The 2013 Chinese Year of the Snake (i.e., smart people who use others to achieve their goals) saw disappointing results from an industry smart grid strategy of convincing customers to change their behavior to mitigate inadequacies of the existing grid. Clearly, the demand response approach, while having some benefit, will not by itself ensure an acceptably economical, reliable, secure and sustainable electric grid for the long term.
In 2014, the Chinese Year of the Horse (i.e., people who make unremitting efforts to improve themselves) more customers will produce, store and manage some or all of their power and energy locally, and for their own benefit, not to help their electric utility survive or prosper. As Cooper and Carvallo argue in their book, “The Advanced Smart Grid: Edge Power Driving Sustainability,” a modern, sustainable grid will emerge from what has traditionally been the retail delivery edges of the grid, not from the centralized generation and transmission core. GreenTech Media’s recent report, “Grid Edge: Grid Modernization in the Age of Distributed Generation,” supports this view.
Consider three of many technology / business trends that will accelerate this metamorphosis:
Distributed Energy Generation and Storage – Many more residential, commercial and industrial customers will deploy distributed generation and storage, even if it does not result in a net reduction of their total energy costs in the short run, in order to obtain other benefits including:
- Reliability, security, disaster preparedness, privacy,
- Renewable, sustainable energy sources,
- Power quality, service options, customer service,
- Hedge against utility price uncertainty / increases, and/or
- Some measure of independence from the monopoly grid.
Many will deploy companion energy storage and / or sophisticated energy management systems. Disintermediation will grow as more customers turn to non-utility providers of distributed energy generation, storage and management services (e.g., Solar City, Power Secure, Enernoc).
The benefits won’t just accrue to customers. Distributed generation, storage and management can relieve demands on the existing bulk power grid and actually improve its reliability, security, sustainability and efficiency. This is demand, and energy response carried to the extreme! More and more utilities will recognize and embrace the benefits of a decentralized approach to energy production, storage and management.
Renewable Energy Generation and Energy Storage – More consumers will choose renewable energy, even at higher cost than traditional power sources, because of sustainability and environmental impact considerations. Renewable energy sources and storage are well suited to small-scale, distributed implementation and will be a growing component of the distributed generation and storage trend. They will steadily become cheaper and better through technological advances and dramatically increasing production volumes to meet global demand. Their operating costs are already lower than traditional power and the fuel is free. In contrast, the capital, operating and fuel costs of traditional power are steadily increasing along with growing risks associated with construction, operation and fuel supply. Finally, while there is some question about how long the globe can rely on economical availability and withstand the side effects of carbon and uranium fuels, there is no uncertainty about the availability and cost of renewable energy sources.
The Internet of Things – The Internet, primarily the connection of people to other people and things is more and more about connecting things to things. Cisco predicts that 37 billion new connections will be made to this Internet of Things (IoT) by 2020. The Smart Grid is one of the first and currently the largest example of the IoT (e.g., see “Smart Grid 101: The Internet of Things and the Smart Grid”) and will grow rapidly. Today’s grid has about 10,000 utility generation plants. If only 1% of electric utility customers move to distributed generation, that explodes to 1.5 million points. Utilities presently monitor about 150 million meters. Customers, non-utility providers and utilities will be monitoring and controlling more devices (e.g., smart thermostats, individual appliances, lighting, premises monitoring, PHEVs/EVs, on-site generation / storage, premises monitoring and automation) resulting in hundreds of millions, eventually billions more points. Customers will rely on the Internet to monitor and manage their energy. Utilities eventually will, too, because the Internet will be the best means of ensuring adequate ubiquity, capability and interoperability. The electric grid will converge with the IoT.
As Bob Metcalfe, inventor of the modem and smart grid visionary, said: “Over the past 63 years, we met world needs for cheap and clean information by building the Internet. Over the next 63 years, we will meet world needs for cheap and clean energy by building the Enernet.”
Steven Collier is an IEEE Smart Grid expert and director, smart grid strategies for Milsoft Utility Solutions.