Groups struggle to find the elusive ‘value of resilience’ as the electric grid reveals its fragility

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During an extreme heat spell several years ago, my house lost power for a week. We were taking care of aging parents and had no power or water. By week’s end, I would have emptied my life’s savings for some working kilowatts.

value of resilience

fran_kie/Shutterstock.com

After the power was restored, I quickly forgot the pain and, like most people, again took reliable electricity for granted.

That’s why it is so hard to put a value on electric resilience. It’s often subjective and changes based on the circumstance. 

But getting the number right — determining exactly what power outages cost society — is crucial, as two leading organizations for state regulators and policymakers show in a report issued yesterday: “Valuing Resilience for Microgrids: Challenges, Innovative Approaches, and State Needs.” 

“Threats to the electricity grid are increasing in frequency, severity and impact. Without knowing how much a given resilience investment will benefit customers or society more broadly, investors, policymakers and regulators are less likely to make or approve such investments, and less able to prioritize those investments,” says the report by the National Association of Regulatory Utility Commissioners (NARUC) and the National Association of State Energy Officials (NASEO).

Old grid fixes not working

2021 was a particularly tough year for the power grid. Using figures from the National Oceanic and Atmospheric Administration, the report says that in the first six months of 2021 eight climate disasters caused more than $29.4 billion in damage and led to 331 deaths. 

In February 2021, Winter Storm Uri shut down power for millions of Texans for days, leaving many without heat or water. In the fall of 2021, Hurricane Ida knocked out power to 1.2 million electric customers in eight states. After the storm, the temperature rose to 100 degrees while electric customers remained without power.

Something needs to change, and the old grid fixes aren’t working, as the report explains: “With extreme weather events and no-notice events such as cybersecurity breaches occurring at greater frequency and intensity, traditional reliability investments that may have powered through previous events are no longer meeting customer needs and expectations.”

 “On the Gulf Coast, for example, Entergy’s billions of dollars of investments in concrete and steel transmission and distribution poles and substation elevation failed to prevent widespread, multi-day outages driven by Hurricane Ida’s excessive wind speeds,” the report says. “In early 2021, Oregon’s Bootleg Fire burned more than 100,000 acres and led to important transmission lines, including those providing electricity to the California grid for peak demand, going down,” the report says.

What is resilience?

With hurricanes, fires and heat waves undermining the electric grid, the “concept of resilience has emerged as a priority for the energy system,” the report says.

Resilience goes beyond electric reliability — the ability to meet routine recurring charges. Resilience is broader and more demanding, encapsulating “the system’s ability to anticipate, absorb, adapt to and recover from all threats, including high-impact, low-frequency (HILF) disruptions like 2021’s most severe winter and summer storms,” the report says.

Determining the value of resilience

So the pressure is on to capture the elusive value of resilience. And national labs, utilities, researchers and government agencies are on it.

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As summarized by the report, the solutions they are working on include:

  • The Interruption Cost Estimator 2.0 calculator, a project of the Lawrence Berkeley National Laboratory and the Edison Electric Institute, which is expected to be completed in 2023.
  • The Customer Damage Function Calculator by the National Renewable Energy Laboratory, released in 2021.
  • The Social Burden Method by Sandia National Laboratories and the University of Buffalo, piloted in 2021-2022.
  • The FEMA Benefit-Cost Analysis Tool by the Federal Emergency Management Agency, issued in 2021.
  • The Power Outage Economics Tool by Lawrence Berkeley National Laboratory and Commonwealth Edison, piloted in 2021-2022.

The calculators take various approaches. The Customer Damage Function Calculator helps electric customers calculate power interruption costs based on specific losses that they expect. The Social Burden Method emphasizes the needs of communities during power outages, while the FEMA tool quantifies the loss of emergency services during power outages. The Power Outage Economics Tool estimates the economic impact of long power outages and takes into account how customers adapt. And the upcoming Interruption Cost Estimator 2.0 is populated based on new willingness-to-pay surveys and geographic outage costs.

Others are looking at different ways to value resilience, including economywide approaches. The New York State Energy Research and Development Authority, for example, examined what power outage would cost a community as part of its NY Prize microgrid incentive program.

Adding to the effort, several states now incorporate resilience strategies. Some have incorporated microgrid tariffs and other microgrid support programs, which are outlined in the report.

value of resiience

Courtesy of NARUC/NASEO

The report also showcases several microgrids and recommends actions states can take to improve electric resilience.

Hope

Despite the work to date, the microgrid industry continues to have a math problem — an inability to quantify its most sought-after benefit. No universally accepted tool exists, but “some approaches in development offer hope,” the report says. 

All of the work is worth it.

“Improving how PUCs and state energy offices value resilience will lead to more investments in resilience technologies such as microgrids and better outcomes for ratepayers, taxpayers and society,” the report says.

Interested in learning more about microgrids and the value of resilience? Join us in Philadelphia June 1-2 for Microgrid 2022: Microgrids as Climate Heroes.

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About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than three decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

Comments

  1. Ed Carey Sr says:

    When I was a Little boy, during WW2, we had Wardens who used to walk the streets, and yell at your house, if there were any lights showing. This was called a “BLACK OUT” so that enemy air planes could not find. My family and I would sit, huddled in the dark, listening to the latest war news, praying that my oldest brother, who was in the air force, was safe., Being without electricity, back then was a big thing, even though there were no:
    TV,
    Cellphone,
    Electric ice box,
    Electric stove,
    Electric Refrigerator,
    Electric Air Conditioners,
    Electric Heaters.
    Electric Blankets,
    Electric Cars,
    OR Computers,
    I remembered those nights when I grew up, and had a family. that’s when I first wanted to have renewable energy.
    I spent $10,000.- for a solar system. and $2.000.- for an electrician to wire up 6 solar panels, from a Co. in Florida..
    It had a huge steel case, containing special batteries. The first day I tested it, at night I switched it over to power our Floor Freezer. and Refrigerator, I was awaken in the early hours of the morning, by this continues “BEEP -BEEP -BEEP” sound. I unplugged everything, and the noise stopped, then I went thru the instruction book, to find out that ALL the batteries had been depleted. I called the guy in Florida, who had me write down instructions for how to recharge the batteries over the next 3 days, with the warning that, if I were to deplete the batteries a few more times like that, my whole set of batteries would be useless.. I shut the entire set down and have never touched it again.
    I Believe that Renewable Energy, could power a home in Florida..
    I just no longer believe, that I will live long enough,
    to see it affordable enough, to power my home in NH.

  2. I’ve always struggled with placing a value on the lost load from a grid interruption when justifying reliability and resilience alternatives like a microgrid. It occurred to me that a possible method may be to use a well-accepted actuarial approach that the insurance industry uses for business interruption. Insurance companies must make some type of calculation when setting premiums for business interruption insurance based on the probability of an interruption occurring. This results in a premium charge for coverage over a specified period of time. Using the avoided cost of the insurance premium calculated actuarily for power stoppage would seem to present a very plausible, scientific and believable explanation to managers and directors who would be evaluating microgrid alternatives.

  3. “During an extreme heat spell several years ago, my house lost power for a week. We were taking care of aging parents and had no power or water. By week’s end, I would have emptied my life’s savings for some working kilowatts.”

    This is where one “needs” a service that can actually monitor the energy use in a home and what loads can be shed like electric water heaters, washer/dryer, pool pumps, the ceiling fans, lights some receptacles in the house and refrigerator/freezer, a microwave and be able to program what appliances ‘can’ run and when. In the above response about the floor freezer and it failed. One has to do “more homework” and find something like Danzinger D.C. chest freezer where one can run one of these units for days off of batteries and continuously with solar PV charging the batteries each day. With today’s SiC power transistors being used in house inverters, one can start a relatively high surge current load and power more of the home for a longer period of time off of solar PV and energy storage during the day and into the night. With power shedding algorithms in place the system can give the home enough resiliency to be manually operated “off grid” in perpetuity with the right interactive inverter and battery storage system.