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Pathway for Optimization

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Mike Oldak's picture
President Oldak Consulting

Extensive experience in rates, regulation, and energy and telecom policy for utilities adapting to changing markets and technologies. History of leading policy debates, managing complex...

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  • Aug 25, 2020 4:30 pm GMT
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This item is part of the Special Issue - 2020-08 - LTE Networks, click here for more

Written By: Mike Oldak, Oldak Consulting and Ahmad Faruqui, The Brattle Group

Regulatory policies and rate designs have always followed technological advances.  The electric meter allowed electric bills to reflect actual kWh usage. Today the data and control available in all aspects of the energy and water industries, as well as the consumer side of the meter, requires a movement in the ratemaking and regulatory policy focus.  It is no longer enough to focus mainly on the traditional balancing of shareholder and consumer interest while setting rates to mostly reflect cost causation and ensure cost recovery.  The FCC’s decision opening up new options for the 900 MHz band provides the much needed spectrum for utility operations as existing networks age out, rely on soon to be abandoned 2G and 3G networks, operate on increasingly congested public spectrum, or are incapable of meeting the ever expanding data needs for modernization.  Maybe most important is that ability of private LTE wireless broadband to enable greater regulatory focus on optimization of energy and water utilities along with all the emerging Distributed Energy Resources (DER) to achieve a cleaner environment as the end goal.

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Private LTE wireless broadband provides the technological advance to refocus regulation and rate designs on real regional[1] optimization, where all the energy and water utility operations, consumer supply and demand resources are optimized together with an expanded emphasis on a cleaner environment. In other words, the time has come for identifying a new direction for designing rates and regulatory policy enabled by new technologies and data. Additionally, if all regional utilities and consumers moved forward together, there could major economies of scale and scope. Today, there is sub-optimization due to utilities and consumers each trying to optimize in their own self-interest. This is in large part due to rates and policies having been designed without the data and control that is now more prevalent and enabled by private LTE wireless broadband providing an economical and secure last mile interconnection. Such data and control can enable regional optimization where the primary focus is on coordinated planning and utilization of all available resources in the most optimal manner. Equally important will be the enhanced ability to integrate microgrids into regional system operations.  Microgrids, when properly integrated into utility operations will complement utility operations, while still being able to establish their own electrical islands when required.

Private LTE wireless broadband ensures the reliability and resiliency of energy in a period of increasing man-made and natural disasters. Modernization of the industry and the movement toward Distributed Energy Resources has made the widely ignored role of utility communication an even more critical component of the critical infrastructure.  As the President’s National Infrastructure Advisory Council noted, utilities need a dedicated communications network for critical infrastructure sectors that is separate and apart from any internet or cyber-based communication network.[2]  Public spectrum currently used by utilities is becoming increasingly congested and, in many cases, is not suitable for tomorrow’s modernization requirements. LTE broadband technology is an international, non-proprietary standard that meets the highest security needs of utilities, and in many cases provides a cost-effective last mile for connecting consumers, Distributed Energy Resources and power suppliers.

Private LTE wireless broadband will also allow sharing of communication infrastructure as well as regional optimization by coordinating the operations of all utilities and consumers within a region.  Today consumers pay for 3 separate networks to read their electric, gas and water meters, each probably within reaching distance of the other, when one shared network could do it all.  Alongside the ~3200 electric utilities that exist in the US today there are roughly 50,000 water utilities, many of which cannot afford the costs of modernization, let alone the cost of a world class cyber team to keep it safe.  The infrastructure could also be shared to support rural broadband in unserved or underserved areas.  Additionally, as building and transportation electrification increases energy demand, optimization will require more sophisticated communication to support new rate designs and programs that dynamically reflect real-time events, rather than static time-of-use rates that may change twice a year.  A private LTE wireless broadband network would enable monitoring and orchestrating all these new supply and demand options and could optimize all those resources, moving us more quickly toward a cleaner energy future that is sustainable without serious challenges.

Private LTE wireless broadband will support expanded non-wires alternatives.  Hosting capacity at the distribution level is in most part a static determination of available line capacity.  A private LTE wireless broadband network can enable real-time monitoring of power flows and orchestrating the dispatch of resources to enable optimal sequential use of the lines thus increasing hosting capacity and efficiency.

Private LTE wireless broadband will enable optimization of supply and demand – moving from an era of energy efficiency to an era of demand efficiency that includes all the resources of the energy and water utilities and consumers in a region, controlled in large part through Artificial Intelligence.  Energy efficiency has resulted in an incredible change in the efficiency of devices for heating, cooling, lighting, and many other needs.   While additional improvements are still expected, private LTE wireless broadband will provide a non-proprietary, secure, and low latency means to enable the careful balancing of all supply and demand options to achieve both efficiency and environmental goals.  We are in an era where we are seeing major advances in energy storage and the rapid movement toward DER and electrification of both the transportation and building sectors.  The ability to orchestrate demand to better align instantaneously with supply could put the energy/water nexus on steroids and ensure fulfillment of all energy and environmental goals in the most efficient manner possible.

Private LTE wireless broadband will enable new distribution level “market” designs.  The industry is rapidly moving from the historic central station model to a distributed, decentralized grid that is DER-intensive. The future model of the industry is likely to be one where transportation and buildings are fully electrified, and there is an increased focus on cleaner renewable energy.  Optimization of all these trends will require a secure advanced communication network capable of both real-time monitoring as well as real-time control.  There are a variety of novel market designs that would establish a platform or market where energy put into the distribution grid or taken out is priced to reflect a variety of policies.  Power put into the grid could possibly reflect more market-oriented prices, utility operational needs, or value in providing cleaner energy. Power taken from the grid could continue reflecting the full spectrum of retail rates.  Devices that can be controllable could be provided incentives that would allow optimization of all the resources.  For example, managed Electric Vehicle (EV) charging could better follow variable energy resources, avoid “timer peaks” or support non-wires alternatives by optimizing the use of existing distribution line hosting capacity. Using that energy for Vehicle to Grid (V2G) support during the day that could potentially multiply those benefits.

Private LTE wireless broadband will also support the rapid expansion of V2G.  As electric vehicles increase in market share, the value of V2Grid, V2Home and V2Busines becomes more apparent.  The ability of EVs to provide energy to the grid during critical peak periods, grid instability or even disaster recovery will also help the distribution grid on the supply side.  Additionally, backing up variable energy resources can reduce the need for additional spinning reserve and thus provide for a cleaner environment.  But V2G like any other energy source on the grid, requires a safe, secure, resilient, low latency communication network. A private LTE wireless broadband network ensures that the integration of EVs onto the grid, business or home could be deployed virtually everywhere without creating safety and operational problems.  

[1] A “region” can be defined by many factors and can be as small as a local utility, some of the 50,000 water utilities under their feet, and importantly customer side of the meter devices.  A “region” could also expand to a multi-state area which makes both technical and economic sense.

[2] Securing Cyber Assets: Addressing Urgent Cyber Threats to Critical Infrastructure by The President’s National Infrastructure Advisory Council, August 2017, www.dhs.gov/sites/default/files/publications/niac-securing-cyber-assets-final-report-508.pdf

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