The head of America’s second-largest energy provider hopes to make the foundation of his industry’s current business model obsolete.
David Crane, president and CEO of NRG Energy, said as solar power, wind power and energy storage grow more efficient, and as more American homes also come to rely on cheap natural gas, energy customers will switch from buying power to generating their own through “microgrids” – perhaps in as little as 30 years.
“There will come a day, in a generation or so, when the grid is at best an antiquated system to a completely different way of buying electricity,” he said Tuesday during a panel discussion before a crowd of hundreds at the ARPA-E Energy Innovation Summit outside Washington, D.C.
“Everyone just stop a moment and think how shockingly stupid it is to build a 21st-century electric system based on a system of 130 million wooden poles,” he said. “Stop trying to rearrange the deck chairs on the Titanic, and start talking about, ‘How do we get rid of the grid?’”
The statements were not purely altruistic – NRG plans to roll out a microgrid generator, dubbed the Beacon 10, early next year, Crane said. Able to pump out 10 kilowatts via a building’s gas line, the generator will not only provide enough power to supply a large house, but also give off heat to warm up showers, sinks, pools or the building itself.
What did raise eyebrows, though, was Crane’s projected timeline. While there’s some consensus among energy experts that a “huge movement to decentralized grids will take place,” in the words of University of California, Berkeley, energy professor Daniel Kammen, it’s happening in just three decades is far less certain.
“I have to say that’s naive,” says James Kirtley, a professor of electrical engineering at MIT. “It’s very highly unlikely that we will at any point in the foreseeable future be able to get rid of the baseload [electricity] generation that will be produced in central stations. Within a generation – that’s simply not going to happen.”
“Central grids are still very useful – the system backbone,” he says. “David Crane maybe right in spirit, but not in substance.”
The economies of scale, alone, combined with low energy prices, are intensely difficult to overcome: While residents may save some money through cogeneration – heating and powering their homes through a gas line, while largely eliminating their need for an outside electrical line – the price of purchasing the microgrid generator, and then maintaining it, will still far outstrip their regular utility bills.
“It’s hard for me to imagine houses with gas-fired turbines in their basement being competitive with the typical price of large-scale generation as we have it today,” says Ross Baldick, energy professor at the University of Texas at Austin. “In Europe, where energy prices are very high, it might make sense. In the U.S., where we have [mostly] low energy prices, I would guess it would be hard to justify.”
Others, though, were far more confident – most notably Robert Hebner, director of the Center for Electromechanics at the University of Texas at Austin. Speaking one week after hosting a microgrid conference – what he dubbed a “rodeo” – he says the country’s movement toward microgrids was not merely past a tipping point, but “already gone over a hill, and rolling.”
In fact, just as “the smartphone did for telecommunications,” the “microgrid is absolutely the killer app for the [centralized] grid,” he says.
“Places like Nome, Alaska, have always been on a microgrid, or places like the Virgin Islands. It’s not like it’s a new thing,” Hebner argues, pointing to one estimate that microgrids will start coming online in earnest within a decade. “I think we’re just crossing off the list of low-hanging fruit where it makes sense to do it today [to install microgrids], and the technology keeps getting better, and that list keeps growing.”
In fact, NRG, which officially unveiled the world's largest solar plant in California last week, has built microgrids at Princeton Hospital in New Jersey, on Necker Island in the British Virgin Islands and in Haiti.
Energy storage for the solar and wind systems remain a challenge – “the battery costs, the storage costs are killing us,” Crane said. Yet he remained upbeat.
“There are already 40 million American homes that are tied to natural gas systems,” he said. “All those 40 million American homes need is an electric gizmo in the basement that turns natural gas in to electricity and you’re done. You tell your electric company to go jump in the lake.”
Richard Lester, who is head of MIT’s department of nuclear science and engineering and joined Crane on stage Tuesday, urged energy companies to brace themselves.
“The electricity industry over the next 20 years is going to be looking at changes the scale of which we haven’t seen in this industry for 100 years,” he said.