The Lehigh Business IlLUminate podcast recently spoke with Alberto Lamadrid, an associate professor of economics who is affiliated with Lehigh's Institute for Cyber Physical Infrastructure and Energy (I-CPIE), about the recent massive failure of the Texas electrical grid and what lessons we should learn from it.
Lamadrid is principal investigator on an interdisciplinary team—along with Rossin College electrical and computer engineering faculty members Shalinee Kishore and Parv Venkitasubramaniam—that, last year, was awarded $2.5 million in funding by the Advanced Research Projects Agency - Energy of the U.S. Department of Energy. The funding supports the development of a framework and platform for asset and system risk management that can be incorporated into current electricity system operations to improve economic efficiency.
In the episode, Lamadrid says:
"I think that this grant was coming out of the need to improve the risk management in the system. Overall, the system, it is amazing how well has it held, in general, given the fact that it has changed a lot during the last 20 years. So when these markets were originally developed, they were not thinking that we were going to be having that much renewable energy. Because of that, a lot of the design features are based on suppliers that we can control, right?
But the moment that we start using much more renewable energy—as you know, we're going to be producing with wind energy—nobody has to pay for the wind. So there's no cost associated to that. But we don't know whether it is going to be as windy as our models predicted. Because of that, we ended up in a situation in which we're using market designs that were based on more controllable generation, but our portfolio generation has changed significantly.
So this is a collaborative effort with our colleagues in electrical engineering. My two colleagues are Shalinee Kishore (Iacocca Chair Professor of electrical and computer engineering and Associate Director, Institute for Cyber Physical Infrastructure & Energy) and Parv Venkitasubramaniam (associate professor of electrical and computer engineering). And this is a multi-institutional effort. Besides Lehigh, we have people from MIT, and we have two national labs, which are part of the Department of Energy: Argonne National Lab and Lawrence Livermore National Lab. And our objective is to start coming up with better ways to handle the risks, using tools from finance, using tools from banking that allow to hedge these kinds of risk. Now, overall, the fact that we're going to be using much more renewable energy sources, which are intermittent, means that we're going to be dealing with overall risk every single day. In normal operation, even without these kinds of extreme events, … day to day, we're going to be dealing with much more intermittency."
Listen to the podcast here.