As I write my last IssueAlert article of 2011, I reflect on my previous work this year (see IssueAlert Archive), as well as Smart Grid articles I’ve read lately that anticipate trends for 2012. In IssueAlert articles this year, I’ve laid out the elements of change that are besetting electric utilities around the world, as Smart Grid moves from a concept to reality in a variety of venues. In looking at the year ahead, some articles highlight such potential developmental areas as renewable integration, data analytics, energy service business models, demand response, smart buildings, electric vehicles, energy storage, solar PV and combined heat and power (CHP) generators, and more. Clearly, we are on the cusp of significant change. But other articles question whether Smart Grid still has legs in North America (and around the world), where some combination of outdated or misguided regulatory guidance, low natural gas prices, the lack of leadership from Congress, cyber security risks, immature interoperability standards, conservative utility culture, consumer resistance, and lack of available capital will slow things down. So, pick your future from this menu—surely, the actual prospects for 2012 must be based on the dynamic tension between optimistic change potential from progressive technologies and business advances that pull us into the future, and the pessimistic outcomes described by those who cite the litany of challenges ahead, which will hold us back in a variety of ways.
So here I offer my own predictions for 2012—I’ll keep the list short, providing three favorite trends that I see blossoming in the next 12 months.
Dual-Track Smart Grid. Smart Grid discussion and concepts will divide into two camps in the coming year: the first will be utility-centric, much as it is today, focused on AMI, grid modernization, distribution automation, peak power reduction, and integration of new technologies into grid operations. This track is “inside baseball,” where industry insiders compare notes and guide change to support the utility industry. But there will be an increasingly prominent second track for Smart Grid, populated by new faces—non-utility players discussing issues from a more consumer-centric perspective, focused both on nascent markets associated with curtailment (“demand response” from the utility perspective) and distributed energy resources (DER), a term that includes smart buildings (energy efficiency, etc.), smart transportation (electric vehicles, charging stations, etc.), distributed generation (solar PV, CHP, etc.), and energy storage. This more expansive discussion may be pursued with or without utilities and will be promoted by hungry technology companies in search of early adopter markets.
Distributed Energy Services (DES) and Solutions. Companies will begin to offer services that leverage and improve on stand-alone DER technology product offers. A power purchase agreement (PPA) is a good example of a value-added service associated with solar PV panel sales; the addition of financing, installation services and long-term service contracts has added considerable value and opened the PV market up to many new participants since PPAs emerged. In time, combinations of DER technologies with services will provide even more value to emerging markets—a simple example is adding a small amount of energy storage to PV.
The fullest expression of a DES solution would be a micro grid, which can operate either as a collection of technologies and services independent of the grid (“islanding”) or as an interdependent node on the grid that can take or provide power in cooperation with the utility.
Data Analytics-Driven Products and Services. In 2012, more and more utilities will mature into a new state, as they begin to receive a dramatic amount of data from their sensor devices—principally, AMI systems—that they will input into digital billing systems that will support more dynamic rates (time-of-use, etc.). But the advent of meter data analytics (MDA), beyond simple meter-to-cash, promises a variety of data-driven products and services, any one of which could dramatically alter the utility value proposition, as well as the markets that utilities serve. Since most utilities are relatively immature when it comes to marketing—for example, compare the industrial, commercial, residential and governmental rate classes of the regulated utility with micro segments in the retail consumer marketplace—for marketing impact alone, the advent of Big Data holds great promise to direct utility planning, as well as product and service development.
Just scratching the surface, these three trends suggest that the utility world has both the capacity for change and a compelling need to change, in order to adapt as technology provides energy consumers with an alternative to grid power. Electricity will only become more foundational in our daily lives going forward, but for most, it won’t remain a service with a narrow set of options like we all currently have today—plugging into the grid and paying a monthly bill. Given that societies and economies are driven to improve as they become more complex over time, they are bound to adopt new technologies as they become more available and more affordable. We have only to look at other disruptive periods in the past to understand the potential for change (e.g., moving from railroads to automobiles or from the telephone on the kitchen wall to the iPhone in my pocket). Change will neither be as fast as eager proponents hope, nor as slow as utility traditionalists imagine. Given the inherent uncertainty associated with change, utilities may reflect on what actually lies within their control—namely, the management of their organizations—and begin to acquire skill sets oriented for the future, to reorganize to gain flexibility and efficiency, to pilot new technologies and to experiment with new business models to gain first-hand experience.
I, for one, can’t wait to see what the New Year holds.
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.
