The future for the electricity enterprise may not be anchored in the great engineering creations of the past, but in the hyper-localized management of nearby resources.
This trend is already occurring for the millions adding solar power and home storage; thousands of business and industrial facilities spending on power quality and back-up generation; the installation of utility scale solar, wind, and storage within regional footprints; and more cities demanding each building become self-sufficient.
The hyper-localized transition of the electricity ecosystem is further necessary due to the closure of central power stations, the almost impossible construction of new large-scale transmission, and the state-by-state drive for carbon reduction. Coupled with the increasing need for capacity and the move to community choice aggregation, the only solution in the short and medium-term will be to improve the efficient creation and deployment of electrons at the edge of the grid.
The hyper-localized movement to this new electricity paradigm has been occurring in a disjointed and often unrecognized fashion. It represents both a significant societal opportunity and major threat to the thinking and operations of the electricity enterprise. In the current electric industry, the idea of anchoring based on a simple generation-to-transmission-to-distribution model creates a system where the edge of the grid, local generation and control are not seen as a viable alternative to large scale systems. Yet, it is happening under the radar in many indirect and direct ways.
Apple has added a feature that matches phone charging to peak utility times. ChargePoint electric vehicle (EV) chargers slow the flow and charging rate of EVs to match utility demand periods. Thousands of homeowners are charging their batteries with solar, while industrial concerns ramp operations to lower costs using on-site generation.
Transmission congestion is increasing and despite efforts to streamline the construction process, it is a decade or more before new lines can be built. All of this is occurring when the demand for resource adequacy is dramatically increasing. Many commercial products now have intelligence built into end use devices, and millions of intelligent meters sit at end user premises – taking advantage of the investments being made locally offer the way forward.
The standard utility model relies on a carrot and stick approach, rewarding those who conserve at key times and penalizing those who do not. Taken to the extreme, using artificial intelligence and machine learning to balance system demand and nearby power resources, the peaks utilities have tried to clip and the valleys that utilities have tried to fill offer a new way of managing a system. Shifting load through manipulating the end user’s bill is a crude instrument bound up with negative response mechanisms – often inherently unfair for those who have little opportunity to manage usage.
Hyper-localization is the fulfillment of decades of load control and management. This is not to say the nation does not need to build more transmission, expand large scale generation, and invest in areas such as small modular reactors – it does. This is not to say that market expansion into the west, rebuilding the AC/DC ties across the western and eastern grid, and developing grid scale controls should not occur – they must. However, given the immediate needs for grid resilience and reliability, attention should be paid to the growing power of hyper-localization.
What does it mean for a rural electric cooperative such as United Power, especially as we leave our generation and transmission provider in 2024? It means working with our local resources and seeking close-to-home generation, preparing ourselves as a Distribution System Operator to manage the resources close at hand. It also means supporting plans for large transmission and new technologies once they are available.
As a cooperative, owned by our members, the concept of hyper-localization aligns with our members to deliver mutual value. It has the double benefit of keeping investments in the communities we serve while ensuring the reliability and resilience required in today’s environment.
In many ways, hyper-localization is a back-to-the future movement. The electric enterprise began as the linking of local resources together to form the grid, moved larger and larger generating resources away from population centers, and created the amazing vast energy web enjoyed today. The quiet revolution to localized grids, combined with the advancing management tools of artificial intelligence and machine learning, returns to continue the electricity enterprises’ original intent of bringing light, motive power, and comfort to the communities being served.