J.Peter Lynch
Reprinted with permission from RENEWABLEENERGYSTOCKS.COM

On August 14th 2003 50 million Americans were cast into the dark, as a result of the largest blackout in American history. What happened, why did it happen and what can be done short term and long term to help prevent more blackouts?

What Caused the Blackout?

As of this date no one knows for sure what initiated the sequence of events that cascaded into the blackout of 2003. Whatever single event or sequence of events that triggered the system failure it all comes down to:

A severely overloaded electrical grid that is being constantly asked to do things and handle loads that it was never designed for.

The grid was designed over 50 years ago to service a highly centralized, analog, pre-computer society and was never designed to handle the new demands of our increasingly decentralized, digital society.

An easy way to visualize the problem is to picture a large hub with 6 spokes coming out from the center. This is the current "centralized" power generation model, which supplies the majority of power to the industrialized world. The hub is a large power plant and the spokes are transmission lines carrying power from the plant. All of the spokes are running very close to full capacity and all of a sudden, one of the spokes has a technical problem. The system tries to immediately switch the electrical load to the other 5 spokes. However, since they are all running so close to full capacity they cannot handle the surge in power and the whole system goes down. Once the system is down, it can take hours or even days to gradually bring the system back to full operating status.

However, once it is back in operation, it is still running dangerously close to full capacity and the possibility of more blackouts remains possible. In fact, we are just as vulnerable now as we were on June 14th to another technical accident, human error or worst, a terrorist attack.

Why did it Happen ?

The primary "technical" reason the blackout occurred was:

The Existing Imbalance between Generation Capacity and Transmission Capacity

The Energy Department has recently stated that electricity demand has increased 25% since 1990, while construction of transmission systems to distribute the power has declined 30%. As a result, we have larger and larger amounts of power trying to force itself down inadequate transmissions lines and sooner or later you are going to have a major problem.

In fact, we have had four major grid power failures in the last 10 years that have affected whole regions of the country with the loss of billions in revenues for the regional and nation economy. In addition there have been hundreds of "minor" power outages that may only effect a city or two and do not show up in the national press. All of these events, both large and small clearly point to the fact that we need to address this problem and we need to do it now.

How did this tremendous imbalance occur and why does it seem to be getting worst ? 

The answer? The "usual" suspects:

1. Confusing and inconsistent federal government policy's
2. Politics that are further complicated by different regions and authorities inability or desire to effectively communicate with each other
3. Antiquated technology that is not capable of reacting at the necessary speed to avoid a problem. 

Deregulation

The "partial" deregulation of the utility industry created attractive incentives for companies to produce power and sell it in an actively traded power market. The utilities were forced by law to pay volatile wholesale prices and as the prices rose it gave incentive for power producers of all sizes to get in the market and produce and sell power. 

However, utilities and investors were given little or no incentive to upgrade the grid itself. It only created uncertainty and investors will not invest in anything where there is uncertainty as to how they will recoup their investment. As a result of this, the investment in the grid decreased dramatically and companies cut back on maintenance and the implementation of newer technologies in order to improve profitability. In fact, other countries spent as much as ten times, in relative terms, as the U.S. to upgrade their grids as they're respective generating capacity increased.

Politics

Five years ago a federal task force of experts warned the Department of Energy that the reliability of the electrical system was based upon a jumble of voluntary standards and that some form of mandatory rules had to be imposed on the electric industry. Standards for a more reliable system were not opposed by the industry and many of these needed regulations were included in an energy bill that came before Congress in 2001.

The bill never passed because of political disputes over matters like Alaskan wilderness drilling and efficiency standards for cars that were attached to the energy bill. Once again, politics caused delays resulting in the legislation getting stalled over totally unrelated subjects that someone had attached to the legislation in order to get "their" pet project through Congress.

"The U.S and the world are currently on the verge of a major paradigm shift in the power generation industry". 

If one wants to look at it in a overly simplistic way you could just say that it was an overloaded electrical grid and that all we have to do to "solve " the problem is:

1. Run more power lines in key areas of the country; 

2. Update some key equipment with new technologies;

3. Build more large power plants and make sure everyone has enough power.

Many people are saying that once this is done, everything will be "back to normal". This is partially true, we do need to utilize advanced technology that is currently available and we do need to build more power plants, but these solutions combined with the current centralized power generation approach has a major design flaw. 

We are building the "wrong" kind of power grid. We are simply adding on to an already antiquated system and assuming that since this is the way we have always done it in the past, that it will be OK for the future and it will once again be business as usual. 

We are assuming that the world now and in the future is the same as it was in the past. Frankly, this is simply not the case. When the electrical grid was developed over 50 years ago, we were a highly centralized economy with very inefficient power generation machinery and very limited technical capabilities. The best way, at the time, was to take advantage of economies of scale and make power plants big and centralized, "bigger was better". However, today that is not the case. Smaller is better, more efficient, more secure, more reliable and much cheaper. In fact, the U.S and the world are currently on the verge of a major paradigm shift in the power generation industry. 

What is this "paradigm shift"?  What will it entail? And how will it unfold? 

The paradigm shift I am referring to, is the shift from centralized power generation (the central hub (power plant)) and its many spokes (power transmission wires) to distributed/decentalized generation, in which power is produced as close to the location where is used at a scale as close to the end use application as possible.

I think that the energy needs of the next 100 years will require a substantial overhaul in how we think about electricity. How it is produced, utilized and transmitted. 

" In periods of profound change, the most dangerous thing is to incrementalize yourself into the future.  Our society is changing more broadly and more rapidly than at any time since Edison's day. The current power infrastructure is as incompatible with the future as horse trails were to automobiles."  Kurt Yeager, President, Electric Power Research Institute 

What will it entail? 

First of all, we can't just magically convert the existing system to a "new and better version" overnight.  It will take time (20+ years) and it will take a long-term vision on the part of politicians, government regulators, utilities and private investors. We must start now to formulate a long-term plan that will guide us through the transition period to a fully distributed/decentralized digital electrical system. 

The Short Term

In the short term we need to implement a number of common sense measures to stabilize the current grid and the near term viability of the grid. 

1. Conservation. Easiest and the most cost effective. People can easily shift to fluorescent lights and new energy efficient appliances for example. It is simple  to do and usually plays for itself within 2 to 3 years.
2. Improved transmission line technology. Super conducting cables and other current technologies that will allow significant additional power to be transmitted on existing cables. 
3. Change the tax codes to encourage technologies that have positive benefits to the economy and our environment - such as photovoltaics, wind and tidal power.
4. Eliminate tax incentives that encourage technologies that are not cost effective without government support - such as coal and nuclear power.
5. Solid state power controllers (switches) that can replace the current electromechanical switches. These switches are much faster (hundreds of times faster) than current switches. It is only with this increase in speed and "intelligence" that the system will be able to route power smoothly throughout the grid. It is very similar in concept to the routers that are used on the Internet to move information around seamlessly.
6. Sensible new regulations that allow some form of centralized or regional control of the transmission grid and mandatory quality parameters.

The Long Term 

In the long term we need to move toward a distributed/decentralized power generation network. This network would produce power as close to the location where it is used as possible. It would also try to match as close as possible, the production quantity to the amount of power used at each location.

In this future scenario, the grid would act as a supplemental source of power to the end user rather than the main source of power as it currently operates. 

In many respects it could be thought of as an "Energy Internet". Energy flowing in all directions, from multiple sources all controlled by high speed digital switches directing traffic on a nationwide "energy web", similar to the current World Wide Web (Internet), except this system would be moving electrons instead of information. 

The advantages of this type of system as compared to the current centralized "Hub and Spoke" system are as follows: 

1. Cheaper to build, especially in terms of risk adjusted cost to build.

2. Much faster to build. A major wind farm can be in operation in approximately 6 months. Whereas a major power plant can take 2 to 3 years to come online.

3. Far more secure from terrorist attacks. It is far more difficult to blow up 10,000 local generators than to blow up one giant central power station.

4. Much better matched to the current and future digital economy.

5. Much more reliable. In fact, many distributed power sources, such as microturbines, fuel cells and photovoltaics are MORE reliable than the grid itself.

6. Significantly more efficient use of energy, thereby further reducing our dependence on foreign oil.

7. More adaptable to the inclusion of Renewable Energy sources such as wind power and Photovoltaics. This will result in reduced pollution, more stable long-term energy prices and a dramatic decrease in our dependence on foreign oil.

All of the technology for this transition is available today. All we need to do is to muster up the political will to "do the right thing" and move this country resolutely forward to a fully distributed, hopefully renewable energy system with little or no dependence on foreign energy sources.

Mr. Lynch has worked, for 26 years as an independent analyst and investor in small emerging technology companies. He has been actively involved in following developments in the renewable energy sector since 1977 and is regarded as an expert in this field. He was the contributing editor for the past 17 years to the Photovoltaic Insider Report, the leading publication in Photovoltaics industry that was directed at industrial subscribers, such as major energy companies, utilities and governments around the world. He is currently a consultant to a number of companies, among them RenewableEnergyStocks.com and DayStar Technologies, a Photovoltaics company. He can be reached via e-mail at: solarjpl@aol.com

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