- Aug 20, 2019 7:13 pm GMT
This item is part of the Special Issue - 2019-09 - Distributed Energy Resources, click here for more
The Demise of the Utility
Customers in the US install distributed energy resources (DER’s) to beat the band. Mainly solar. Customers sell their excess electricity to the utilities at the same price as they buy electricity from the utilities. At the same time, the utilities are saddled with aging assets. They supply power to customers when the sun doesn’t shine. That means that the utilities’ cost of delivering the power rises. Utilities’ revenues go down. Customers’ aren’t buying as much power. Since electric companies are regulated monopolies, they can’t raise their prices. They go to the state public utility commission to get a rate increase. They make a strong case. Revenues are down, costs are up. They are guaranteed a rate of return on their investment. Regulators grant the rate increases. But the rate increases hurt the people without solar. What do they do?
They install solar.
Over time, the population of people without solar shrinks. Utility revenues shrink even more. Costs rise. Utilities raise rates again. More people move to solar. Revenue shrinks, cost rise – you get the point – that’s a death spiral – the utility demise.
Add to that those pesky people at Tesla who sell big household batteries. So instead of people having to rely on the utility when the sun doesn’t shine, they can simply install Tesla’s batteries along with their solar panels and guess what? They disconnect from the grid. Maybe the gas companies might even jump on the bandwagon and install local natural gas generators to supplement the batteries and solar. People will also install local wind turbines.
Will this really happen? No more grid? Everyone has their own personal energy system? Does this remind you of anything?
The Rise of the Utility – Like the Cloud
Remember big mainframe computers? They were invincible. Then along came PC’s. Everyone predicted the demise of mainframes. PC’s became enormously popular, they also had limitations. As more demand was placed on them, they needed to be constantly upgraded. They ran out of memory. Broke down and left people stranded. Then people realized they were not computing islands. The PC’s had to talk to one another. They needed to be connected. Thus, the internet became the equivalent of the main frame computer. Today, the notion of an independent PC is almost never an issue. The cloud has replaced much of the computing power of the PC. Now the cloud is even more of a centralized system than the mainframes ever were.
See the trend. The computing industry started with localized central systems, then went to decentralized systems and is returning to global centralized systems. The cloud allows users to expand their computing needs as the demands require. This centralize/decentralize cycle ended up with a hybrid. Local resources when your application requires it. Backed up by nearly infinite supply of computing resources when peak demands require.
The same thing is happening to the electric grid. It’s moving from one-way to a two-way delivery system. It is becoming a hybrid, centralized at times and decentralized at other times. The grid of tomorrow is like the cloud of today only for power. It is migrating to a market system, able to buy and sell power at the lowest price to benefit consumers.
Completely splitting from the grid is like never having internet access. If you did, you would be totally self-sufficient, having no flexibility to increase your power during those times you need to. Maybe during a big party or during an extreme heat event. Let’s say the grid is having a power sale, when there is too much power, you couldn’t buy power dirt cheap and save it up for those times when you need it later.
The utility will be the energy equivalent of the internet – it will facilitate the energy market. You will pay for the connection and it’s services. That will be the real value, not just for the energy.
What Role Does GIS Play?
A lot. The new grid of tomorrow will be a lot smarter. It will be a grid of connected and disconnected microgrids, some producing, some not. There will be infinitely more sensors, intelligence and monitoring. The GIS will help the new grid operators and the brand-new grid market participants figure out where things are, how the market is working and diagnose when things are trending in the wrong direction and act.
Rumors of the demise of the utility are dead wrong. Sure, the grid will change dramatically. GIS will play a pivotal role in helping utilities make the migration.
“By 2040, we expect 57% of all passenger vehicle sales, and over 30% of the global passenger vehicle fleet will be electric.”
Electric Vehicle Outlook 2019, BloombergNEG
That’s a lot of energy. The US Energy Information Administration (EIA) states that the world used 104 quadrillion British thermal units (Btu) in 2012. Nearly all of that supplied by fossil fuels. Imagine if instead of gasoline, the fuel was electric? That will be a huge increase in electric revenue. Demise? Hardly. GIS will be there to figure out how to power the trains, planes and automobiles. And where they are. GIS be there to play key role in helping utilities figure out how to manage this new world of energy. For more information on how GIS supports the new world of the electric utility business, click here.
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