Today, the scope of electric grid services can be put into nine categories:
- Electric Energy
- Operating Reserves
- Firm Capacity
- Black Start
- Network Connection
- Voltage Control
- Power Quality
- Constraint Management
- Energy Loss Reduction
There is a great paper on the topic by Ignacio J. Perez-Arriaga, et al, of MIT titled “Electricity Services in a More Distributed Energy System” Well worth the time to read for those seeking more information on this subject. The execution of the Distributed Energy Resources (DERs) Wave Strategy from my prior blog has the potential to help with all of these. When I think through disruptive innovations, I use the framework of "feasibility, viability, desirability."
Feasibility - is it technically possible?
Viability - can each part of the value chain make money?
Desirability - do all involved parties feel good about it?
I would suggest that all three components are necessary for successful innovation. Here’s how I see it play out when we bounce the 3 Waves against this framework:
Wave 1: "Assets in the Ground." Feasible - yes; Viable - yes; Desirable – yes, this wave is already activated and growing.
Wave 2: "Optimize Inside the Fence-line." Feasible - yes; Viable - in many cases; Desirable - in many cases. This wave is also activating.
Wave 3: "Virtual Power Plant." Feasible - yes; Viable – unproven yet; Desirable - depends on role in our current energy ecosystem. This wave is not yet activated.
I would further hypothesize that new services, new business models and potentially a new regulatory environment, will be necessary to activate the full potential of Wave 3. There are several potential new services that could emerge in a Wave 3 ecosystem, and I’ll expand on three of them below.
First – aggregation. The service will aggregate kilowatts into megawatts in order to simplify the interaction of dispatching Distributed Energy Resources (DERs) for both the producer and the utility or the distribution system operator. It can reduce variation and hedging by spreading it across large numbers of end nodes. Whether this is a transitory (over 5-10 years for instance) or a permanent service is an active point of discussion, and one on which I solicit input from many sources.
Second – shifting. This service would help align production and consumption through either energy storage or demand response. In the future state we are discussing, both production and consumption are stochastic, but predictable. For example, clouds passing over solar panels or the timing of HVAC turning on is stochastic, but intraday cycles of load are predictable. We see this with higher use during the day than at night in office buildings. DERs including demand response can assist with smoothing the highs and lows on the distribution network to reduce demand charges for the end customer. They also reduce complexity for the utility in managing the grid.
Third – Grid Infrastructure-as-a-Service. This service would defer or eliminate the need for grid infrastructure investments through management of the system downstream of the distribution substation. That means if the substation was reaching capacity, a service could be provided to reduce peak load downstream of the station during these peaks to defer the need for the upgrade. Furthermore, if the addition of DERs kept pace with load growth, it could eliminate the need for the upgrade completely. This is a concept currently being tested by ConEd with the Brooklyn-Queens Project, and you can read more about it here.
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