War of the Currents

“History Doesn't Repeat Itself, but It Often Rhymes” – Mark Twain

Today, the US power grid is the world’s largest machine, containing more than 7,300 electricity-generating plants, 500,000 miles of high-voltage transmission lines, 5 million miles of distribution lines, 40 million units under electric utility management, and in excess of 10 million units under private management. That's 50+ million distribution transformers in operation, truly a modern marvel. This sprawling infrastructure is responsible for powering the greatest economy in the world’s history. This complexity of machinery is lost on the average rate payer in the same way the inner workings of a vehicle are lost on the average driver. But their ignorance can be explained by two "isms" summarized by the great Rick Rule:

“When people get in their car, they expected the car to turn on when they put their key in it and when they flick a switch the expect the lights to come on.”

The inception of our electric grid traces back to the early 19th century when Thomas Edison conceptualized the notion of bringing illumination directly into households, a market not catered to by arc lighting systems of the time. Edison's innovative utility was grounded in a modest 110-volt direct current (DC) supply, specifically designed to power his high-resistance incandescent lamp, a pioneering invention tailored for the system's requirements.

The efficacy of Edison's direct current system lay in its seamless integration with incandescent lamps, which constituted the predominant load during that era. Moreover, the compatibility of DC systems with storage batteries facilitated crucial load-leveling capabilities and offered backup power during instances of generator downtime. The parallel operation of direct-current generators further enhanced operational efficiency, allowing for the utilization of smaller machines during periods of lighter loads while bolstering system reliability.

Edison's introduction of a meter for billing customers based on energy consumption was another milestone in the evolution of electrical distribution. However, this meter was tailored exclusively for use with direct current systems. Additionally, the compatibility of direct current with electric motors conferred a significant advantage, maintaining its superiority over alternating current (AC) systems well into the 1880s.

Despite its merits, the primary limitation of Edison's direct current system was its operational voltage of 110 volts throughout the transmission network, resulting in a relatively limited transmission range. To mitigate this challenge and minimize the need for extensive copper conductors, generating plants had to be strategically located within urban centers, restricting their ability to supply customers situated beyond a mile from the plant.

When people think of Edison, two things come to mind: the lightbulb and Nikola Tesla. Many confuse Nikola Tesla's role in the development of America’s electrical grid. Nikola's contribution to the development of the United States electrical grid came in the form of an induction motor that ran on alternating current (AC), patented in May 1888. His design avoided the need for a commutator, reducing high maintenance costs of replacing mechanical brushes by avoiding sparking.

Imagine provided by Google Patents

Edison's main competition came from American Engineer George Westinghouse, inventor of the railway air brake. Westinghouse's contribution to America’s electrical grid came from his importation of AC technology, not its invention. Alternating current had been under development in Europe since the 1850s and was the offspring of improvements of several contributors: Zenobe Gramme, Guillaume Duchenne, Sebastian Ziani de Ferranti, Galileo Ferraris, Lucien Gaulard, Ganz Works, and Guillaume Duchenne. Alternating current had several advantages over direct current, namely the greater economics of scale. Greater central generators combined with transformers allowed for transmitting stepped-up voltage over very long distances to step-down transformers at the other end. This greater economics allowed for mass adoption of AC technology, machinery, and supply chains to facilitate AC mass adoption in America. All of the technology and equipment that runs this machine was designed to work with the current AC system. And it is the harmony of the production, demand, load, distribution, frequency, and equipment that keeps the lights on, and any disruption that throws the balance off creates curtailments, equipment protection, or blackouts, demand response.

The push for decarbonization is threatening this balance by transforming the nation’s grid from an AC system to a DC system, reverse engineering a settled system over 100 years old. In 2022, the United States generated 4,243 billion kilowatt-hours (kWh) (or about 4.24 trillion kWh), an all-time high fueled by EV growth and AI via data centers. Sixty percent of which was produced from fossil fuels (coal, natural gas, and petroleum), eighteen percent from nuclear, and twenty-two percent from renewables (hydro, wind, & solar). That is to say that in order to reduce carbon from the grid, the grid must transform from a 60 plus percent fossil fuel dependent grid to a 100 percent fossil fuel-free grid. The goal of the current administration to achieve this was expressed by President Biden's Executive Order 14057, colloquially known as "The Federal Sustainability Plan".

Through the Federal Sustainability Plan, the Federal Government will achieve the following:

• 100% Carbon Pollution-Free Electricity by 2030, including 50% on a 24/7 basis

• 100% Zero-Emission Vehicle Acquisitions by 2035, including 100% light-duty acquisitions by 2027

• Net-Zero Emissions Buildings by 2045, including a 50% reduction by 2032

• Net-Zero Emissions Procurement by 2050

• Net-Zero Emissions Operations by 2050, including a 65% reduction by 2030

• Climate Resilient Infrastructure and Operations

• Develop a Climate- and Sustainability-Focused Workforce

• Advance Environmental Justice and Equity-Focused Operations

• Accelerate Progress through Domestic and International Partnerships

Much has been written about how the administration intends to accomplish with and the limits it will run into so, here is a few highly recommend pieces to pursue:

Out Of Transmission Revisited

Grassley v. The Grid

Windbaggery

To understand why this failure is imminent, let's take a look at how wind and solar—the preferred remedies—produce and make electricity:

Solar and wind turbines do not generate AC electricity; they generate DC electricity. That DC electricity then needs to run through an inverter to be converted into AC electricity and then fed into the grid. Intermittency aside—which pundits claim can be solved with batteries and won’t be an issue—what other disadvantages come with inverter electricity? How will this pan out? Let’s take a look and shed some light on this transformation.

Here is a list of disadvantages of the administration's plan to revert the grid back to a DC grid:

• Efficiency <100% There are losses in the energy conversion of the inverter, which affects the overall efficiency of the system.

• Damage & Repair Cost.

• Cannot be fully loaded or overloaded.

• Weather effects.

But the greatest disadvantage comes from its lack of inertia.

What is inertia?

So things that are not moving need a force – like a gust of wind – to get them moving, while things that are moving will keep moving unless a force, like friction, causes them to stop. 

This makes inertia incredibly important to the stable operation of the electricity system.  

Many generators producing electricity for the grid have spinning parts – they rotate at the right frequency to help balance supply and demand and can spin faster or slower if needed.  

The kinetic energy ‘stored’ in these spinning parts is our system inertia. If there’s a sudden change in system frequency, these parts will carry on spinning – even if the generator itself has lost power – and slow down that change (what we call the rate of change of frequency) while our control room restores balance.  

Inertia behaves a bit like the shock absorbers in your car’s suspension, which dampen the effect of a sudden bump in the road and keep your car stable and moving forward.  Julian Leslie of National Grid ESO 

How do we generate inertia? Well, it is a by-product of coal, natural gas, hydro, and nuclear generators. These fuels are used to create steam to turn a turbine; the steam is then converted to mechanical energy by spinning turbines, maintaining a frequency of 60 Hz. Renewables like wind and solar don’t synchronize with the grid in a way that provides inertia. The more DC that comes onto the grid, the more incapable the machine becomes, increasing instability.

Without restoring “balance” in the nation’s energy equation that includes coal, natural gas, and oil, “energy prices will skyrocket, grid reliability will degrade, and families all across the country will suffer,” Barrasso said. More than 5,200 megawatts (MW) of oil, coal, and nuclear power plant energy generation were “retired” between 2013 and 2022, and another 5,000 MW of coal- and oil-fired generation could be retiring in coming years, according to the U.S. Energy Information Agency (EIA). Coal-fired plants that generate more than 200,568 MW of energy plan to shut down by 2029 because of “continued competition from natural gas and renewable resources” and higher operating costs associated with older, less efficient coal-fired generators, the EIA reported in November 2022. It said an average of 9,450 MW of coal-fired electricity was retired annually between 2012 and 2021. U.S. coal-fired plant retirements totaled 11,778 MW of capacity in 2022. That trend is expected to continue at least through 2029 when, the EIA projects, 23 percent of the remaining 200,568 GW of coal-fired energy will go offline. By September 2025, FERC anticipates that the amount of electricity produced by renewable energies will grow from about a quarter of the nation’s power generation to one-third of “available, installed generating capacity.” Utility-scale solar and wind generating capacity would expand from 17.37 percent of domestic capacity to 23.24 percent by September 2025, with solar and wind accounting for 11.23 percent and 12.01 percent, respectively, according to FERC. While the sharp increase in FERC’s three-year forecast for wind and solar, coupled with coal-fired plant retirements and the “apparent peaking of natural gas” as a source of electrical generation applauded by renewable energy proponents, even those who support the shift to renewables are raising alarm about the timing of a transition that is happening faster than government capacity to plan and regulate.

Let's explore the administration's initiative to electrify our economy using real-time DC inverter power technology. Transformers, crucial electrical devices facilitating the transfer of electrical energy via electromagnetic induction between circuits, play a pivotal role in power transmission and distribution systems. They adeptly adjust voltage levels, either stepping up or stepping down electrical power as needed.

A key consideration in transformer operation is temperature control. Transformers inherently generate heat during the transmission of electrical energy. Excessive heat can compromise insulation and other vital components, ultimately diminishing efficiency or causing complete failure.

To mitigate overheating risks, transformers are engineered with cooling systems, typically employing oil or air circulation to dissipate heat effectively. Maintaining a low operating temperature facilitates optimal cooling, safeguarding against overheating-related damage.

Additionally, managing temperature helps mitigate the impact of thermal expansion. Fluctuations in temperature can prompt components to expand or contract, inducing mechanical stress that may lead to deformation or failure over time.

In essence, ensuring transformers operate at low temperatures is paramount for sustaining their reliability and efficiency throughout their operational lifespan.

In conclusion, the demand on the electrical grid will be tested and stretched to it limits. And this quest for decarbonization and electrification has already pushed The United States to an all-time high for electrical demand after 15 year of flat demand. Physic, economics, and the Iron Law of Electricity will retard any true progress of the administration’s ambition and investors are giving a front row to watch and benefit from the dislocation that will appear.