Tuesday, May 23, 2017

Planning for Failure

When I worked in the power industry everyone understood that the cost of a power outage was high, but it was impossible to put a precise value on it. There is the reputational damage, the specific costs of payouts to businesses and residences that are impacted (depending on your jurisdiction), the cost of restoring service (typically it is "all hands" in terms of available personnel and equipment), and finally the loss of trust by your all-important regulator when you come back later and ask for an inevitable price increase for your customers.

The other, more subtle, cost of outages is the fact that businesses and residents must plan for unreliable power sources, and invest in backup generation which includes fuel, testing, etc... I would call this "planning for failure". Over time, this also causes businesses to consider exiting the grid entirely in one form or another when they are large and capable enough, causing the remaining fixed costs to be borne by the remaining customers.

Here in Portland right now we are dealing with a major outage, as a fire caused a power outage to over 2000 customers downtown near the Pearl district. This isn't 2000 customers... most of these meters are large businesses and buildings and not individual houses. In practical terms, the downtown Target is probably closed, Powells' bookstore (a major tourist attraction) is closed, and many, many other smaller businesses and restaurants. It would be similar to a power outage taking out most of River North in Chicago where I used to live.

Luckily I live in a building with a backup generator, and they have fuel for 3 days, so we likely will be unaffected. That's what you get when you pay more for a recently built class A apartment rather than an older vintage walkup. But many, many folks are going to be impacted by this (it was over 90 degrees yesterday) and many restaurants are going to have to throw out their food on top of losing a couple of days' worth of customers.

As we re-think electricity and the grid entirely it is important to consider reliability in the equation. I believe that many individuals and businesses just take power for granted until it isn't there anymore. This challenge will likely be exacerbated by renewables and solar power... in this outage it is a distribution system failure, but intermittent generation of power is another variable in the reliability equation.

Cross posted at Chicago Boyz

No comments: