Cloud Computing for Utilities: The Economics of Software and Scaling up of Decarbonization
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- Aug 25, 2020 4:00 pm GMTAug 20, 2020 11:05 pm GMT
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The proliferation of renewable energy requires an energy market that can react to change, as matching supply with demand becomes more complicated with weather-dependent resources. All over the world, power suppliers, producers, and grid operators are learning that flexibility in the grid system is essential; however, they are also quickly understanding the massive amounts of data required to properly manage new energy dynamics. Cloud computing is a necessary management tool to keep up with the exponential increase and potential of data we are seeing in utility grid operations. It has many benefits, like streamlining energy efficiency and other grid services programs and helping utilities deliver flexible power. However, implementing the forward-looking concept of cloud storage, within the traditional, risk-averse utility model, is where it gets complicated.
Utilities often do not know how to take on these new initiatives from a capital investment standpoint and lack clarity on how to anticipate returns. In the United States, this is compounded by electric utilities’ incentive structures that offer higher returns for large capital expenditures than for operating expenses, where cloud computing currently falls. Cloud computing also falls out of the realm of utilities’ core functions. For example, where we have seen utilities thrive is when regulators require utilities to invest in research and development. Often key contacts for flexibility programs are heads of innovation departments. However, utilities also face a need for speed in scaling flexibility solutions. Keeping operational processes status quo impedes utilities from taking advantage of today’s new energy landscape.
The key to supporting utilities using cloud solutions is through low or no-cost, performance-based solutions that pay costs off through earned revenue developed by the cloud-based program. This low-cost approach does not burden utilities with having to capitalize the cost of computing and other related program expenses and are therefore specifically intriguing for U.S. clients.
Cloud-based solutions provide additional benefits in the form of security because they do not connect to the electric utilities’ systems, like current on-premise offerings that connect into SCADA systems. These cloud-based solutions are easily scalable and save costs by not requiring complicated onsite engineering. To keep costs low while elevating security practices, industry standards offer valuable guidance, such as the UL standard 2900-2-2 on cybersecurity that certifies end-to-end wired and telemetry solutions.
Commercial models that offer low-cost cloud solutions for a low barrier to entry are critical to helping utilities establish programs that earn revenue from distributed energy assets in a low-risk capacity. The new energy market calls for an innovative, cloud management system to help utilities quickly adopt and enable strong and flexible energy markets. This will offer to their rate base and participating energy players opportunities to maximize the value of their assets.