The Penetration Problem. Part II: Will the Inflation Reduction Act Cause a Blackout?

by Planning Engineer

The “green” provisions of the poorly named  Inflation Reduction Act  are sweeping and it appears they may do more harm than good. The philosophy behind the inflation Reduction Act seems to reflect the belief that if you can get the ball rolling, adding additional wind and solar will get easier. However, as  Part 1 discussed, the compounding problems associated with increasing the penetration level of wind and solar generation are extreme.

Replacing conventional synchronous generating resources, which have been the foundation of the power system, with asynchronous intermittent resources will degrade the reliability of the grid and contribute to blackout risk. The power system is the largest, most complicated wonderful machine ever made. At any given time, it must deal with multiple problems and remain stable. No resources are perfect; in a large system you will regularly find numerous problems occurring across the system. Generally, a power system can handle multiple problems and continue to provide reliable service. However, when a system lacks supportive generation sources, it becomes much more likely it will not be able function reliably when problems occur.

Just as a pile of dry wood and flammable material can be sparked from many potential sources, or a very unhealthy person could succumb to many different threats, a weakened power system is more vulnerable to many conditions than a robust one. In this post I discussed responsibility for the Texas winter blackout. Many things went wrong that day in Texas. But often many things do go wrong – the real problem was that the Texas market did not provide incentives for standby resources.  In Texas there were not enough committed resources to provide for the system load levels and potential contingencies. Texas relied on an energy market designed to favor wind and solar resources and it failed them. However, many analyses of the Texas blackout focused on the proximate conditions (problems of the sort that are common) ignoring or denying the major underlying problem.

We are seeing blackouts and system problems all over the world now, unlike in the past. There is a common factor for most – high penetration of intermittent asynchronous wind and solar generation. This commonality is generally ignored when evaluating the individual outages as vested interests focus on the triggering conditions. There are always going to be potential triggering conditions. No one anywhere will eliminate triggering conditions so absolving green resources of blame because such things exist in the real world only makes sense as theater. When faced with “green” outages, focusing on the proximate triggers serves to protect “green” interests and helps mask the emerging greater problems to come.

The Inflation Reduction Act is promoting a system with less stability, robustness and reliability. Besides describing how these green programs contribute in general to major outages, I will conclude this article by identifying a specific type of outage likely to become more common due to provisions of the Inflation Reduction Act.  Before describing how the ACT impacts the system, I will take a detour and describe a specific past incident where a system element which was valuable at one penetration level became a system detriment at a higher penetration level.

Penetration Case Review: Ground Source Heat Pumps

A heat pump is an efficient way to heat or cool. As a refrigerator transfers the heat out of the refrigerator to the coils in the back to cool or freeze your food while making your house warmer, a heat pump can transfer heat between a home or building and the outdoors. In the winter it transfers heat from the outdoors to the interior. In the summer it transfers heat from the house to the outdoors. With a heat pump you don’t “create” heat you merely use a small amount of electricity to efficiently transfer heat in the preferred direction.

Even when the temperature is cold outside a heat pump can extract heat from the outdoors and use it to warm a home or residence. As the temperature drops below 40 degrees. However. heat pumps become less efficient and as temperatures drop below freezing, the home must be heated with a backup method, usually resistance heating. Resistance heating makes the process more expensive and inefficient. It is possible to exchange heat with a source below the ground or a source of water to get around this problem, or alternatively to provide heat from natural gas backup, but these approaches have not worked out as practical means on any significant scale.

Because of their behavior at colder temperatures, heat pumps are not appropriate for all parts of the country. In the north the many hours they would have to run with resistance heat makes them both environmentally irresponsible and too expensive. Natural gas is a better option. They work where it is hot enough some of the year that air conditioners are installed anyway (thus they don’t increase the summer peak) and where it is cold but not too cold at most times. If they run in resistance mode only a few days a year that does not cancel the net benefits, but with longer time periods the benefits are lost.

Encouraging heat pumps was all the rage, when I first started working in the southeastern US. Most entities in the south did not see winter peak loads, so adding heat pump load in the winter was a great thing. It was a win, win, win situation for all involved. The economics work generally the same for all utilities, but I will describe how they worked for distribution cooperatives.

Distribution co-ops pay a demand charge based on their peak load and an energy charge based on their kwh usage. Residential sales are on a kwh usage, so the peak charge must be recovered through the kwh charge imposed on residential customers. The better a Co-ops’ load factor (total kwhs sold/(peak demand*total hours) the lower their rate can be set. Heat pumps did not raise the demand charge, but increased energy sales and allowed the demand charge to be spread out over more energy sales lowering energy costs for all.

Builders were rewarded with free underground distribution if they committed to building all electric homes which relied on heat pumps. Rebates were given for heat pump installations and often those installing heat pumps were rewarded with free water heaters. My company had a big marketing division supporting the work of the distribution cooperatives to support efforts at increasing ground source heat pumps. It worked well, almost perfectly. The only drawback was that on very cold days the heat pumps would switch to resistance heating and this made the customers’ meters spin at high consumption levels, raising heating costs a lot that day. But with incentives and the saving at most times, those costs were not that significant. The overall winter load increased a lot on those days, but it was still below the summer peak at most times. Plus, when it’s cold you can put a little more load on the power lines and fossil fuel generators can provide more power without overheating. So, the heat pumps did not contribute to increasing fixed costs.

Everything was going well as the penetration level of heat pumps increased. But there was a cloud on the horizon. Looking ahead it seemed like that within the decade our winter peak would move to surpass the summer peak. This meant that the winter peak would soon drive the need for improvements and expansions. Unfortunately, what should be technical disagreements are often political problems as well. In a battle of experts, the consultants working for the marketers disputed the trend. The programs continued and everything was great in the short term.

Sooner than expected the winter peak did hit and it hit hard and it hit regularly. On the coldest days when the resistive heating kicked in, peak demand rose sharply and swiftly. The winter “needle shaped” peak drove investment and costs. The mostly residential cooperatives who had invested big in the heat pump programs had to pay rates based on their demand during the new winter peak, greatly raising their average energy costs.

While almost no one wanted to see it coming, once the effects hit, most everyone in the power supply chain wished they had. This was a terrible blow to rural electric cooperatives who had invested big to improve their load factor, only to find they had subsidized a worse winter load factor. Residential customers are not charged for contributing to peak demand (the meters don’t measure that) so for them their contribution to the demand charges has no significant penalty. For customers in this region, it still makes sense to put in heat pumps so the problems continue to grow for some to this day.

The Inflation Reduction Act Enabling Blackout Conditions

The Inflation Reduction Act seeks to decarbonize the grid. In looking at the grid, you should not make one goal a priority but should instead seek to balance competing objectives. See Balance and the Grid for a discussion of how efforts to maximize one objective without due attention to other major goals can result in a worsening condition for all goals. It seems apparent that all the “green” measures in the Inflation Reduction Act were included because independently they all seem capable of reducing carbon. I have not seen any evidence that any consideration was given to system reliability or how these measures might interact to create problems.

The green measures encouraged by the inflation Reduction Act will lead to generic blackouts in many situations as described earlier in this essay and in Part 1.  Presented below is a chart from a previous posting, tiled “Will California “learn” to avoid Peak Rolling Blackouts?”  The projected peak that was causing blackout concerns was only around 10% above the average for the previous year’s included in the chart.

The specific prediction of an outage condition I will make here involves winter peak demand conditions. Winter peaks can be extreme, much more so than summer peaks. As temperatures climb in the summer, air conditioners reach a saturation point. The climb in summer peak demand with each additional increase in temperature typically flattens out. In the winter each additional degree drop can increase demand more than the one before. There are a lot of potential sources of resistive heat that increase demand. In severe cold more and more come? heating elements come into play and the increase in demand rather than flattening can go up exponentially. Peak winter loads tend to hit just before sunrise. The system sees a rapidly rising peak, often described as needle shaped, which drops as the sun comes up and temperatures warm.

The act encourages solar at the bulk, distribution and residential levels. Solar will be of no benefit during such a peak, but does serve to push out other resources which might support the system during such conditions. Plus, there is a double whammy. Solar power supply supplied to the grid will not be there and at that same time homes usually supplemented with solar will be putting maximal demands on the grid. (Note -The infrastructure needs to supply a home which only puts a demand on the system a few hours a year concurrent with other uses maximum demand is basically the same as the infrastructure need to support a full requirements home. It is challenging to collect that from such customers. When there are rate challenges and it’s difficult to collect system costs, needed infrastructure often is delayed.) In any case widespread adoption and reliance on solar creates concerns around winter morning peaks.

The act encourages wind development. Like solar, wind will push other better suited resources out of the supply pool. Wind is generally slower just before sunrise and winter is not generally peak wind season. In any case wind is intermittent and some of the times during cold weather wind is not available. Some say that wind tends to rise up as temperatures get colder and there are ways to keep turbines from freezing,. Nonetheless, we do see freezing problems and a tendency for wind to be there is not a guarantee. Green resources perform much better in theory than practice. At least at sometimes wind power will not likely be a great asset during winter morning peaks demand conditions.

The act encourages efficiency. This could help to reduce load and thereby make severe outages less likely. But the real problem with peak demand is the difference in demand during the extreme peak period and other more normal high load periods. If efficiency reduces load, you will likely see a reduction in generating resources to serve the load at all high load levels. The risk from peak conditions is more attributable to the delta between the winter peak demand and more common high load levels.  This is because regular loads drive generation additions more than extreme conditions. I don’t know that efficiency measures work better during the most extreme winter temperatures than it does at normal winter cold temperatures (probably less so), therefore its mitigating impact may be small to none. Also, there are those who might argue that consistent with Jevon’s Paradox efficiency efforts lead to increased energy consumption. The basic mechanism, behind this counterintuitive theorem, is illustrated by mechanisms observed such as   individual consumers with more efficient homes choosing to heat more rooms or increase comfort because you get more for your money in an efficient home.

Solar, wind and efficiency are intended to decrease fossil fuel-based resources. Combustion turbines and hydro are generally the most appropriate resource for limited duration demand surges. The expansion potential of hydro is very limited and this resource can not make up for lost combustion turbines in most areas. Combustion turbines perform relatively well in cold conditions and old mostly useless units traditionally have been called on to get the system through short term peak demand conditions.

To be fair the Act does encourage energy storage and that should help somewhat with peak demand concerns. Care is needed as batteries do not give their best performance in cold temperatures. But in light of all the other changes that is a huge burden to place on technology at this stage of development.

The chart below shows the US typical resource generation by major energy source. Imagine how this chart will look as fossil fuel is phased out. Hydro only makes up about 6% of the mix and expansion there is limited. Nuclear could replace these resources but it is not great for ramping up and down to follow needle peaks. If wind and solar step up to replace fossil fuels this leave us vulnerable to energy shortages during winter peaks just before daybreak. Battery capability would need to be huge, expansive and probably would not be procured in advance of demonstrated needs.

It is frightening to imagine how to serve a vast winter system demand just before daybreak in the green future. But one more feature of the Clean Air Act helps raise concerns to an even higher level. The Inflation Reduction Act subsidizes ground source heat pumps!

Heat pumps are attractive to the Inflation Reeducation Act for only one reason.  They help reduce the demand for gas furnaces. Subsidies will be available in areas where today heat pumps are not considered practical. Today it doesn’t make sense to drive resistance heating with electricity generated from fossil fuels. It’s inefficient and environmentally unsound. However, you can theorize that if all electricity is green, inefficient electric heat is green too. Replacing natural gas heat with heat pumps is not a good idea when one considers their impact on the power system during winter peak conditions.

Under the Acts subsidy provisions people who live in areas where heat pumps don’t make sense may decide to get them anyway with the subsidy. For example, if you live in a cooler area and you’ve gotten by without air conditioning, now your units can be subsidized and the resistance heat will be there for you in the winter too. Green advocates talk of shaping the load to better use resources, but that evidently can be quickly forgotten when other green objectives emerge. Putting in a bunch of heat pumps and building tremendous infrastructure to support their short-term demands is far from environmentally responsible.

Specific Blackout Prediction

With a lot of help from the Inflation Reduction Act we will likely see these full set of conditions in many areas:

  • Very cold pre-dawn extreme temperatures
  • Backup quick start fossil fuel combustion turbines have been largely driven out of the resource mix,
  • Nuclear, hydro and battery resources are tapped out
  • Solar is absent from the distribution side and not available on the generation side
  • Wind may or may not be blowing
  • Heat pumps are operating maxed out in resistance mode, along with other resistive heating to drive system load to extreme heights
  • As with every power system there will be a few problems on the system
  • System will be forced to deliberately shed a lot of load or may go unstable and suffer crippling blackouts

To the extent as claimed by some, climate change is driving more extreme winter peaks in the near term, we may see the situation sooner than later.  In any case green measures are driving us there with current historical weather patterns.  Being without heat and power in extremely cold conditions is highly problematic for most individuals, businesses and industries.

What can be done to prevent such blackouts? Unfortunately, not much attention seems to have been paid to concerns of this sort. It might be argued we need vast surpluses of wind and storage (those not paying attention may argue we need more solar) to support winter load. The cost and environmental impact of these extra mostly underused resources would be large and prohibitive. This would be true weather the resources were wind, solar, batteries or nuclear.   Keeping older already manufactured combustion turbines around for emergency conditions would be a much more reasonable means of mitigating risks.  The additional environmental impacts of using something already manufactured and placed in service are small compared to building extensive new resources, no matter how green these resources may be claimed to be.

How do we encourage smart ways to provide emergency capacity?  Current energy policies are seeking to direct as much money toward “green” resources and costs away from them.  As discussed earlier, in Texas they are moving away from recognizing capacity value consistent with a trend towards energy only markets.  I’m a big fan of markets, but they don’t do a good job of protecting against extreme conditions especially when no one has ultimate responsibility (except governmental entities) for ensuring load is served.  Some measures would need to be employed to compensate for providing and ensuring combustion turbines are available for emergency conditions.  But no one seems to be talking about such measures.  The Inflation Reduction Act appears to be a single focus approach to a nuanced problem. Cut CO2 emissions and hope for great innovations. Reliability threats apparently are not on their radar, nor are they an articulated or contemplated concerns. It’s a shame because reduced reliability can wreak havoc on the economy and the environment.


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