Electric utility customers can become small power producers

New technical and market possibilities were discussed by researchers and students at the São Paulo School of Advanced Science in Renewable Energies.

By Maria Fernanda Ziegler  |  Agência FAPESP – The electric power industry is undergoing a major transformation. Rising demand for competitively priced renewable energy sources and the growing use of renewables are powering a shift from the traditional logic of large-scale centralized generation to microgeneration, which will gradually become capable of meeting demand without the need for major transmission lines. 

This paradigm shift was the focus of the São Paulo School of Advanced Science on Renewable Energies, held in Brazil on July 23-August 3 at the University of São Paulo’s Engineering School (POLI-USP). 

The event assembled leading researchers in wind power, solar photovoltaic and solar thermal power, marine renewable energy, biomass power, and hydrogen power. It was supported by FAPESP under the São Paulo School of Advanced Science (SPSAS) program, which aims to attract talented young researchers to graduate courses and research centers in São Paulo State. This school was attended by 160 students, 50 of whom came from over 33 other countries with full financial support from FAPESP. 

“We can’t know yet, but it may well be that in 40 or 50 years, what’s happening now will be called a revolution, like the industrial revolution, the electronics revolution and the IT revolution. We’re in the middle of a massive change in the way we generate and distribute electricity, where customers cease to be passive recipients of power and become generators themselves,” said José Roberto Simões-Moreira, who chaired the school’s organizing committee.

Simões explained that the transformation of customers into local generators (microgeneration) involves many challenges. “All this has to be managed,” he said. “When customers can sell the power they generate via photovoltaic solar panels or small wind turbines, the concept of centralized power generation changes. Many distributors are already preparing for the change by selling services to help customers adapt by managing and storing electricity.”

Local power produced using photovoltaic solar panels or small wind turbines could be deducted from the customer’s monthly bill, but Brazilian law currently does not allow the sale of any surplus power. “As a result, no one will want to invest in a system to produce surplus power by microgeneration,” Simões told Agência FAPESP.

Hence, there is a need to develop new technologies for power management and distribution systems, such as smart networks and distributed generation, as well as the application of energy efficiency concepts.

“What we’re seeing is a movement whereby technology drives usage, and usage drives technology enhancements, producing a virtuous circle. This leads to an increase in scale and a reduction in prices, as is usual in the industrial field,” Simões said.

Photovoltaic solar power is a case in point. In a presentation to the SPSAS on Renewable Energies, Stefan Krauter, a professor at the University of Paderborn in Germany, commented on the falling cost of power produced by photovoltaics. 

“Twenty-five years ago, when I began working with solar power, its production cost was 2 US dollars per kilowatt-hour. That’s very expensive. Now it’s only two cents per kWh. This cost is competitive with that of thermal power from coal or natural gas,” Krauter said.

However, customers pay close to 1 USD per kWh because of tax and distribution costs. “Generally, the price falls 24% whenever production doubles,” Krauter said. “The problem with pricing isn’t in generation but distribution. Taxes, for example.”

According to José Aquiles Baesso Grimoni, a professor at POLI-USP, there are obstacles to the expansion of distributed generation and especially the distribution of power produced by consumers, now known as “prosumers” (a portmanteau of producers and consumers). These obstacles occur because in many countries, electricity consumers who also produce power can inject any surplus into the system, obtain a discount, and become independent from distribution utilities, making it harder for the distributors to maintain their network infrastructure.

“If customers generate their own power and don’t need to buy it from a utility, who will pay for the grid? So there’s a discussion about separating power from the wires. Consumers will pay for the wires even if they don’t need the distribution network. This is already happening in Germany and the United States,” said Grimoni, who was also one of the speakers at the SPSAS.

Although renewable energy technology is well established, there is room for technological advancement. Photovoltaic panels, for example, are increasingly made up of polymer film membranes, making the matrices installed on the roof of buildings more flexible. 

“Even with the market established, opportunities exist. In the case of photovoltaics, for example, there’s the problem raised by the fact that they only produce during the day. So you need a way to store the power. It’s been shown here at this SPSAS that storage accounts for 50% of a photovoltaic station system. That means batteries,” Simões said.

The same is true of wind power, currently the fastest-expanding renewable in Brazil. However, wind power is still generated on a centralized basis by large wind farms connected to the national grid, enabling the power produced at one end of the country to be consumed at the other.

Renewable power

Renewables – wind, biomass and solar – currently account for a larger share of Brazil’s energy balance than fossil fuels. Data from ANEEL, the National Electricity Agency, show that hydroelectric dams contribute 66.7% of total generation, followed by fossil fuel power plants (15.9%), wind (7.8%), biomass (8.7%), various imported sources (4.8%), nuclear (1.8%) and solar power (0.7%).

According to Grimoni, the energy balance is becoming increasingly hybrid, and all renewables will tend to play a part. “This enables us to create complementary systems, combine production methods, analyze situations such as drought, for example, and spot locations in which a particular source is more worthwhile,” he said.

For Simões, “The energy policy issue has to be addressed. We appear to be going out of phase: renewables are on the rise and the rest are on the wane, yet we’re investing more in the energy sources that are waning, such as thermal power from fossil fuels.”

There are other challenges, such as biomass power. The main use of this source is in cogeneration, whereby sugar and ethanol plants burn sugarcane bagasse and generate revenue by selling surplus power to the grid.

“It’s an intelligent system because it produces power precisely during the dry season. So much so that sugarcane bagasse is becoming a commodity. There’s a market for this,” Simões said.

Hydrogen from ethanol 

Hydrogen is another very strong competitor and was discussed in depth at the SPSAS on Renewable Energies. 

Hydrogen fuel can be produced by water electrolysis, for example. It is possible to produce hydrogen, store it, and use it in a fuel cell to generate electricity at night. 

“Studies have been performed here in Brazil to validate several techniques for producing hydrogen not by electrolysis but via certain chemical reactions. One of these could use ethanol, for example,” Simões said. In this process, the ethanol reacts with steam to produce hydrogen gas.

Simões said that hydrogen production from ethanol could be an additional opportunity for the sugar and alcohol industry. “Automotive fuels in Brazil are either petroleum products – gasoline, diesel and natural gas – or ethanol. But if the problem of the cost of vehicle batteries is solved and electric cars flood onto the market, what will we do with our ethanol? This should be a concern for our sugar and alcohol industry. Fuel cells with hydrogen produced from ethanol could be the answer,” he said.