The Grid, Gretchen Bakke, 2016 - I love books that teach me about a sector I had no clue about and this does it for power sector. It is America focused but a whole lot of it is applicable everywhere.
It covers the history of electricity from Faraday discovering it, to the arc lamp, DC power, Edison’s DC systems, parallel circuits, invention of AC power by Tesla, long-distance distribution, centralizing distribution and production (utilities were born), standardization of outlets, appliances, the energy crisis of the 70s and the power capex, renewables, decoupling of generation and distribution from utility companies, nation-wide grids, power exchanges making power a commodity, long-distance wheeling, blackouts / brownouts, incentives of everyone from govt., utilities, home-owners, factories etc.
My notes -
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The grid is 20th century’s greatest engineering achievement squarely in the center of our lives and yet we barely notice it
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America has three grids - One for the west that includes bit of Mexico and western Canada, one of the east and a separate smaller one for Texas
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More than 70% of the grid’s transmission lines and transformers are more than 25 years old. Most power plants are 34 years old (Written in 2016)
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We rely on twice as many power plants because of massive inefficiencies in the system
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Power outages - 15 in 2001,78 in 2007 and 307 in 2011. America has highest power outages for a developed nation at 360 mins per year. Korea has 16 mins, Italy 51m, Germany 15 and Japan 11m
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The more we invest in green energy, the more fragile our grid becomes since the grid was built to run on well-regulated, predictable electrical flow
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Wind doesn’t blow with same steadiness and every time sun goes behind clouds the generated voltage fluctuates. The grid is unprepared for this unsteady flow
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Places like Wyoming or West Texas have a lot of strong wind but the grid wasn’t built to be robust in wastelands
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As coal plants get retired, natural gas is our transition fuel. It is more efficient since the combustion spins the turbines and the recovered steam as well is used and is cleaner than coal (only from greenhouse gases and wastewater pollution but not from methane emissions in transmission leaks)
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If only 3.2% of nat gas produced is leaked in transmission, it is more harmful than coal
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The grid is built as much on law as on steel and it runs as much on investment strategies as on coal and produces profits as well as free electrons
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By 2050, every single power plant in US will need to be replaced by new plants (We see this already in turbines players)
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If electricity is made, its shipped and used and it all happens in the same millisecond (it was a drop of water, a ray from the sun or a gust of wind a moment ago)
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The grid has to be constantly balanced by local balancing authorities who have to ensure power going into grid and being withdrawn are same (by firing up plants or by brownouts or load-shedding)
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Its easier for people to understand relationship of bananas and dollars but not what a kWh (kilowatt hour) is
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Universal electrification was achieved in 1930 and grid functioned well until 1960s when it ran into trouble as utilities which were monopolies became least inventive, flexible and run-of-the-mill
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More solar / wind as part of the mix, the harder it is to balance the grid as generation can drop by 81% at 5 in the evening just as people come home from work and start their a/c, TVs and other electronics
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Grids have to be designed for peak load and putting up capacity for peak loads is very wasteful (Not very different from running a OTT. Same concept apply everywhere!)
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Ramping up generation for unpredictable peak load or sudden drop in renewable generation - only hydroelectricity can ramp up quickly. coal takes 5 mins to 50% capacity, nat gas takes 10mins. Nuclear takes 24 hours (can be shut down instantly though)
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The grid protects itself with circuit-breakers when it receives more power than it can handle (too much can sometimes lead to blackouts too)
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Power producers don’t care about transmission and balancing the grid - that’s the utilities’ problem
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25% renewable energy target by 2025 (20% now - though 50% is hydro). To overcome challenges - use smart grid tech, curb customer demand, end peak demand, develop grid-scale storage, nation-wide extra high-volt DC/AC transmission network, reduce line congestion, encourage inter-regional co-op, develop inter-op standards, incr. govt. investment, train grid ops, integrate large number of EVs
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Net metering - Utilities pay home owners for the power generated by their solar panels (adjusted again the bill). Problem is grid upkeep as more people switch to solar generation at home. So net-metering can kill the utilities and the grid if not regulated and compensated (homes still need grid as a backup power)
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Electricity had the peculiar ability to divorce space from time. telegraph (1830s) sent messages across town, telephone (1876) did it with voice, radio (1896), phonograph (1877) enabled information across space and time. Electricity displaced steam engine and it was possible to send remotely produced mechanical energy across space (but not time)
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Faraday experiments produced electricity in 1830s. We had no use for it until 1870. First electric lamp around 1871. By 1879 arc lamps were used in mines. 1882 NYT office had 52 incandescent bulbs
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Edison’s greatest achievement wasn’t the light bulb (he did not invent it) but the parallel circuit. Until then everything was connected only in series (so streetcars had their own circuit and generation and lighting another)
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If you wanted Edison’s bulb, you also had to have his dynamo, switches and his lines and had to hire Edison’s men for servicing them (First walled-garden?)
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Preferred form on electric current in the 1880s was DC
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AC system was made in 1887 (Westinghouse and Tesla). Voltages could be stepped up or down using transformers and helped transmit power far and wide by 1891 (60 cycles AC in US)
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1896 - First large scale generation of electricity and Niagara falls and first American grid!
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1907, only 8% of American homes was served by electricity
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In 1901 only 18 refrigerators in Manhattan, by 1910 there were 45k appliances (80% were electrical iron)
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Early days electricity was an elite product. Rich mansions had their own generation and wiring. Only after the Great Depression, the notion that money could also be made by selling cheap things to lots of relatively poor people made inroads
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Standardized plug and outlet came in 1929 and by early 1940s there was a veritable explosion of electrical appliances
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JD Rockefeller monopolised oil with Standard Oil owning 90% market share. Same could not be done with Electricity (Edison struggled with decentralised DC networks).
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In 1907 there were over a thousand power companies having 30% market. In 28 years only 8 remained and controlled 75% of market, thanks to Samuel Insull (was Edison’s secretary)
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Insull realised to make a large power company, midnight load has to be on par with 10am load. So he wanted lots of diverse customers to provide that 24/7 demand to make him large and profitable. He had a rate structure that rewards night-time use and radically lowered price of electricity in general (more one used, less he paid) and also improved efficiency of coal plants (2% to 20%)
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From Insull’s time America built along with demand until 1970s and was able to keep up. But the 70s energy crisis (OPEC oil embargo), the power costs started to go up instead of down for the first time (Interesting situation similar to current). Carnot’s theorem limits on efficiency were reached. Lot of plants had to be retrofitted to function on oil instead of coal
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Electricity is a peculiar kind of public good whose price went up with competition (when utilities also owned generation along with distribution that is)
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Utilities attracted the bottom of graduating classes unlike computers, aerospace and electronics. These risk-averse and facile minds in a monopolistic situation weakened utilities and the sector (Currently education sector is here)
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Monopsony - Being sole customer of a product. While everyone knows monopoly, very few know this. American utilities before PURPA were monopsonies (every bit as bad as monopoly)
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Utilities managed the grid, made the power, owned the wires, distributed the electricity and collected the money and no one else could do it
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When PURPA reversed, they had to buy power even the smallest of entities, paying “avoided costs” (hence homeowners can sell via net-metering). PURPA was smart anti-monopsony regulation
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1912 10% of electricity was co-gen (generated by factories for themselves). 1962 it was down to 3% due to grid. With PURPA its back up at 12%. Goal is 20% by 2030 (Lot of grid connect and transformers and substations needed to hook these in)
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PURPA destroyed the public-good / natural monopoly narrative of utilities. Utilities could now make money only by transporting, delivering and metering and not by producing
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When utility companies now try to be profitable by cutting tree-trimming budgets and maintenance personnel, blackouts are the end-result
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Utilities had to agree on fixed price contract well ahead for long-term. This was no good for them. They need time-of-day rates which wouldn’t arrive until much later (power exchange with real-time arbitrage. More renewables in the mix, more arbitrage is going to be needed?)
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Electricity now is a real commodity - tradeable, transportable, profitable and a real hedgeable entity with futures markets and derivatives products
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This now created a country-wide market for electricity and a country-wide grid and all the technical complexities that come with it, in terms of line-load factors, carrying capacities etc. Too much electricity was now traveling too far - lines were getting over-burdened, heating up, sagging, shorting-out, arcing and filling with harmonic resonances
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Long distance wheeling now means utilities need a lot more data to plan investment decisions (No central controlling authority)
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Enron scam - they would buy transmission rights on long-distance lines and fictitiously “clog” it and ask the state for money to “free” it
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Our wires are underprepared for long-distance wheeling, population growth, explosion of pluggable devices, internet, data centers, air-conditioners and electric cars
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Smart meters can allow utility companies to read what appliances you are using by reading power signatures (proven papers online). They can even tell what TV programmes you are watching
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With smart meters, utility company can know when anyone anywhere is having an outage (saves on personnel costs)
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Consumption was a personal matter but with smart meters, utilities can control consumption and flatten peak demand with peak pricing (everyone puts on a kettle during ad break). If peak demand is flattened, a lot of redundancy in power plants and transmission can be reduced with time-of-day and peak rates (peak load is the utility’s nightmare, just like a OTT with a live match or a e-commerce company running flash sales)
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Utilities don’t know how to upgrade existing tech without putting themselves out of business, nor do they know how to continue with existing infra without putting themselves out of business
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Refrigerators use 14%, freezers 6%, lightning 11% (26% for commercial) - forms the predictable baseline
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Anywhere there’s air-conditioning, smart-grids will likely prosper. Your interests to stay-cool is at odds with utilities’ goal to lower peak load (on hot days, everyone feels hot at the same time when they return home from office)
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To meet peak demand, utilities fire up coal / gas powered plants which aren’t used 98% of the time (just 6-7 days a year of use for such large capex!)
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70% of gasoline used by the military is used for transporting other gasoline around
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For decades, nuclear fusion has been 20-30 years away, from the 1950s it was 1980s, by 70s, we were to have it by 2000s, in 2014 it was 10 years away and in 2022 we are told its 20 years away (despite achieving ignition. Its simply not viable?)
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Different ways of power storage - pumped hydro, compressed air, flow batteries, concentrated solar towers (liquefies salt). Most are at most 24 hours max storage, except pumped hydro. Li-ion batteries at grid scale are the dream - scale-up and down can be done to the millisecond
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Negawatt- price of a watt not used. Americans aren’t good at ascribing a price to something that’s not used (You get paid for watts you did not use)
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Decentralised storage can happen if EV batteries work to stabilise the grid. This way capital-intensity is also distributed (Idle cars when parked should be connected to the grid to stabilise it and then charge in non-peak hour). This way car as an asset, utilisation can go from 3-5% to 95%. Public electricity, private storage (Elegant idea if it works)
While this book was very good, it was a bit poorly edited and last 2-3 chapters delivered little incremental knowledge and felt like filler. However, books like this must be bought and read over yet another self-help, motivation / investment read. These are unique and actually teach you something you did not already know. I absolutely loved it but its perhaps not for everyone. 9/10