The Smart Grid will modernize and transform our energy infrastructures to incorporate more renewables and reduce use of fossil fuels for electricity and transportation. But energy surety or autarchy requires more than a transformation of energy sources to supply electricity. True energy surety requires the right grid provisioning – how our electricity grid is architected and managed; how our electricity markets are organized; and how our regulatory policies support these actions. There are two very different directions the Smart Grid could take. Given the critical social-economic importance of electricity, we must give serious attention to the policies our elected and appointed representatives make in support of one direction over the other.
One path continues the current “command and control” model of centralized, remote, and large-scale generation that is transmitted at high voltage for eventual distribution to consumers. These consumers are mostly allowed to participate in the electricity market through curtailment programs like demand response (DR) that offer some monetary incentive to reduce electricity use (create negawatts) at specific times. The other direction is a decentralized grid of distributed energy resources (DER) that produce and store electricity close to points of consumption. Consumers can become producing consumers (prosumers) and participate in generation of kilowatts or negawatts. In short, it is the choice between a “business as usual” model with utilities as electricity suppliers or a new business model where utilities or other entities become DER managers.
When faced with that choice, the smart questions are, which path offers the optimal grid reliability and resiliency? Which choice makes consumers less vulnerable to service disruptions and reduces the grid brittleness experienced after severe weather events (or potentially future cyber attacks)? A growing number of industry experts and organizations are advocating that a decentralized grid based on a transactive energy model is the best answer to these questions.
Intrepid nations like Germany are pioneers in moving along the decentralized path. Two books offer excellent information about Germany’s Energiewende or Energy Transformation. The Decentralized Energy Revolution by Christoph Burger and Jens Weinmann describes the early lessons learned through in-depth interviews with a number of stakeholders in the evolving energy supply chain. The second is an ebook from Osha Gray Davidson titled, Clean Break. Both publications deliver thought-provoking information about Germany’s plans, players, progress, challenges, and potentials, and how we can apply their learnings to our advantage.
Germany is transforming its energy infrastructure to achieve energy autarchy – self-sufficiency in energy production and independence from fossil fuel. The identified drivers of this transformation are technologies, regulations, and empowerment, which includes ideas like “Think global, act local” and consumer activism, particularly around nuclear energy and climate change. In the USA, the drivers for our energy transformation are technologies, regulations, and finance mechanisms.
For example, today’s regulations are structured to support business-as-usual in which utilities function as electricity suppliers. A transition to energy surety or autarchy will require regulatory revisions to support utility transitions to DER managers, and create market conditions that encourage new participants delivering kilowatts or negawatts.
Defaulting to the business-as-usual model for the Smart Grid may seem like less work upfront, but it essentially guarantees a grid that continues to break every time the wind blows with concomitant billions of dollars of lost economic value to regional and national economies. Creating energy surety through technology, regulations, and financial mechanisms to provision a decentralized grid needs serious discussion in the USA.
On February 28, I’ll moderate a panel session at the Distribution Automation conference in Raleigh, NC that will explore regulatory challenges in the USA to provision a decentralized grid with extensive DER deployments.