Microgrids With Hydrogen: Supporting Energy Systems for the 21st Century

The energy grid in the U.S., particularly in regions like California, Texas, and the Northeast, is overstretched and increasingly unable to meet modern demands. California’s grid, for instance, is facing unprecedented strain with the sale of more electric vehicles (EVs), and air conditioning usage surging due to longer periods of high temperatures. EVs now account for 9% of new car sales in the U.S., and as the planet warms, air conditioners are running more intensively, more frequently, and for a greater number of hours. This simultaneous rise in EV charging and air conditioning usage in an increasingly hot world during peak hours places an unsustainable burden on an already fragile grid.

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Unfortunately, EVs and air conditioning are not the only factors increasing stress on the grid. California’s ambitious climate policies are phasing out natural gas appliances in favor of electric ones. In Los Angeles County, as of May 2022, new homes can no longer include gas-fired stoves, water heaters, furnaces, or clothes dryers. This mandate, designed to reduce methane emissions, is a model that the rest of the state—and other parts of the nation—will follow.

The convergence of these factors—more EVs, more air conditioning, and the electrification of appliances and even whole industries—ensures that electricity demand will continue to increase. At the same time, the state’s aging transmission infrastructure, particularly high-voltage lines crossing California’s backcountry, poses a persistent wildfire risk. Studies show that over 85% of California’s wildfires have historically been caused by power line malfunctions, often during high winds when transmission lines spark and ignite dry brush below.

Clearly, California’s centralized grid model—built on 19th-century assumptions about electricity generation and delivery—is increasingly incompatible with modern realities. Unless we adopt a more resilient, localized, and sustainable energy model, the problems associated with our overtaxed grid will only worsen.

The Grid: A Flawed Legacy

The inefficiencies of today’s grid can be traced back to the debate between Nikola Tesla and Thomas Edison in the late 19th century. Tesla, backed by George Westinghouse, championed centralized electricity production delivered via high voltage alternating current (AC) transmission lines. Edison, on the other hand, argued for decentralized power generation using direct current (DC), which is 50% more efficient over short transmission distances and eliminates the need to rely on vulnerable long distance energy distribution networks.

Tesla’s AC model prevailed primarily because it allowed for electricity to be transmitted over longer distances. While arguably merited at that time and through much of the 20th Century, the limitations of this centralized grid model have become glaringly apparent. The reliance on long-distance power lines not only reduces efficiency, but also increases the risk of wildfires, outages, and delays in delivering power to end-users. Today, we are grappling with the consequences of that decision, with a grid that is prone to failure and a system that is incapable of accommodating the growing demand for clean electricity.

In California, the shortcomings of this aging system are painfully evident. Wildfires caused by transmission lines have already led to widespread, preemptive power shutoffs across the state. And as climate change exacerbates these vulnerabilities over the coming decade, residents and businesses face the prospect of increasingly frequent and longer duration power outages.

Hundreds of billions of dollars are now being considered to replace, extend, and bury utility lines underground, without considering that the nearly 150-year-old concept upon which the grid system is based itself needs to be reimagined based on 21st century technology. Rather, to address these challenges, we must reimagine our approach to energy generation and delivery. Rather than doubling-down on the technology of the past, the solution lies in integrating localized power generation with existing infrastructure through microgrids— small-scale energy systems that operate independently as well as in conjunction with the main grid.

The World Business Academy was founded in 1986 as a result of discussions centered on the role and responsibility of business in relation to critical environmental and social challenges. Since that time, the Academy has been a 501(c)(3) non-profit that engages the business community in better understanding and practicing the role of business as an agent for positive social transformation and solutions to humanity’s largest challenges. The Academy’s focus on climate change, energy security, hydrogen, and optimized corporate governance through advocacy of stakeholder capitalism, results from an analysis of the most important threats to human survival. Its 38-year track record of leadership includes the publication of cutting-edge books, articles, podcasts, and videos discussing these topics and many other issues of primary importance to the evolving role of business in society.

Microgrids: A Resilient Alternative

Microgrids offer a modern, scalable, and resilient solution to the problems plaguing centralized power systems. By generating electricity locally and distributing it through existing substations, microgrids can eliminate the need for long-distance transmission lines and reduce the risk of grid overload and sustained outages.

In California, microgrids can dramatically enhance both reliability as well as safety. For example, Santa Barbara County relies on an aging “extension cord” transmission line that runs from Ventura through fire-prone backcountry terrain to Goleta. This line delivers 68% of the power needed for the Ventura-Goleta “load pocket” and most of the roughly 250,000 residents living in the area are blissfully unaware of the risk they face despite Southern California Edison’s public warnings that a failure of this line—due to either earthquakes, a wildfire, or severe weather—could leave the region without electricity for months.

By installing microgrids, these risks could be immediately and significantly reduced. The microgrids, powered by renewable energy sources like solar in Santa Barbara, and a combination of wind and solar in Lompoc, could also serve as a backup in the event of a transmission line failure. Similar strategies could be applied statewide to enhance grid resilience and reliability while meeting the ever-growing demand for electricity.

Hydrogen Fuel Cell-Enhanced Microgrids: The Missing Piece

While microgrids powered by renewables can reduce dependence on the centralized grid, they face a critical limitation: intermittent energy supply. Solar power is only available when the sun shines, and wind power depends on weather conditions. To ensure a constant power supply, microgrids need a reliable energy storage solution.

Batteries can provide a few minutes to hours, but providing longer-term backup is best supplied with hydrogen. Nothing can beat a hydrogen fuel cell for reliability and for the steady supply of power without surges or “noise” entering the system. This is why all modern server farms are already electing to install hydrogen-powered fuel cells. In a similar fashion, hydrogen fuel cells provide the perfect complement to renewables in microgrid systems. Rather than curtailing power when not required, using excess solar and wind energy to produce hydrogen through electrolysis affords microgrids with stored energy for later use. As needed, stored hydrogen can be used to power fuel cells and supply immediately dispatchable electricity generation with zero emissions.

In the case of Santa Barbara County, co-locating hydrogen fuel cells and storage facilities with electrical substations would provide a reliable backup power source. And supplemental hydrogen could be delivered as needed to ensure uninterrupted electricity supply, even during extended periods of low renewable energy generation.

Another advantage of this approach is the ability of microgrids to use direct current (DC) power. Unlike alternating (AC) current, which is used in traditional grid systems, as noted above, DC power is more efficient for short-distance transmission, and better-suited for modern energy applications, such as electric vehicle charging, battery storage and powering data center operations.

By adopting DC power within microgrids, we can reduce energy losses and improve overall system efficiency. This approach, which aligns with Edison’s original vision of decentralized power generation, will be more resilient, ultimately lower in cost, and more adaptable to modern energy demands.

Winners of a Decentralized Energy Future

The shift to integrated energy systems based on microgrids and hydrogen for back-up power will create significant benefits for consumers and gas utilities.

Microgrids provide reliable, locally generated power, reducing the risk of outages and enhancing resilience during natural disasters or grid failures. Additionally, since microgrids eliminate the need for long-distance transmission lines because they can port power from one microgrid to the adjacent one ad infinitum, they lower costs associated with energy delivery. Microgrids also reduce fire risk by obviating the need for high voltage lines rather than burying them underground. Over time, these savings will be passed on to consumers in the form of lower electricity bills.

This approach also provides an opportunity for utilities –and particularly natural gas transmission companies like SoCalGas– to reinvent themselves in a clean energy future. By transitioning from their 20th Century business model of delivering natural gas through trunk lines and local distribution, such companies can repurpose the existing rights-of-way they control to deliver hydrogen via upgraded pipelines to power fuel cells located at the electrical substations. Local electric lines, rather than aging gas distribution pipes, can then provide the last-mile distribution into consumers’ homes and businesses. SoCalGas could also deliver hydrogen directly to large volume users in the “hard to abate” industries like cement and steel manufacturing from a centralized hydrogen distribution system.

It’s time that the government and industry realize that the centralized grid model of the 19th century is no longer sufficient to meet the energy demands of the 21st Century. As electricity consumption rises and the risks associated with long-distance transmission lines grow, we must embrace a new approach to energy generation and delivery. By integrating microgrids with renewable energy, hydrogen fuel cells, and DC power, we can create a more resilient, efficient, and sustainable energy system and a path to thrive in a clean energy future, while assuring society of a reliable, sustainable energy system for generations to come.

—Rinaldo S. Brutoco is the founding president and CEO of the Santa Barbara, California-based World Business Academy. Brutoco is co-founder of JUST Capital, and founder and CEO of H2 Clipper Inc.