To catch a glimpse of what the utility of the future may look like, one needs to look no further than Puerto Rico, an island that went completely dark for a week after being hit by Hurricane Maria on September 20. In fact, one month after the storm, approximately 85% of the island remained without power, as reported by The Washington Post. Forecasts further predict that it may take an additional four to six months to fully restore power across the island in a blackout that is without precedent in the industrialized world.
Coastal communities, which are especially vulnerable to the weather, can light the way for the future of utilities.
Before the storm, Puerto Rico’s entire electrical grid was managed by a single utility company. As the Washington Post reported a few days after the storm, the hurricane “dealt a new blow to Puerto Rico’s bankrupt electric company—knocking out power for the entire island and imposing costly repair burdens on a utility that was already struggling with more than $9 billion in debt, poor service and sky-high rates.” They went on to indicate that “even before it was hit by [Hurricanes] Irma and now Maria, the Puerto Rico Electric Power Authority said it needed more than $4 billion to overhaul its outdated power plants and reduce its heavy reliance on imported oil. The company filed, in effect, for bankruptcy on July 2.”
How can a place with a decrepit electricity system become a model for the future of the utility industry? The power outage, with no apparent end in sight, created an opportunity for new energy companies to approach the island as the perfect test ground for their minimum viable products for the utility of the future.
As reported by NPR soon after the storm, new energy companies rushed in as they saw an opportunity to create a better grid from the ground up. These organizations included solar power companies, like Tesla in the U.S. and Germany’s Sonnen. According to industry analyst Jessica Hester, “Companies like Sonnen, which makes batteries that store solar energy, are offering to help build ‘micro-grids’—small-scale, closed-loop energy systems—that could initially support things like health clinics and cooling centers for storm victims and slowly grow to greater capacity.” Meanwhile, Tesla sent “hundreds of its solar batteries to Puerto Rico” and started talks for a bigger engagement with the local government.
Sometimes, natural disasters can provide an opportunity to rebuild from the ground up an idealized version of what ‘should be’ without the burden of legacy infrastructure and with minimum, if any, opposition. As the NPR analyst put it, “humanitarian interventions are likely to be partnered with a business end goal…It’s an opportunity to help, but also an opportunity to grow the renewables industry there.” Hester further added, “many of the sources that I’ve been speaking with, from former EPA officials to humanitarian officials, are saying that they feel it’s irresponsible to just build the infrastructure back up to the condition it was in before the disaster…fixing a broken system, is not really a fix at all.”
Replacing a Broken System
There are several reasons why Puerto Rico’s electric grid turned into a human and economic nightmare in what was literally and figuratively the “perfect storm.” For starters, a single company managed the grid for the entire island, which reduces the resiliency and the redundancy of any system. Almost all of Puerto Rico’s electricity is generated by burning fossil fuels, which must be imported, with the consequential interruption of shipments when a storm like Maria hits the island. There was also the dire financial situation experienced by the utility, which prevented it from modernizing equipment.
According to the New York Times, Puerto Rico is dealing with the prolonged power outage by becoming a “generator island” in the dirtiest possible way. People are buying diesel generators by the thousands to gain some level of power while waiting for the grid to be restored. This is one more pointer for the solar and battery companies that have gone in to help evolve Puerto Rico’s grid: power at the edge of the electricity system needs to be part of the solution on an island where hurricanes are common.
What will hopefully grow out of this perfect storm is a prototype for the utility of the future, if industry and government continue to cooperate to replace rather than repair. Companies like Tesla and Sonner are just the tip of the iceberg for creating a model of how a sustainable utility can also be a resilient one that thrives economically.
The good news is that the local government and the companies that rushed in to help Puerto Rico will not start from zero when it comes to devising the model for a more resilient and efficient electric grid. Several utilities around the world are already on their way to diversifying fuel sources, incorporating energy from the edge of the grid (such as solar produced locally), and tweaking their business models to ensure it all makes economic sense. What the opportunity to start fresh will add to this mix is a re-thinking of the grid itself—a better model for keeping the lights on, and a way to power cities without damaging the environment.
New Energy for a New Grid
The resilient model for the future of electricity sourcing and delivery includes plenty of distributed power generation at the edge of the network. Local resources like solar and wind have a big role to play here alongside energy storage companies (essentially batteries to store solar and wind for when the sun and the wind are not available). Other sustainable sources, such as Hydrogen 2.0, could also play an important role to power the utility of the future, via energy and heat that can be produced at the edge of the grid from water 24/7 to complement variable sources like solar and wind.
A smart mix of available clean energy sources, alongside a physical delivery system and business model made for today’s energy realities, can help to ensure that lack of power does not further aggravate the suffering of people who go through natural disasters.
As the Hydrogen 2.0 ecosystem gains momentum, we’ll be sharing our views and insights on the new Hydrogen 2.0 Economy. We also update our blog every week with insightful and current knowledge in this growing energy field.