As revolutionary as electricity has been to our society, the source of electricity hasn’t changed much in over 100 years. Need electricity? Then either plug in (to grid-delivered power) or hook up to a battery (previously charged by the grid). The grid is the mechanism by which remotely generated power, mostly from heating water to make steam to turn turbines, travels to end points to do work, either by making light or heat, running an appliance or machine, or charging batteries. But a new class of power-related technologies, Distributed Energy Resources (DER), offers an alternative to the grid, with power that originates from non-traditional sources. And DER may yet prove to be one of the more revolutionary events in the next 100 years when it comes to electricity.
DER may be defined in different ways—I choose to divide it into four major categories. First, distributed generation (DG) is power produced on-site next to load, most typically solar PV these days, but also including wind turbines, combined heat and power (CHP), geothermal, and other technologies. Next, conserving energy in buildings—the built infrastructure—includes energy efficiency (EE) systems like spray-foam insulation and radiant barrier systems, but also low technology solutions like shading from trees and extended eaves, as well as energy management systems like the increasingly popular home energy management systems (HEMS) that give users feedback on their energy consumption. Third, another infrastructure is representative of DER—transportation infrastructure meets electricity with theelectric vehicle (EV) and its cousin, the plug-in hybrid vehicle, and the associated charging infrastructure. Finally, energy storage (ES) promises to revolutionize the entire energy distribution system, offering new time-shifting alternatives for both grid power and DER.
When we wrote The Advanced Smart Grid from 2009 – 2011, we emphasized that the definition of Smart Grid must be far more inclusive, including prepping the grid for the integration of DER technologies and convergence with the water, building and transportation infrastructures. Indeed, utilities must expand their perspectives on the potential of technology and grid modernization beyond the grid itself, to contemplate the potential impacts of DER, but as they do so, they need not limit themselves to the potential impacts of connecting DER to the grid. They should spare some time to contemplate the competitive impacts of DER as an alternative to grid power.
But what are utility managers to do about the emergence of DER and DES, when their primary responsibility is the reliable delivery of remote-generated power over their transmission and distribution grids? Multiple options come to mind, but one thing is clear—these managers ignore developments in this area at their own peril. They must act or they will certainly be acted upon. With DER and DES, we have four families of technologies, entrepreneurial third-party companies, and for three of the four—DG, EE, and ES—revenue dilution to the utility business model as it now stands with widespread adoption of DER and DES. As for EV, which may result inmore utility revenue if these cars and trucks are ever widely adopted, the primary risk has more to do with system operations, where a concentration of EVs on a single feeder could be disruptive, or where widespread charging during peak hours could exacerbate peak demand, an ongoing challenge for utilities.
To be sure, many utilities are piloting these technologies today, many more have programs that support consumer adoption of DG and EE in particular, and many believe that these changes are far into the future, a decade or more. But still others resist the notion altogether that the role of a utility could ever be to cannibalize its grid-oriented revenues with new services—according to that view, these are programs that are marginal, that regulators require, or that utility engineers can experiment with— these are not programs that could one day provide a significant challenge to grid revenues.
My conclusion after publishing The Advanced Smart Grid is that we need to re-examine our concepts of Smart Grid, recasting it from two perspectives. First, Smart Grid is an effort to modernize the grid—the conventional view today. Second, Smart Grid concerns an emerging new power area that includes any number of non-grid related topics and non-utility players, such as off-grid power alternatives, negawatts from conservation and building redesign, new energy services, and new business models that take advantage of emerging opportunities. Technology and entrepreneurialism will ensure that Smart Grid becomes a big tent, open to very different ideas and players unimagined just a few years ago.
John Cooper, co-author of The Advanced Smart Grid, has recently joined the team at UtiliPoint and its sister company, Consonus, to further the goals and realize the vision he developed over the last 15 years as a smart grid pioneer and innovator, captured in this compelling and highly useful new book. John may be reached directly by e-mail at jcooper@utilipoint.com.
