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How the “3 Ds” and “Prosumers” are Helping the Grid Evolve

July 28, 2021

There are three macro trends that have made headlines in the energy industry over the last few years concerning the grid’s evolution. We call them the three D’s: decarbonization, digitization, and decentralization.

Most regular readers of The Current will likely be familiar with the three D’s, but let’s offer a few quick definitions for those who aren’t.

The three D’s each refer to the dominant characteristics that will define the grid of the future. Unlike the grid that dominated the 20th century, the grid of tomorrow will be cleaner (decarbonized), technology-driven (digitized), and will incorporate more sources of distributed generation at multiple points on the distribution grid (decentralized) to complement centralized generation on the transmission grid.

While the three D’s are ultimately viewed as desirable for the grid of the future, they’re creating challenges for grid operators and distribution grid operators (utilities) in the present.

As solar and wind resources have become less expensive, they’ve been increasingly integrated into the grid to make for a cleaner generation mix, albeit one that creates intermittent generation and poses reliability concerns. At the same time, fleets of electric vehicles plugged into the grid have created an unclear demand profile. These challenges add to another the grid has faced for some time, namely an underutilized generation and transmission infrastructure, meaning that some generation (and associated parts of transmission grid) are only used on the peak hours and/ or days of the year.

In short, we have a supply-dominated network right now. During this time of transition, the grid needs flexibility. By flexibility, we mean the ability to provide power and increasingly quick turnaround at any time of the day or year and for changing durations as well as more frequent calls or dispatches. Organizations that can provide this flexibility are helping the grid and should be financially rewarded for that help.

This is where we should focus on the grid’s decentralization.

Today, the grid is in the midst of a transition to an omnidirectional framework whereby demand reacts to supply, essentially a reverse of the centrally oriented grid of the 20th century.

Over time, this omnidirectional framework will develop with consumers injecting electrons into the network. At this point, consumers of electricity become prosumers, meaning they are consumers who use electricity but also provide services to the grid.

Examples of prosumers today are customers who participate in demand response. Prosumers also include consumers who use their behind-the-meter generation or an energy storage capability to participate in a program with their local utility or with the organized wholesale market.

Over the last several years, there has been a wave of technological innovation that has made these energy resources practical and affordable and, in turn, has allowed prosumers to become viable players in helping the grid evolve along the trajectory outlined by the three D’s.

Last fall, the Federal Energy Regulatory Commission (FERC) issued an important Order that’s going to modernize regulations to make it easier for distributed energy resources to benefit from participating in wholesale markets.

Order 2222 has been called a landmark, a game-changer, and plenty of other praising names normally reserved for a historic moment. In time, it may prove to be all of those and more.

 


This post was excerpted from The State of Demand-Side Energy Management in North America Volume III, a market-by-market analysis of the issues and trends the experts at CPower feel organizations like yours need to know to make better decisions about your energy use and spend.

CPower has taken the pain out of painstaking detail, leaving a comprehensive but easy-to-understand bed of insights and ideas to help you make sense of demand-side energy’s quickly evolving landscape.

Download Your Copy

What the Electric Grid’s Future and the Internet’s Past Have in Common

July 19, 2021

In the mid-1960s, a new method for effectively transmitting electronic data over a computer network was born, and with it came one of the quintessential building blocks of what would become the modern internet.

In simple terms, “packet switching” is a routing method whereby data transmitted across a network takes different routes along the network to arrive at its destination. Packet switching allowed for computer networks to become decentralized, ultimately giving rise to the internet and the global connectivity it provides today.

Just as packet switching would help computer networking explode into the future, so too will a similar decentralization usher the electric grid from what it was for the previous century to a more efficient interaction that connects consumers in a cleaner and more collectively beneficial way.

Like most revolutionary ideas, packet switching was not embraced by the established community of experts that presided over the nascent field of computer networking in 1965. That changed, however, when the Advanced Research Projects Agency Network (ARPANET) embraced packet switching as a means to allow multiple computers to communicate on a single network.

The Evolution of ARPANET. Source: Public Domain

Originally funded by the US Department of Defense and widely considered among historians as the first working prototype of the internet, ARPANET would adopt the internet protocol suite TCP/IP on New Year’s Day in 1983, and begin assembling the network that would become the modern internet.

Since its inception, the grid has grown and evolved to become a modern network on the cusp of transitioning to a more efficient future. To get there, the electric grid may borrow a page from the information superhighway and follow a few key transformational lessons.

Consider how information travels on the internet in 2021.

On the internet, every user is a consumer, producer, and storer of information. Send an email from the Northeast US today, and it might route through Canada on its way to a final destination. Send an email to the same person tomorrow, and it might take an entirely different path through a server in New York.

In essence, this is packet switching on steroids.

The pathways that allow for information to travel on the internet are omnidirectional, which has allowed that network to rapidly grow over the last two decades to serve billions of users worldwide.

That was not always the case if you consider how, prior to packet switching, the original computer networks were constructed as a network dominated by central mainframe servers that pushed information and data to users connected at terminal locations.

The electric grid has a similar history to the internet’s in that the grid’s network was centralized from the outset, with large generation sources (power plants) essentially pushing electricity to consumers via transmission and distribution.

The centralized grid conceived by the likes of Thomas Edison and erected by moguls like George Westinghouse served its users well for the better part of the century.

BBN ARPANET Group. Source: Public Domain

Like the internet, however, the electric grid has evolved to embrace decentralization as it transitions to an omnidirectional network in which generation and distribution are spurred by the very users for whom the grid exists to serve.

Today, for example, the electricity you use to charge, say, your mobile phone may come from the bulk grid. Tomorrow it could come from another consumer on your distribution grid who is not using their own excess generation.

As grid operators and utilities adopt new technologies to enhance their flexibility and optimize the delivery of electricity, the grid will start to follow a similar path the internet embraced in its evolution to the modern wonder it is today. The result will be an energy system whose connectivity drives its efficiency and sustainability for decades to come.

It’s an exciting time for the grid and its users, rife with possibility and opportunity.

Achieving Carbon Emission Goals with Demand-Side Energy Management

July 09, 2021

A convergence of pressures in recent years has caused organizations across North America to examine how their energy use can be managed to help achieve their carbon reduction goals.

These converging pressures originate from customers, who desire to do business with sustainability-minded companies; investors, who realize the inherent value associated with an organization being carbon neutral; and regulators, who are introducing laws that reflect and address society’s move toward a cleaner energy future.

Since these pressures show no signs of waning, the question of how exactly demand-side energy management can be optimized to achieve carbon goals is becoming a popular discussion in the industry today.

Some of the best practices for carbon-reducing with demand-side energy management are more obvious than others. Adopting energy efficiency measures or installing on-site renewable energy sources like solar are examples of strategies that have been around for decades.

Let’s examine, then, some of the newer concepts on the topic of achieving carbon goals with demand-side tactics.

Consider the drive toward a carbon-neutral future from the grid operator’s perspective. Across the US, grids face the same converging pressures as organizations and have worked to increasingly shift their generation mixes away from fossil fuels and toward renewable sources like wind and solar.

Of course, wind and solar energy sources are inherently intermittent and can subsequently cease generating if the wind stops blowing or the sun stops shining.

But the immutable truth that some days are overcast and others windless doesn’t ease the pressure on the grid and those who run it to drive toward carbon- neutrality! Nor does inescapable intermittency suffice as an acceptable reason for grid operators to sacrifice reliability in the name of sustainability.

So what’s a grid operator to do?

Here is where commercial and industrial organizations can fill the gap from the demand side and help the US electrical grid find its way to the clean and efficient energy future that everyone desires.

That the grid needs flexible resources which can be dispatched quickly to serve load when it’s needed due to wind and solar generation being unavailable is a central point readers of this book should be quite familiar with, given it’s been examined in detail within these pages over the last three years.

The same is true of the role demand response plays in providing that flexibility to the grid.

What’s becoming more apparent is how increased participation in demand response programs at the ISO and utility levels across the US is providing new tools for grid operators to harmonize their grids’ reliability with their drive toward a future of cleaner generation fuel mixes.

In effect, this demand-side participation enables the firming of renewable energy sources, allowing grids to transition toward cleaner fuel mixes. While demand response participation doesn’t directly help individual organizations achieve their own carbon reduction goals, the cumulative effect of all the organizations’ participation does help our society achieve its desired emission goals.

The pressures organizations face from outside entities that we discussed earlier play a role in driving a given company’s carbon-reduction goals.

Unfortunately, in a reward-based world dominated by measurable metrics, there isn’t a practical way to note just how effective a given organization’s demand response participation is in helping contribute to carbon and greenhouse gas reduction.

That’s starting to change.

Organizations like the non-profit WattTime are searching for and establishing ways to help companies receive measurable recognition for doing their part with demand response to help the grid maintain reliability during its transition to the future.

Naturally, how an organization uses energy can have a large impact on carbon emissions, but when energy is consumed can move the carbon reduction needle, too. By shifting energy usage to a time when the grid mix is cleaner—during the middle of the day when solar is more prevalent compared with coal, for example—overall emissions are lowered.

An increasing number of organizations and cities have sought to eliminate their emissions in the time period when they consume electricity, often in hour-by-hour increments. This is a practice called 24/7 Clean Energy.

The more generation mixes shift toward renewable sources and as more DERs integrate into the grid with help of regulations like FERC Order 2222, the more the 24/7 clean energy effect should increase. That is, an increase in peak renewable generation will likely result in a larger potential emission reduction due to the load having been shifted.

Companies, regulators, and markets are in the early stages of ascribing value to 24/7 clean energy practices.

Consider the New York market, where Local Law 97 (LL97) seeks to reduce carbon emissions in the city’s building stock by 80% by 2050. An estimated 50,000 buildings in New York City stand to be affected by the law, with many in the commercial sector currently above the law’s emission requirements. Retrofits are one means of achieving compliance with LL97. Load shifting may be another, albeit one that will require a tangible means of assigning value to the practice.

Here we have an example of a regulation (LL97) creating a need for a possible market incentive (the value assigned to load shifting) as a means to achieve the societal goal of lowering carbon emissions in a densely populated city.

Absent a concrete policy on climate change at the national level, the market is responding. Throughout each of the deregulated energy markets in the US, demand response programs are growing at the ISO and utility level. The markets are becoming more sophisticated with how they incorporate DERs, and they’re doing all of this at the behest of state legislatures as well as the citizens who the market and grid ultimately serves.

Demand-side resources deliver carbon benefits. They always have, but today more opportunities are emerging to earn revenue with these resources.

For years we’ve touted how flexible resources will help drive the US electric grid to a cleaner future. While the ways organizations that provide those resources will be publicly credited are still undecided, the ways they’ll be financially rewarded are apparent.


This post was excerpted from The State of Demand-Side Energy Management in North America Volume III, a market-by-market analysis of the issues and trends the experts at CPower feel organizations like yours need to know to make better decisions about your energy use and spend.

CPower has taken the pain out of painstaking detail, leaving a comprehensive but easy-to-understand bed of insights and ideas to help you make sense of demand-side energy’s quickly evolving landscape.

Download Your Copy

If Thomas Edison could see the world today…

July 04, 2021

He’d likely marvel at the evolution of several modernities he helped invent.

Thomas Edison standing next to the Liberty Bell on California trip, at the Panama-Pacific Exposition.
Thomas Edison standing next to the Liberty Bell on a California trip, at the Panama-Pacific Exposition. Source: National Parks Gallery

The light bulb’s journey from Edison’s own incandescent systems that wowed in 1881 at such high-profile public events like the Paris Lighting Exhibition to the energy-efficient LED bulbs of today would certainly be worth a day of the great inventor’s study and fascination.

Having designed a battery that would be introduced in Henry Ford’s iconic Model T in 1912, Edison would no doubt also be impressed with the present-day ubiquity of electric vehicles. He might be even more astonished with those vehicles’ ability to not only plugin and charge their cells at charging stations throughout the country but also their ability to provide capacity back to the electric grid.

Indeed, the very nature of how electricity flows on today’s electric grid would certainly be of interest to Edison. A champion of direct current, Edison thought of electricity for much of his life the way scientists had viewed it for centuries—a continuous flow of current in one direction.

But what would Thomas Edison think of the bi-directional electric grid of today, in which electricity flows not from a central point of generation as it had during Edison’s time until his death in 1931 and would continue to do throughout much of the 20th century, but from many points of origin to its point of consumption?

To get his head around this modern marvel, Edison would likely conjure fond memories of September 4, 1882, when at 3 PM he turned on the generators at Pearl Street Station in Lower Manhattan, giving birth to America’s first electric grid—a distributed grid at that, with generation located at the site of demand.

Inside Edison’s Pearl Street electric power plant, showing the large DC generators. Source: Public Domain

By the time of his death in 1931, Edison’s vision of a nationwide electrical grid distributed by direct current had long become a hallucination, replaced by the realities of an ever-expanding grid powered by alternating current, championed by inventor and one-time Edison employee Nikola Tesla and muscled into practice by investor and entrepreneur George Westinghouse.

But it would be another of Edison’s former employees, Samuel Insull, who would have perhaps the greatest impact on the grid and the electric industry during the first half of the twentieth century.

A former personal secretary of Edison, Insull would develop and profit from his own creation of the regulated monopoly, which he made central to his hotly contested but ultimately successful argument for America’s electricity infrastructure in the 1920s. Widely credited as the inventor of such business model staples as time-of-use electricity rates, Samuel Insull would go down in history as the father of the modern electric utility.

Imagine Edison in 2021, emerging ninety years after his death to view the grid of today and examine its evolution and that of the industry built around it.

He’d certainly study electricity’s flow not just from a central plant to its point of consumption as he’d always imagined, but also from points throughout the distribution system from “prosumers,” commercial and industrial organizations that both consume and produce electricity to serve the needs of the grid.

Eventually, the great inventor and lifelong entrepreneur might ask many of the questions the team at CPower answers in this, the third volume of our annual State of the Demand-Side Energy Management in North America.

Each year we take an in-depth look at the issues and trends affecting the deregulated energy markets in the US and present a breakdown of the key items we think organizations like yours need to understand to make the most of your energy use and spend in the coming year.

Thomas Edison in West Orange lab. Source: National Parks Gallery

If Thomas Edison could see the grid of today, he’d likely be amazed that the opportunity to earn money by supplying electricity to the grid no longer exists solely among the few centralized plants and utilities and operators that control them.

He’d be awestruck at the opportunities available for commercial and industrial organizations to use their existing energy assets to earn revenue by helping the grid stay in balance. He’d surely also be inspired by the ways organizations across the country are using demand-side energy management to reduce carbon emissions and achieve their sustainability goals.

So are we.

It’s a big electric grid, a bigger country, and it’s an exciting time to be traveling across the bridge to energy’s future.

Let’s go.


This post was excerpted from The State of Demand-Side Energy Management in North America Volume III, a market-by-market analysis of the issues and trends the experts at CPower feel organizations like yours need to know to make better decisions about your energy use and spend.

CPower has taken the pain out of painstaking detail, leaving a comprehensive but easy-to-understand bed of insights and ideas to help you make sense of demand-side energy’s quickly evolving landscape.

Download Your Copy