reconsidered.

According to Lux, the most accessible storage technologies to shave peak demand are pumped hydro, where water is pumped uphill at night and released to run a generator in the day; compressed air energy storage coupled with wind turbines; and ice-energy systems, where air conditioners store energy by making ice at night and using it for cooling during the day.

Combining renewable generation, such as solar, with storage is an ideal combination but many of these technologies are relatively untested, making these projects difficult to finance by banks.

At this point, it's not clear which technology, or combination of technologies, will become the preferred method for providing electricity during summertime peak-demand events, Lux said. Sullivan recommends that policies be crafted so that they align with the cost to utilities of operating the grid.