WE’VE COME TO EXPECT the miracle of Moore’s Law from our computer technology – exponential progress in speed, power and efficiency, all while prices drop. Until recently, the world of electric power has been a laggard, but that’s quickly changing: At last, the relentless forces of innovation are now bearing down on electric power, with profound implications for how we will harness and deliver it.
Moore’s Law is arriving to the energy field in many forms, including immense wind turbines, advances in solar panels and energy storage, and the promise of micro-grids that enable energy self-sufficiency. The technology onslaught guarantees prices will continue to drop for a variety of renewable energy sources. The trend poses an existential problem for legacy energy producers, who risk being left behind as old, dirty, and expensive. It also poses a challenge to policy makers: The governments that plan for the inevitability of renewable and relatively cheap power will seed the industries and new jobs that will propel the transformation. This lesson could be particularly important as Massachusetts looks beyond its first offshore wind procurement in late April.
General Electric’s giant Haliade-X, a new 12-megawatt offshore wind machine, is a perfect emblem of the energy paradigm shift. Some 850 feet tall, it will double the capacity of the company’s next largest turbine, setting the stage for large-scale offshore wind power generation. It’s a commitment from a company that already knows which way the wind is blowing – toward increasingly cheaper wind prices that already compete with fossil fuel generation. In Europe, where 25 gigawatts of offshore wind are expected to be in operation by 2020, there’s no turning back: wind farms are taking root even on floating man-made islands.
The U.S. couldn’t help but notice. Massachusetts, New York, New Jersey and Maryland all are planning to procure significant amounts of offshore wind, and they all have decisions to make about new and legacy generation. The question remains how much the old thinking will limit future possibilities. For example, the typical cost trajectory of nuclear and hydropower is up: each new project being developed by North American utilities is more expensive than the last. Nuclear projects in the United States and Canada are wildly expensive, and some large Canadian hydroelectric projects are billions of dollars over budget and years behind schedule. The price of electric power coming out of these projects is over $100/MW per hour. The price of power coming from new turbines is likely to be well below $100. Which is the better bet over the long term?
The overreliance on legacy infrastructure policy also will be a challenge. The existing grid remains an amazing machine, and it needs careful attention. Old parts need to be replaced, and incumbent utilities must be persuaded to be “distributed energy platforms” and they should not be allowed to monopolize access to the grid. In the transmission sphere, some large new lines (for example, to connect farms full of more efficient machines offshore) need to be developed. An offshore grid must, however, be independent from generators. To enhance competition — and with it, innovation and the best prices for consumers — the grid must be open to all competitors in the generation sphere: it cannot be owned by the generators themselves. Some generators argue owning the grid is essential to getting financing. That’s a specious argument and policy makers must be stern in their rejection of it.
For the electric Moore’s Law to have its full effect, the recent advances in storage (whose cost has also been declining) must also be part of the new electric power kit. Offshore and onshore wind and solar can be “firmed up” with storage. Properly sized and placed as part of a transmission system, storage can make intermittent renewable energy a completely reliable and secure part of the grid. In large cities like New York, batteries can not only replace the outdated backup generators that every building must have as a reliability tool; those same batteries can also be used to firm up the urban grid, and make redundant the large, oil burning power plants used only a few hours each summer.
For states that are embracing renewable energy, it is critically important that they keep the electric Moore’s Law in mind when they execute commitments via large procurement contracts. Why lock in long-term, high-priced contracts when prices are destined to drop? It may be better to develop the infrastructure on which the new technologies can compete.