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2022 is Coming. We May Have Finally Found…

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Michael Smith's picture
Principal KLN Group

If you have been active in the North American utility IT/automation markets over the last 30+ years, chances are that you have subscribed to a publication, read a research report, or attended an...

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  • Jan 25, 2022
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This item is part of the Special Issue - 2022-01 - Power Industry 2022 Trends & Predictions, click here for more

The last 22 months have been a blur of remote work, masks, jabs, debates, optimism, frustration, returning to “the new normal,” more frustration, more jabs… and in this environment do any of us feel qualified to predict the future? I certainly do not.

I do, however, feel fortunate to be working in an industry that has adapted and sometimes lead the country in adapting to new ways of doing business and, as the T-shirt says, staying calm and carrying on. It is in this utility industry where I have worked for 32 years where I will share a few thoughts on what just might be lying ahead for us with some interesting developments  that lead me and others to believe that we may have finally found…

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…The Perfect Couple. As distributed energy resources (“DERs”) continue to show explosive growth, utilities are now seeing that doing business in the DER-rich future has its share of challenges, but is also leading to some benefits, moving away from dependance on fossil fuels and more customer control over their energy usage and costs among them. As DER penetration continues to grow, we are now seeing DERMS (DER Management Systems) solutions coming online that are able to provide visibility and control in ways that were not imaginable just a few years ago. Now, along comes FERC Order 2222 that “enables DERs to participate alongside traditional resources in the regional organized wholesale markets through aggregations, opening U.S. organized wholesale markets to new sources of energy and grid services. It will help provide a variety of benefits including: lower costs for consumers through enhanced competition, more grid flexibility and resilience, and more innovation within the electric power industry.” (Source: ferc.gov.) This could be one of those rare times when market-driven technology pairs up nicely with the regulatory climate to create “wins” for all stakeholders. BTW, doesn’t it make sense for DERMS to be absorbed into more robust ADMS (advanced distribution management systems) solutions as the coordination and management of DERs becomes more core to how the utility operates the grid?

…The Missing Link. While DERMS represents a potentially big leap forward for renewables, the 100% carbon free grid, or something close to it, requires one big gap to be filled: energy storage that lasts more than a few hours, is economically feasible, and can be counted on to deliver energy for years or even decades. Enter long duration storage. Long duration storage is now coming online in different locations with the capability to provide 12 to 24 hours of affordable battery power at grid-scale. The journey to a carbon-free future has been screaming for the storage not to be cracked. We just might be there now.

…A Killer App for utility analytics. We are all starting to see the progress, successes, and value for the use of data and analytics in the utility industry. New forecasting methodologies, deeper customer engagement, and improved maintenance practices are all the result of utilities leveraging the value that lies in the massive data sets that are the result of the industry’s massive investments in smart technologies. The new kid on the block here is that utilities are now applying many of these learning in their asset inspection and vegetation management operations. These critical functions are massive line items in a utility’s operating budget. Today, using advanced analytics that leverage imagery and big data, utility leaders are seeing improvements in reliability, safety, compliance, and even financial performance with these improved, intelligent imagery and inspections operations.

…And finally, some sanity. Like many in our industry, I am an “all of the above guy;” that is, I believe that we need to dive into this energy transition, but that we need to do so intelligently using the right mix of resources that assure the same levels of reliability and rate stability that have become the hallmark of our industry upon which society functions for over a century. Yes, the climate is changing and yes, there is evidence that this is caused, at least in part, by human activities. The data and the evidence tell us this. A word of caution is advised here: the “energy transition” is just that, a transition. We need to be wise, prudent and patient in how we make this transition as we have seen a growing number of examples of the disastrous results when a wise path is not followed. Recommended authors for reading on a more balanced approach to the energy transition: Bjorn Lomborg and Steven Koonin.

No matter how these developments ultimately play out, our industry is moving towards a bright future (pun intended) that is sustainable, economically viable, and poised to continue to provide the reliability upon which society will continue to function and advance. Wishing all of you a healthy and blessed 2022!

Michael Smith's picture
Thank Michael for the Post!
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