The availability of electricity is essential for any off-grid, remote location, such as oil and gas and mining projects. However, research shows that connecting to the utility power grid can take as long as three years.
This in-between time is called the utility gap: The period between the start of a project and the connection to the utility power grid. During this gap, there is no access to reliable and consistent power from the grid, which can significantly impact your project’s progress and completion. This delay can lead to setbacks, lost productivity, increased expenses and loss of revenue.
Temporary power solutions help organizations avoid these issues to bridge the gap until the utility power is connected. Read on as we explore the challenges companies face in securing their projects to utility power and the benefits temporary power solutions can provide.
Understanding the Utility Gap
First, let’s dig a bit deeper into the utility gap.
The power grid is fundamental to modern society. It provides electricity to power homes, businesses, industries and other essential services, such as health and IT. However, a range of factors can impact the grid’s reliability. And when it fails, both businesses and individuals experience significant disruptions and potential financial losses.
In addition to grid failure, the utility gap occurs for several reasons, such as delays in obtaining permits, lack of infrastructure, lack of planning or remote project locations where the grid is unavailable. Temporary power solutions can provide a reliable source of electricity while businesses and individuals wait for the grid to be restored or while waiting for a permanent connection to the grid.
Many factors potentially contribute to the fragility of the utility grid, which causes it to become an unreliable power source for your project. Some of these factors include:
- Capacity Issues. When you cannot predict how much electricity you need at any given time, the utility may not have enough capacity to meet your demand. This leads to potential power outages, brownouts and issues with grid reliability.
- Lack of Planning. Without strategic planning and forecasting, the utility may not invest enough in upgrading and maintaining the infrastructure to meet growing demands for electricity. This leads to an aging grid that is vulnerable to breakdowns and failures. Conversely, the lack of forecasting and planning also leads to infrastructure overbuilding in areas that don’t need it. It results in unnecessary costs and inefficiencies, which are ultimately passed down to consumers through higher electricity bills.
- Increased Demand. As populations grow, the demand for electricity increases. This pressures the utility grid to keep up, leading to power outages and brownouts during peak usage periods. This was exacerbated by COVID-19 and the shift from in-office to home-office environments.
- Extreme weather, such as hurricanes, wildfires and tornadoes, can damage power lines, transformers and other grid infrastructures, leading to power outages. This damage often takes several days or weeks to repair. Emergency agencies around the world expect these catastrophic weather events to become more frequent and spread around certain areas of the world.
- Supply Chain Issues. As with many industries, supply chain issues impacted the manufacturing and delivery of critical components for grid operation and maintenance, such as semiconductor chips. In addition, this has affected the power grid since transformers, substations and even power generation equipment are scarce.
- Renewable Support. Though renewable energy positively impacts grid reliability, it also presents challenges. Renewable energy is often intermittent, meaning its output varies depending on uncontrollable factors, such as weather conditions. This variability makes it challenging for grid operators to maintain a consistent electricity supply, leading to reliability issues.
These factors can significantly impact projects, leading to disruption and loss. Organizations need to understand their utility fragility to strategize ways to maintain operations during disruption.
Where the Utility Gap Lies and Why
Several factors contribute to these gaps, which are critical to understand. Addressing them takes proactive steps and puts an effective plan in place.
Grid Code Changes
According to the International Renewable Energy Agency, grid codes set rules for power systems and energy market operations. They enable network operators, suppliers, consumers and generators to function more efficiently across the market. Changes to these codes can result in a utility gap due to new requirements or standards for the power grid operators to learn how to adopt, implement and execute.
A “Duck Curve” in Peaking Power Plants
The duck curve, which gets its name because the graph shape resembles a duck, refers to a graph that charts the difference in electricity demand and the amount of available solar and/or wind energy throughout the day. When the sun is shining, solar floods the market and then drops off as electricity demand peaks in the evening. There is also a high correlation between the sun and wind, exhibiting complementary peaks in production. So, states like Texas where wind is prevalent see this phenomenon as well.
Traditional power plants may struggle to meet this sudden and significant increase in demand for electricity, resulting in a power supply gap.
Shut Down of Coal Mines
A significant reduction in coal use is essential for reducing carbon emissions and meeting global climate goals. However, phasing out coal also raises challenges in impacts on the community, energy affordability and electricity supply security.
If a significant portion of a region’s electricity generation comes from coal-fired power plants that depend on local coal mines, shutting down these mines can cause a fuel shortage for these power plants. It results in decreased electricity production, power gaps and blackouts.
The Cost of Waiting
Most oil and gas projects and discoveries take place far from a power grid. In addition to being remote by nature, these projects demand large amounts of power ranging from a few megawatts (MW) to several tens of MW, or more. They often require continuous power to run, resulting in significant power requirements.
Connecting a project with a large power requirement to the utility typically involves multiple steps. The exact process can vary depending on the location and specific requirements set by the utility company or regulatory authorities. Some of the general steps include:
- Determining feasibility and requirements, such as existing infrastructure, available capacity and regulatory guidelines.
- Contacting the utility company for guidance on specific steps and documentation.
- Conducting a technical evaluation to ensure compliance with safety standards.
- Submitting applications and documentation, such as lease agreements, proof of ownership and electrical load calculations.
- Installing infrastructure and ensuring necessary site preparations.
- Commissioning after necessary tests and inspections, and finally, energization.
As we noted in the introduction, this process can take up to a few years to accomplish. Many potential costs are associated with waiting several months to years to connect to the utility grid.
Project Delays. Waiting can have a significant financial impact if it results in project delays. Delays may incur additional costs for extended labor, equipment rental and site management. They also impact the project’s revenue generation or delays a return on investment (ROI), leading to financial losses or missed business opportunities.
Financial Costs. The interest accrued during the waiting period adds to the overall project expenses if the project is financed. It results in higher interest payments, impacting the project’s financial viability and ROI.
Opportunity Costs. Waiting for a utility grid connection leads to missed business opportunities and revenue generation. If the project cannot operate or function at total capacity without a reliable power source, it may lose potential customers, contracts or market share. These missed opportunities have long-term financial consequences for the project.
Regulatory and Permitting Costs. Project delays can result in additional regulatory and permitting costs. Depending on the jurisdiction and delay duration, there may be a need to renew or extend permits, obtain other approvals or comply with new regulations. These additional costs can contribute to the financial burden of waiting for a grid connection.
The Importance of Reliable Power for Remote Project Sites
Power is non-negotiable: It’s needed to run critical equipment from pumps to compressors to processing units. Production activities may be disrupted or halted without a reliable power source, resulting in significant financial losses and delays. Reliable power ensures critical equipment and operations function seamlessly, minimizing disruptions and maximizing productivity.
Beyond powering critical and sensitive equipment, reliable power is essential for the safety and well-being of the crew working on remote project sites. Continuous power is crucial for maintaining climate control, ventilation systems, lighting and medical facilities in harsh or extreme conditions, such as offshore installations, deserts or remote research stations.
Reliable power is essential to ensure the smooth operation of critical equipment, maintain project timelines, enhance safety measures and enable effective communication. It reduces downtime, improves productivity, safeguards personnel, and minimizes financial and operational risks associated with power interruptions. It is vital for successful and efficient remote project execution across various industries.
The Benefits of Temporary Power Solutions
Temporary power solutions offer critical advantages and benefits as a power source for operations while organizations wait to connect to the utility. Temporary power sources, such as turbine and reciprocating generators, provide fuel efficiency, quick mobilization, and uninterrupted, reliable power.
Technology and fleet options available include:
Reciprocating Engine Generators. These are reliable and versatile temporary power solutions with robust power generation, portability, fuel availability, durability and reliability. They deliver high-power output and are easily transported to locations. Today, natural gas fuel is widely available through compressed natural gas (CNG) or liquefied natural gas (LNG), which translates to more fuel-efficient solutions, reducing operational costs. With their high reliability and safety features, diesel generators provide uninterrupted power efficiently.
Gas Turbines. They provide a reliable and efficient power source, particularly for large-scale applications and industrial settings. Gas turbines can deliver high power output and have excellent load-following capabilities, allowing them to respond quickly to changing power demands. They are easy to transport and install with a compact size and modular design. They’re also highly efficient, offering fuel efficiency and lower emissions than other power generation technologies.
Natural gas generators range from a few kilowatts (kW) to several MW of power output, which is significant compared to the average household power requirement, which runs from one to five kW on average. Gas turbines are primarily designed for larger-scale power generation and have outputs ranging from a few MW to hundreds. They are well-suited for grid-scale power generation or large-scale temporary power needs.
Temporary power solutions offer several benefits:
- Temporary power solutions provide flexibility in meeting power needs in various situations. They can easily be scaled up or down to match the specific power requirements of different projects, events or emergencies. This flexibility allows for customization and optimization of the power supply, ensuring that the temporary power solution aligns with the demand.
- Quick Deployment. They can quickly be transported to the desired location and set up quickly. This deployment speed is crucial in urgent situations, construction projects, and remote areas where a reliable power source must be established immediately.
- Reliable Power Supply. Temporary power solutions are designed to deliver a reliable and consistent power supply. They’re equipped with robust components and backup systems to ensure uninterrupted operation.
- Cost Efficiency. Temporary power solutions offer cost advantages over waiting to establish permanent power infrastructure. They eliminate the need for extensive capital investments, maintenance costs and infrastructure development, making them economically viable for temporary power.
- Grid Independence. Temporary power solutions provide grid independence, allowing power to be generated on-site without relying solely on the local electrical grid. This independence is valuable in remote areas with limited grid access.
- Smooth Transition to Grid. In cases where permanent grid connections are being established or repaired, temporary power solutions bridge the gap and ensure an uninterrupted power supply during the transition period. Once the grid connection is available, the temporary power system can be seamlessly integrated, ensuring a smooth transition from temporary to permanent power infrastructure.
When meeting temporary power needs, the right provider is essential to get these advantages. Distributed Power Solutions (DPS) is a trusted provider of temporary power solutions in North America, offering flexible and scalable options to meet diverse organizational requirements. With expertise in the field, DPS ensures a quick deployment of temporary power systems, enabling prompt response and setup in construction sites, remote locations, events or emergency and disaster recovery situations. DPS prioritizes reliable power supply, employing backup systems that deliver consistent and uninterrupted power. DPS also offers product support services, including design, engineering installation and operation, to help solve your power needs.
All our equipment is current with the latest efficiency, safety and compliance standards. Our gas turbines are well equipped with the latest dry low emission (DLE) combustion system technology, which helps reduce harmful pollutants released into the air during combustion. This allows your project to achieve lower emissions without reducing the combustion temperature. This equipment achieves a cleaner and more environmentally-friendly operation compared to traditional generators.
Together, our power fleet consists of 400MW, equivalent to the power consumption of over 300,000 households!
Preparing for Temporary Power Rental Solution
Choosing the right temporary power solutions partner is critical for a successful project. Selecting a partner with the right expertise, reliable and compliant equipment, and industry knowledge and experience is essential. The ideal company will have a proven track record in understanding oil and gas operation requirements, delivering engineered solutions, and deploying reliable customer equipment and product support.
Steps to Partnership
To initiate a successful partnership, organizations need to follow a series of steps:
Assess Power Need
Certain locations and projects make accessing a local utility entity nearly impossible. In these cases, alternative solutions can act as a total solution themselves. Regardless, if you need a backup solution or temporary power solution to fill the utility gap, you will need to assess the power required to run your operation. DPS can work with you to help you determine this need.
A feasibility study is needed to analyze the critical aspects of a project to determine the likelihood of its success. There are several nuances and steps in conducting a feasibility study, requiring a team that is familiar with the process. DPS has the expertise and is well-versed in assisting companies with conducting feasibility studies to determine the risks and returns of pursuing a plan of action.
While the specific regulations can vary based on industry, location and jurisdiction, there are some key regulatory aspects that a temporary power solutions partner must be able to work through to ensure the project is compliant.
Due to the unique and complex nature of oil and gas operations, choosing a power solutions partner that offers turnkey engineered solutions is crucial. DPS can provide customization to meet the specific power requirements based on a project’s scope, meet compliance and industry standards, integrate with existing infrastructure, allow for scalability, and provide expertise and 24/7/365 support services.
Approvals and Execution
Once the steps above have been compiled, presented and reviewed, you can secure your partnership with a temporary power solutions company and begin to execute the project.
Case Study: Emergency Power in One Week
The benefits of an experienced local power solutions provider were powerfully demonstrated when DPS responded in the wake of Hurricane Laura.
When the natural disaster cut off power to half a million customers on the Gulf Coast, the entire electrical grid became unstable, and a backup power source became necessary while technicians worked on repairing the storm damage. The region’s primary utility provider announced that it was the most challenging restoration they faced, and it would likely take weeks to restore power.
The next day, construction services and electrical engineering company, Saber Power, met with DPS to find a temporary power solution for one of their key customers, Energy Transfer. The organization needed 40MW to power its facility, but its utility provider could only temporarily allocate 8MW.
With only 24-hour’s notice, DPS immediately got to work. With its strong history as a first responder, the company was experienced in providing support in stressful situations. It ensured that the equipment was serviced and ready and even made the financial decision to secure trucks to ensure they could service at a moment’s notice.
When Energy Transfer greenlighted the plans, DPS was ready to head toward them within an hour’s notice. Within 24 hours, more than 30 trucks were at the site and prepared to work. Working alongside Energy Transfer and Saber, DPS worked diligently to set up cables, trays, piping and electrical interconnections. Because of its experience and preparation, the extensive team met each unforeseen challenge to finish the job as quickly as possible. DPS completed the job within six days of getting the green light.
DPS has a long history of helping companies in dire situations as a power solutions provider. The team knows how to rise to the occasion and provide critical power during natural disasters and has the experience to guide companies in making plans.
Meeting the Utility Gap in Remote Locations with Temporary Power
Bridging the utility gap in remote project sites requires innovative solutions and partnering with temporary power rental solutions companies. These providers specialize in providing flexible, reliable and scalable temporary power solutions tailored to specific project needs. Organizations can benefit from quick deployment, cost efficiency and seamless integration with existing infrastructure by partnering with them, ensuring uninterrupted operations.
For companies setting up temporary power for remote project sites, it’s recommended to carefully assess power requirements, engage with reputable rental solution providers, and communicate project specifications effectively. By following these recommendations, companies can successfully deploy temporary power solutions, overcome the challenges of remote locations, and achieve their project goals efficiently.
Headline photo: Microgrid power solutions to reduce downtime. Photos courtesy of Distributed Power Solutions.
David Velosa is the Director of Commercial Operations for Distributed Power Solutions (DPS Energy). He has over 10 years of experience in the mobile power generation market, bringing reliable and cost-efficient solutions to various markets on the global stage, including mining, oil and gas, industry and utilities. With a bachelor’s degree in electrical engineering and a master’s in business with a focus on finance, he understands the financial implications of power shortfalls, not only on loss of revenue, but also on additional costs due to a loss of power.
Oil and gas operations are commonly found in remote locations far from company headquarters. Now, it's possible to monitor pump operations, collate and analyze seismic data, and track employees around the world from almost anywhere. Whether employees are in the office or in the field, the internet and related applications enable a greater multidirectional flow of information – and control – than ever before.