How Can Utilities and Society Benefit from Distributed Energy Resources?

There are a lot of people who believe that distributed energy resources (DERs) are a fundamental threat to the utilities. This recent briefing report in The Economist is a case in point. However, we just hosted our second annual customer summit last week in Philadelphia with hundreds of thought leaders from the utility, regulatory, and technology industries to discuss the evolving 21^st-century energy landscape. At the Summit, we explored business strategies around the growing distributed energy market and digitalization. During the opening day, we had thought leaders from two of the most dynamic states in the U.S. experiencing a lot of changes, and opportunities, in their energy systems and markets, namely New York and California.

From New York, we had a former regulator who shared perspectives from the New York REV (Reforming Energy Vision) experience, while from California, we had a senior executive from the state’s largest investor owned utility, sharing perspectives from the California experience. Moreover, we closed the opening day with an industry panel with thought leaders who further enriched the discussions by providing perspectives from academia (MIT), and technology solutions providers point of views (Google Nest, NRG Station A, and Stem).

Everyone understands that a utility’s core asset is the grid (i.e., utilities own the network) and the more things that are connected to the network, the more the network is used, the more value the grid can provide. Yes, it may be hard in utilities’ current business model structure to see that value returned to the owners of the grid, but it can be achieved if utilities do a few things differently. Utilities have to build the system differently for two-way intermittent variables and flows. Utilities have to deal with a lot of volatility in voltage, fluctuations in frequency, and the reduced reconfiguration and operational flexibility that all happens when you start putting more DERs onto the system.

How should utilities be approaching these changes? By embracing agility in energy!

By integrating intelligent technology at every level of its business model, including infrastructure and basic operations, efficiency and cost savings, and broader business model transformation through new products and services.

1. Modernizing Infrastructure and Improving Operations: It may be easy to overlook the importance of modernizing existing power infrastructure, but the bottom line is that we cannot rebuild our power grid from scratch. We have to rely on intelligent technologies to improve the systems we have in place, improve power quality and security, and enable consumers to have a role in their power usage. All of our technologies from field automation devices to software integration and planning services give utilities unprecedented levels of control over their operations through both improved hardware and digital technologies.
2. Enhancing Efficiency and Cost Savings: Focusing on digital technology drives efficiencies across a utility’s business by increasing the opportunity to integrate new renewable generation and distributed energies into their system. More importantly, intelligent management of grid assets can drive significant value through operational efficiencies with solutions, such as FLISR, GIS, OMS, and DMS.
3. Driving Utility Transformation: The value to a utility goes far beyond basic operational enhancements or efficiency, ultimately leading to major change to the business value for the utility, typically reflected in the form of new products and services that are outside of the traditional utility model with solutions, such as DERMS and DRMS. The underlying premise of electric rates just about everywhere in the country is that the biggest value received is the electron, but nowadays at many customers’ homes, they get a lot of different products (e.g., solar PVs, EVs, etc.) from the grid than just the electron. Arguably, customers’ most valuable product nowadays is being able to put the excess electron onto the grid without having to call the utility to do so. It is also pretty convenient to be able to charge EVs any time. Consumers also get the benefit of the grid when their solar system goes down or when generation is way down due to the weather. These benefits start need to being reflected in the rates that many utilities charge their customers. If a customer cannot have access to and see the benefits and costs that they receive from the grid, then they are not going to make the right choices for themselves or for the grid as a whole.

The goal is to give DERs the opportunity to provide that grid service that utilities otherwise would not get and put them into the toolkit as a viable energy alternative.