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Preparing for Next Year’s Power Shutoffs

The best customer response depends on how much utilities can reduce their frequency.

The rains have arrived in California and wildfire season has ended, temporarily. But fire risks will be back in 2020, and they will likely come with more disruptive and costly Public Safety Power Shutoffs (PSPSs).

Last month, Meredith and Duncan discussed the trade-off between a high-tech response to power shutoffs – solar panels and battery storage – versus a lower-tech response – a gasoline-powered generator. Today, I want to pan back and discuss some general principles for customer response to the threat of more PSPSs. I think these principles argue for caution in responding to the risk of future PSPSs with large customer-side investments.

ResponseToPSPSFig2

Guiding Principles for Precautionary Investments

The first principle is that the value of any investment in end-user generation is larger the more frequent and lengthy you think PSPSs will be in the future. This may seem obvious, but often discussions of alternative end-user strategies don’t specify the implied assumption about the future of PSPSs. (Meredith and Duncan, of course, do.)

A second, very closely related, principle is that high capital cost/low operating cost technologies are more attractive if we face many power shutoffs, because the high upfront costs can be justified by many hours of lower-cost operation.

And a third related principle – a bedrock of economics and finance – is the benefit of maintaining options when the future is uncertain. This principle highlights the value of postponing big, irreversible investments in order to preserve options while the uncertainty is resolved.

Fewer Power Shutoffs in Our Future?

Virtually everyone agrees that utilities need to ramp up activities that will reduce the need for power shutoffs: more aggressive vegetation management, hardening grid infrastructure, better power flow fault detection that triggers automated line deenergizing, and better remote wildfire detection, among other things.

ResponseToPSPSFig4 Plus, consider all the knowledge acquired over even the last few years of discussing and implementing power shutoffs.  Utilities are learning about forecasting dry windy weather and the associated fire risk, about the most effective ways to inform customers, and about segmenting the grid, so that a given PSPS can be more narrowly targeted.

Customers are also learning, not just about end-user power generation, but also simple strategies like packing refrigerators and freezers with ice (which can be created during the 1-2 day warning that we have gotten for the shutoffs) to keep food cold. Or learning where one can go with family (and pets) in nearby areas that have power. And local governments are learning the best places to set up community centers with power generation, and the best ways to configure them.

Of course, on the other side, climate change will almost surely continue to increase the incidence and dangers of wildfires. But the already-high risk is not likely to change much over a few years.

Annual weather fluctuations in California are substantial, so it’s impossible to forecast the need for power shutoffs, but my best guess is that we will see fewer/shorter/narrower PSPSs over the next few years, and fewer still beyond that.

Reevaluating Customer-side Investments

So what does that imply for customer options?

Less may be more. Obviously, make sure you have done what’s necessary to avert catastrophic impacts (for instance, if a family member has a medical need for electrical devices or refrigeration). But resources for dealing with PSPSs compete with other important household expenditures, at least for most people. So, consider the likely value you will get from investments over the range of possible PSPS events we may see in the next few years, including the very real possibility that there will be fewer in the future.

Recognize the potential value of minimizing upfront costs. If the rate of power shutoffs is likely to decline, or if we are uncertain but will learn more over time, coping for now with strategies that require a smaller upfront financial commitment may be preferable. This weighs in favor of end-user generation that avoids big investments. Everyone talks about gasoline generators, but my preferred technology is the humble power inverter.

A power inverter – the size of a squat shoebox – can take electricity from your car battery (gasoline or EV engine) and convert it to standard household voltage that can run appliances and devices. It has many advantages compared to a gasoline generator, including lower upfront cost (generally $50-$200) and easier upkeep. More information on power inverters is here and here. As with a generator, this solution requires the owner to be at least somewhat comfortable dealing with motors and electricity. And neither approach is very workable for most customers in multi-unit housing.ResponseToPSPSFig5

I used our power inverter without a hitch for about 5 hours (with our car idling in the driveway) on each day of the 2-day outage we had in late October. That was enough to keep the refrigerator and freezer cold, light the house in the evening, and keep our electronics and flashlights charged.

Consider the non-PSPS benefits of an investment. If you were on the cusp of getting the full solar Monty (panels, batteries, switch to disconnect from the grid, etc.) then the additional value during a PSPS is definitely a plus. A power inverter, generator, or full solar installation also has potential value during other emergencies, such as after an earthquake. I also considered the fact that a power inverter kept in the car could come in handy if I or someone else needs emergency power while I am away from home.

Understand that this doesn’t substitute for grid investments. Whether it is neighborhood microgrids, solar+storage, a gasoline generator or a power inverter, spending on end-user generation over at least the next decade will do little to reduce the need for the grid. Except in some very remote areas, it seems very unlikely that it will make sense to have all customers beef up end-user generation while continuing PSPSs. In any case, it is clear that California residents and businesses will not accept power shutoffs being a regular feature of life here. So, we still need to invest billions in making electricity transmission and distribution safer in the face of drought, high winds, and a population that has increasingly diffused into the wildland-urban interface. The local generation expenditures are on top of those billions, not a substitute for them.

Californians know that next year we will again go months without measurable rainfall, creating increasing wildfire risk in the late summer and fall. And parts of the state will likely again face power shutoffs. We need to be ready, but we need to prepare with careful consideration for the costs of our options and the real benefits they are likely to yield.

I am still tweeting interesting energy news articles, research papers and blogs (and occasionally my political views) @BorensteinS

Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas.

Suggested citation: Borenstein, Severin. “Preparing for Next Year’s Power Shutoffs” Energy Institute Blog, UC Berkeley, December 16, 2019, https://energyathaas.wordpress.com/2019/12/16/preparing-for-next-years-power-shutoffs/

 

Severin Borenstein View All

Severin Borenstein is E.T. Grether Professor of Business Administration and Public Policy at the Haas School of Business and Faculty Director of the Energy Institute at Haas. He has published extensively on the oil and gasoline industries, electricity markets and pricing greenhouse gases. His current research projects include the economics of renewable energy, economic policies for reducing greenhouse gases, and alternative models of retail electricity pricing. In 2012-13, he served on the Emissions Market Assessment Committee that advised the California Air Resources Board on the operation of California’s Cap and Trade market for greenhouse gases. He chaired the California Energy Commission's Petroleum Market Advisory Committee from 2015 until its completion in 2017. Currently, he is a member of the Bay Area Air Quality Management District's Advisory Council and a member of the Board of Governors of the California Independent System Operator.

8 thoughts on “Preparing for Next Year’s Power Shutoffs Leave a comment

  1. This article seems to be written inside-out as the proposed solutions only work if we think PG&E is quickly going to get better and cheaper.

    If one is ONLY thinking of PSPS mitigation (and does not have solar) the high captial solution is battery storage (e.g. Tesla PowerWall). It is the high-cost, high value option that provides seemless power continuity….but at a significant net cost.

    There are, however, options that have net present benefit that also immuniize from PSPS. We are doing the “Full Monty” and I have calculated that with the various incentives (ITC, SGIP) involved the payback time is about 7 years–and that assumes that PG&E does not increase rates faster than inflation (bets?). So we are making money AND are proof from popwer outages (up to 5 days of full usage). This is a win-win-win scenario.

    For someone who is planning to get solar anyway, the economics are about adding the storage (and perhaps upsizing the array.) With PG&E’s programs, even this option can be a net positive investment while providing outage insurance. In all cases, the investment adds to the net worth of the home (or at least reduces the capital gains tax).

    Such solutions only work for homeowners, of course. The low-cost, portable solutions are the ones a renter or short-term owner should probably consider. FHomeowners, now that the immediate crisis has passed, should see if the Solar&Storage solution makes economic sense before making some environmentally unfriendly non-investments like buying (and maintaining) a generator.

  2. Interesting problem. Principle two can be implemented probabilistically for an outage-event distribution. You can imagine different households assigning different shadow prices of carbon according to their willingness to contribute to the global public good. Now you have an estimate of the “agency cost” of outages to a community –the avoidance cost of backup systems plus the residual inconvenience cost. Now you can redo the whole exercise for different levels of community investment, say converting the community distribution grid into a microgrid with community level backup generation and/or storage. Some demand-side management would be needed including interruptible loads and a price of non-price mechanism for rationing backup power. This nested approach would allow an estimate of how much community level (or larger system) backup is warranted.

  3. While the solutions suggested here may work for some residential customers (and probably very little for the quarter of residents that live in multi-family dwellings), these customers are only 35% of the electric load based on PG&E’s ERRA workpapers. The remainder is made up of businesses and farms for whom a car charger won’t cut it, and even a small generator is unlikely to be of much help.

    As for the costs of hardening the lines, particularly through undergrounding, I’ve calculated that this solution likely costs ten times more than installing dispersed microgrids on the wildland-urban interface (WUI) and mountainous areas. My blog post detailing this will come out tomorrow here: https://mcubedecon.com/

  4. Dr. Borenstein,

    You are certainly a consistent apologist for the fossil fuel industry. Your analysis externalizes and/or ignores the cost of air pollution that comes from legacy fuels and conveniently overlooks the impacts of systemic, long-term malpractice and malfeasance on behalf of our local “investor owned” utility. (I say “investor owned” because investors seem to own the profits while the state of California owns the losses.) Do you think you’ll get around to addressing these topics at some point? Believe it or not but they do have some bearing on the decision to continue to invest in the status quo.

    Sincerely,

    Tom Tansy

  5. Severin, I’ve been wondering about the availability of something like the power inverter you mention, but for the purpose of continuing to use rooftop solar during a PSPS. Are you aware of anything off the shelf, or vendors planning to enter this market? I found it frustrating that we could presumably have at least run everything in the house during daylight hours if we’d had the ability to flip a switch that would have the effect of disconnecting us from the grid. Not sure what that would imply about reconnection, however…

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