Huge Change Is Coming to Our Electrical Grid

Peak Power Demand

Last week I had dinner with an executive from a major Florida power company. His company is investing in “municipal scale” batteries. These are the giant, tractor-trailer-sized batteries that can store large amounts of electricity.

The idea is to smooth out peak power demand on the grid.

That’s because electric utilities use “time variant” pricing. That’s a fancy way to say that the price of power depends on how many people want it.

The peak time of electricity demand acts like the evening rush hour. Everyone comes home from work, lowers the air conditioning, cooks dinner, turns on the television, etc.

That crowds the power lines. Demand soars, driving prices way up. The power company needs auxiliary power plants to generate extra supply.

Right now, peak electricity can cost triple the normal rate. However, at night, rates plummet.

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In New York, the state has “superpeaks” of 33,000 megawatt-hour (MWh) demand. They only last for a couple of hours but can cost $450 million per year. That’s a huge problem.

Imagine if you could pay one-third of the price for gasoline if you filled your tank at 1 a.m. I’d do it, and I’m sure you would too. However, with electricity, we don’t have that choice … yet.

Peak Power Demand

Changes in electricity demand aren’t just daily. They’re seasonal too.

According to the Energy Information Administration (EIA), air conditioning is the single largest use of electricity by residents. The house heats up during the summer, so we use the power while the sun is up.

The table below is a chart of monthly electric power production in the U.S. Each peak happens in summer. Each low occurs in late winter or early spring.

Peak Power Demand Power Plants

As you can see, the spread grew larger over the years. The five-year average grew from 94 billion MWh per month to 104 billion MWh per month today.

You can see the problem. We all need electricity at the same time, for the same reasons. That’s why peak power demand happens.

If demand is lumpy, then how do we smooth out supply? Batteries.

A Massive Transformation

Batteries hold the promise of making electricity prices as smooth as gasoline prices. However, creating a battery large enough eluded engineers for decades. I remember, a few years ago, reading about molten sodium batteries as the leading solution.

At the time I thought: That’s a terrible idea. Sodium is highly reactive. It will explode if it gets wet. Now imagine having a superhot, explosive metal in large volumes near your town. Not ideal.

However, several technologies arrived in time to prevent liquid sodium batteries from showing up in our towns.

The first is lithium-ion. Minster, Ohio, deployed 3 MWh of lithium-ion batteries next to its 4.2 megawatt (MW) solar farm. The plan is to fill the batteries from the solar farm and use them during peak hours.

The other is zinc-air batteries. French multinational utility Engie set up a 4 MWh zinc-air battery system in Tubarão, Brazil. A 5 MW solar/wind project will supply the battery system with power.

What’s interesting in both these examples is that municipal-scale batteries are already in use. This is the start of a massive transformation in our daily lives. And it will create opportunities for us to profit.

This is one of the big themes we will focus on in my Real Wealth Strategist newsletter over the next few years. The expansion of municipal-scale batteries will drive metal demand for lithium, copper and zinc.

Good investing,

Matt Badiali

Editor, Real Wealth Strategist

  • yirgach

    Adding more power plants is a better idea.
    Mining for cobalt and lithium is done mostly in the Congo and many illegal miners there use child labor.

    Many have died for Apple and Tesla.

  • Gea

    We can harvest renewable energy (wind, passive and active solar, hydro) and rain water from our roofs, back yards and from small neighborhood micro grids in apartment complexes and eliminate grids all together…We can store this energy in batteries of our electric cars, which should replace internal combustiion engiens, and in large batteries we can store in our basement for later us…same with rain water, as we do not need clean expensive drinking water to flush our toilets and wash clothing and dishe

    Only then we the people will not be hostages of large utility companies and will go back to basics of independence, self-sufficienty and meritocracy of the free markets. So far, sun shines, rain falls, creeks and rivers flow, and wind blows FREE of charge and inexpensive technologies, both ancient and modern to harvest energy and water are easily available. Send the governments packing and also the utilities as we the people do not need them ;-)! The framers of US Constituiton did not have electricity grids or water grids but relied on their own wits. to provide good lives for themselves…..

  • Charles Burton

    If you think there is peak demand now, wait until all those commuters get home on a hot summer evening, and not only peak their household use, but want to recharge their new EVs at the same time. An electrical engineer tells me power companies are starting to talk about this demand, but not yet really doing anything about it, since the demand is still a few years away. But it is coming.

  • soluna1969

    I want to know where I can get carbon-fiber nanotube supercapacitors that MIT developed and Lamborghini is using to build their electric supercar.

  • Jonathan_Christopher

    Recharging is an easy solution. All charging stations can have time of day timers. That will make the car battery part of the battery solution, not a system problem.

  • Charles Burton

    Would you want to wait to recharge after getting home, perhaps planning to go somewhere later? Instant gratification has become the American way. People will plug in as soon as they get home, to avoid forgetting. Recharging demand for EVs, as they become more prevalent, will put high and growing loads on power stations and distribution systems – loads which they are presently not able to handle. The result, unless fairly rapid rebuilds are undertaken, will result in widespread system failures and power outages. Even most home circuits, especially in older homes, will blow circuit breakers or fuses or burn out unless they are rebuilt, especially with rapid 10 minute recharge systems such as the one recently announced by Mercedes Benz.

  • Frank

    Nonsense. People will plug in then walk away and let the smart charger handle it overnight. These cars have 300+ miles of range, you’ll be able to go anywhere you want whenever you want.

    As mentioned, these car batteries will be a huge help to the new grid dynamic. We will desperately need somewhere to put all our excess power from renewables. Folks plugged in at work can absorb free solar or take in overproduction of wind at night.

  • Frank

    Riiiight

  • Reuvensure

    No mention of vanadium batteries?

  • Charles Burton

    I’m talking about how people ACTUALLY behave, not how idealists want them to behave. People nearly ALWAYS put No.1 before others. That is why our electrical grid is nearly obsolescent, along with much of our infrastructure. If it ain’t broke, don’t fix it.

  • Charles Burton

    And there ain’t no such thing as a free lunch. Think about it.

  • Charles Burton

    Correct about cobalt, not lithium, which is mostly from Chile. And many people die in thrall to ALL big business. And think about Big Medicine. Patent medicine companies may prolong many lives, but also kill many each year through misuse of their products.

  • Wasteland Warrior

    Ummm Hello?? All sound good in theory but it many States it is ILLEGAL to collect rainwater…Yes the County or State laws say that the Gov. owns rainwater and it is illegal to collect it or divert it…The gov also forbids you from living off the grid on their territory. People have been taken to court, fined, and even spent time in jail for these offences!… Also many States and counties forbid wind generators and solar panels on your home!…They don’t want you to be independent where they aren’t making money off you! You can only be green if they are profiting… So stop dreaming in color about your Utopian future where we all happily live independently on the cheap without the authorities in our faces and out of our pocketbooks… IT ISN”T GOING TO HAPPEN!…Don’t believe me?? just youtube “collecting rainwater now illegal in many States” and see some facts people!… Here’s one reporters quick look at some real cases: https://www.youtube.com/watch?v=DQHVCOT4PPw

  • John Draughon

    Sounds like this could be old, outdated technology you’re talking about. In a recent Korea Times article, KT was noted to be testing EV-DR technology where electric vehicles’ batteries plug in and supply needed hydro to the grid. After you drive home, you plug in and your EV supplies the grid for AC, TV and cooking in early evening (peak hours) then it recharges in late night before morning rush hour. see http://www.koreatimes.co.kr/www/tech/2018/02/133_244179.html AND scroll down to “KT also leads EV-related business ” headline. That’s the portion of the article you want.

  • Jonathan_Christopher

    You are right in that people will plug in to recharge as they get home. you are wrong in that the system will be set up so that they have some choice on when the recharge occurs. I would design the charger to bill based on time of day. If the owner wanted an immediate charge at max peak, of course he or she would get the power, but at much higher than average rates, In most cases, the charger would charge between midnight and 5 am, when usage was low. In addition, if the home was equipped with solar, as mine is, the charger would charge the car preferentially to putting the demand on the grid, if the solar uni was producing more than the home demanded. We are talking about setting up a smart grid, with smart devices.

  • Charles Burton

    Congratulations, Jonathan, on having a solar system that gives you some independence of the grid, but won’t your regular evening usage largely drain your batteries, leaving you dependent mostly on the grid to charge your EV between midnight and 5 am? Also, a fair number of people work night shifts, causing them to have to charge an EV at daytime rates. Nit pick, maybe, but it happens.

  • Pete

    “electric cars can be used as supplementary batteries by discharging their electricity and giving it to factories or buildings.”…….the key word here is “supplementary”…..batteries to supplement power but only on a small scale…i.e. (A building)….No way can you power entire large cities, or large regions with these “supplementary batteries”.

    This article is referring to large massive batteries as a back up storage system to a large power plant,,,,a power plant that supplies power to large cities and regions….an entirely different type of power source than EV related power supplies which only supplies power to a single building…..

  • Frank

    Renewables plus storage(both at grid level and distributed) will cost about half todays retail electricity rates. So while there’s no free lunch, you will soon have a far better lunch at half the price.

    You’re fundamentally misunderstanding the role of grid/residential storage and how powering your vehicle will interact with your daily life. People will simply plug in their vehicle at home and forget about it. With 300+ miles of range, traditional “fueling” will never even cross your mind.

    Imagine leaving your home every day with a full tank of gas. If that were the case, how many gas stations would we need? Almost none.

  • Vickie Christensen

    what is the stock symbol for nano crystal electricity

  • Charles Burton

    Building all that infrastructure to allow individuals freedom from the claws of big business requires a HUGE industrial infrastructure itself, and is VERY expensive. As if we aren’t indebted enough to begin with. And it uses VAST amounts of sometimes scarce or hard to access natural resources to generate and store all that energy.

  • Jonathan_Christopher

    HI Charles Burton: You are right, but Utilities, like Water, Electricity, Internet and Cell phones all work on the same kind of probabilistic math, which says that not everyone will be on he system at maximum use at the same time. THat allows water systems to use 65″ pipes in neighborhoods, and electric utilities to use many Kilowatt rated transformers instead of Megawatt-sized units. Bot saying that some sizing upgrades are unnecessary, In Hawaii, tens of thousands of homes have solar electric systems. Maui Electric, the utility, is having some problems with that, but looks like it can be handled..

  • brown7228

    The winner will be the company that uses Graphene in their batteries. It has already proven that they last longer and recharge quicker. That’s the company I want to know about.

  • Wilhelm

    Can anyone explain to me why there is so little awareness and promotion for large, stationary salt-water batteries? Less energy-dense, perhaps, than metal-based systems, but fine for stationary applications, and they’re very safe and made mostly of inexpensive materials. Is it because other battery types are so much more profitable for their promoters?

  • Namorado_TX

    . . . Large amounts of electricity is lost through long-distance transmission lines.
    Perhaps people should listen to scientist Dr. David Criswell, advocate of using
    microwave energy transfer. The sooner we do lunar colonization, the better,
    because it’s far more efficient to build solar panels there and transmit it back to
    Earth via microwaves, no long-distance wire-cables needed. Details explained
    at lunarsolarpower.org
    . . . Why can’t electric energy be stored in gyroscopes, magnetically levitated in
    vacuum containers for maximum efficiency? Why can’t electric cars be devel-
    oped to have pallets of batteries on extendable/retractable wheels so a discharged
    group can be easily exchanged at homes or service stations for a recharged group,
    giving the “instant gratification” others claim is a social need? Charging can be
    done at times of lower demand, and be available anytime thereafter as needed.