Electric utilities and their constituencies—industrial, commercial, governmental and residential energy consumers—will all be dramatically influenced by changes in technology over the coming years. The acceleration of the digital revolution can be seen in the variety of new internet business models and in the variety of new consumer electronics transforming the market. Starting with iPods, then iPhones and iPads, a wave of revolution in mobility has swept through the consumer electronics world over the past decade, turning Apple into one of the world’s leading corporations. And in the process, we’ve all watched as mobile technologies have converged with entertainment media, then telecom, then computing itself, dramatically impacting well-established industry sectors such as music (CDs), telecommunications (cell phones), and computing (laptops). Similarly, as the new technologies that ride these waves begin to penetrate the electric utility bubble, both the supply and demand sides of the utility industry will need to adapt and accommodate new possibilities with changes in service delivery models, business processes, organizational structures, business models, etc. But beyond adapting to the technologies themselves, players in the local electricity ecosystems will need to adapt to changes in their relationships with each other, reevaluating long-standing assumptions and perceptions .
To better understand the coming technology changes and resultant impacts, it is helpful to divide our field of vision in two. First, the centralized paradigm of the distribution network—the grid itself—will see a wave of new technologies bringing new capabilities and dramatically more data to utility operators and control centers. The lion’s share of the discussion on Smart Grid to-date tends to be focused on this area, where IT meets OT (operations technology), including such well-recognized areas as AMI, demand response, and distribution automation. Second, the emerging distributed paradigm will be a more immediate and relevant area of technology change to energy consumers, who are already seeing rapid changes in four fundamental categories. Energy efficiency (EE) includes building and appliance efficiency, as well as home area networks (HAN), energy management systems, etc. Distributed generation (DG) includes smaller scale wind and solar energy, but also combined heat and power (CHP), geothermal and other types of on-site generation. In the longer term, electric vehicles and charging station infrastructure (EV) will be highly disruptive as the first mobile load to impact the system. Finally, energy storage (ES) may prove the most disruptive of all, given that the centralized paradigm is historically based on the imperative to chase load, matching supply with demand.
Informed as it is with expertise in energy and long-held opinions, the utility perspective is bound to differ from that of consumers. As distributors / suppliers of energy, utilities naturally look out from the core to the edge, and seek to improve grid reliability and performance, especially with regard to changes in load and healing of the system after disruptions. In contrast, consumers on the demand side look from the edge back to the core, but they also look increasingly at non-grid options through an entirely different lens. While many consumers may be naïve and relatively ignorant of how the current system works, they’re also likely to be more open to changes that improve their situation, especially regarding cost, carbon, comfort and convenience (what I’ve labeled “the 4 Cs” in The Advanced Smart Grid). As consumers begin to understand the need to maintain the grid and invest in its modernization, they’re also more likely to show an interest in novel technologies that meet their needs, but also delight them. Over the coming years, as consumers mature in their relationship to energy and experiment with newfound knowledge, they will leverage new tools and use on-line social networks to share new approaches to energy.
It is imperative that utilities begin to shift their priorities to position themselves out on the edge as soon as possible, so they will be there with consumers, ready to investigate and evaluate, and perhaps even influence potential new energy use cases as the new energy ecosystem unfolds, blending changes to the centralized system with changes to the distributed system. Like anthropologists, utilities will do well to study how consumers use energy in new ways, the better to document, evaluate and derive a far greater institutional understanding of the ways they provide energy and how the concept of value is changing. Understanding customer use cases will also enable utilities to be more effective in their process innovation and to make smarter decisions on applications and data design. Such preliminary, bottom-up, man-on-the-street observation and documentation of customer use cases will enable the utility to design a Smart Grid architecture that fits its territory, that is supple and resilient, and that is capable of accommodating a variety of new uses in the decades ahead.
Our goal at UtiliPoint is to explore the emerging challenges of Smart Grid with our readers and document new ways of dealing with new challenges. No doubt, the Smart Grid journey will go in a variety of directions, and solutions will be different from utility to utility. We expect that together, we will be able to define an emerging set of Smart Grid best practices by observation and analysis, and then refine them through comparison and dialogue.
