Extreme weather events have become the new norm around the world. In the typically wet Northwest, prolonged periods of drought can put pressure on the region’s hydropower system, cause heat stress and wildfire risks. In this blog post, we connect the dots between increasingly volatile weather conditions and the value of customer-side energy resources. These are resources customers and utilities can deploy, such as energy efficiency, demand response, direct load control, distributed storage, or rooftop solar. Customer-side energy resources, and managing when we use our power, can provide the flexibility and reliability needed to rapidly decarbonize our energy system.
In the Northwest, climate change contributes to a new normal of intense heatwaves, prolonged drought and severe winter storms. Increasingly frequent summer heatwaves put pressures on a region among the lowest air conditioned in the country. This creates equity concerns; as low-income, BIPOC, and other frontline communities face barriers to adapting as quickly. The chronic drought facing the Western US affects the Northwest, as seen in the figure below, and puts stress on one of the Northwest’s main clean energy assets: hydropower.
The effect of drought on hydropower
Hydropower is the backbone of the Northwest’s electricity system, supplying 60% of the region’s energy production on average since 2000. This gives the Northwest a head start in the race to decarbonize and electrify whole sectors – from transportation to buildings. At the same time, volatile weather patterns can limit hydropower’s availability. Hydropower has always varied year to year, but climate change is ramping up these swings. Increasingly dry and hot summers can sap smaller snowpacks and thus hydropower production, right when it’s most needed. This causes polluting fossil fuels like coal and gas peaker plants to fire up to fill gaps in supply. A Stanford study found that between 2001 and 2021, this uncertain hydropower availability contributed to an additional 121 million metric tons of carbon, equivalent to around 1.3 million extra cars driving during that period.
Hotter, drier summers, coupled with expanded air conditioner usage in the Northwest raises the stakes for utilities to plan for summer peak load events when hydropower output is low. For the first time in the Pacific Northwest Utilities Conference Committee’s (PNUCC) 2023 forecast, summer peak load is projected to grow more than winter peak loads (growth of 11,000 megawatts in summer vs 9,500 megawatts in winter). This shifting landscape of weather conditions in the Northwest points to a growing need for more clean, adaptable, and reliable energy resources.
Our energy system is in a transformative period. The 2023 PNUCC forecast points to accelerated load growth compared to prior forecasts, attributed to more certainty in planned industrial loads. It is important to note that this forecast does not include electrification of transportation or buildings. The region’s strong commitment to energy efficiency has helped per capita energy use plateau, saving 7,500 aMW (average megawatts) over the past 40 years. But widespread electrification is expected to cause electricity demand to surge.
Electrification is a lynchpin to reaching the region’s climate targets as recently detailed in the Net Zero Northwest study by Clean Energy Transition Institute. However, the convergence of volatile weather events and increased dependence on the electrical grid presents a critical question: how can we ensure a reliable, affordable, equitable, and clean energy system?
Deepening investments into customer-side resources
A critical piece of the puzzle is customer-side resources: going further with energy efficiency, demand management and response programs, distributed solar, wind and storage, and community microgrids. As discussed in our Harmonious Grid series, these resources can help customers play an active role in the grid of the future: one that’s more resilient, flexible, and saves money.
Demand management fosters resiliency
When we use electricity matters a lot for power system reliability. Extreme weather events like winter storms, drought and heatwaves put pressure on grid operators to meet peak load demand. Historically, utilities have not needed to manage peak energy use, because the Northwest’s hydropower system had great flexibility to ramp up and down. As noted above, that flexibility is becoming constrained due to climate change and the need to change hydrosystem operations to help restore healthy and abundant salmon and steelhead populations.
There are a variety of ways that customers can manage their electricity usage. Time of use rate designs, for example, use price signals that rise during peak load periods, thereby encouraging customers to reduce their energy use. Utilities can also create direct load control programs to adjust the internet-connected water heaters, thermostats, and electric vehicles of customers who have opted into the program. This enables utilities to remotely raise your thermostat a couple degrees or change when you charge your vehicle to relieve stress on the grid, a small change that adds up to crucial demand reductions when multiplied across hundreds of thousands of households.
Demand response programs are another useful lever for operators to pull. They mobilize tens of thousands of customers to reduce energy use during peak demand, often in exchange for small financial incentives. In the Arizona heatwaves this summer, demand response programs motivated customers to shave up to 300 MW off demand by turning down their ACs or running their dishwasher at night. Demand response programs are a vital energy resource that rewards customers for helping smooth demand surges and can displace the need for expensive, and polluting, fossil fueled peaker plants.
Customer-side resources provide flexibility
Alongside programs that lower energy demand, utilities should lean into the resource potential of individual customers and communities looking to invest in their own distributed solar and storage projects. Incentives in the Inflation Reduction Act are poised to unleash a firehose of tax credits and incentives to install solar, battery storage, and adopt electric vehicles. These coming distributed energy resources provide flexibility that will help balance supply and demand. For example, electric vehicles with vehicle-to-grid technology can discharge power onto the grid when it’s most needed and charge when demand is lower. Utilities that proactively plan for and incentivize an interactive two-way energy system will be better positioned to maximize the benefits of distributed generation to balance peak loads and increase grid resiliency.
The most economical option
A new report from the Lawrence Berkeley National Laboratory and Brattle Group illustrates the economic benefits of energy efficiency and demand response. As seen in the figure below, the report found that aggressive investments to make commercial and residential buildings more efficient can reduce the costs of decarbonizing our power supply by a third and save up to a whopping $107 billion per year by 2050.
Energy efficiency is our most effective climate solution, helping to curb load growth over the past 40 years and shrinking the amount of additional clean energy development we need to fully decarbonize the grid. Now is the time to ramp up even further and accelerate investments in new technologies and systems. Energy management systems can collect data on a building’s heating, ventilation, and lighting to optimize those systems. Many building upgrades, such as improved insulation, high-efficiency heat pumps and smart thermostats, use readily available technologies and pay for themselves in avoided energy costs. Given that buildings comprise over 30% of our country’s emissions, there’s a lot of work ahead to increase building efficiency and fully decarbonize. A recent announcement from the US Climate Alliance, a 25-governor coalition that includes Washington and Oregon, aims to quadruple the number of heat pumps to 20 million by 2030 among a range of other efficiency and decarbonization targets. Utilities and policy makers should double down on programs that accelerate customer adoption of cost-saving technologies.
Our electric system is quickly evolving to meet the inevitability of a more electrified, decarbonized energy system. Customer-side resources provide the flexibility and resiliency we need to weather continued unpredictable weather events and the impacts of climate change. Accelerating investments in these resources now will deliver benefits to both households and their utilities and help to ameliorate the climate crisis while minimizing the impacts it has on our energy system.