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DER’s? – Utility Rise or Demise

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This item is part of the Special Issue - 09/2019 - 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.

Bill Meehan's picture

Thank Bill for the Post!

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Matt Chester's picture
Matt Chester on Aug 23, 2019 7:45 pm GMT

Agreed with you that full decentralization of the grid will of course never happen, but the trend towards more DERs penetrating the market certainly seems like it will happen. One of the issues in the spiral you present is that the ones who are most likely to get left behind are low income households who may not be able to afford the investment, but for whom the benefits would be most profound. Is GIS something that can tap into this market in a useful way?

David Svarrer's picture
David Svarrer on Sep 24, 2019 6:48 pm GMT

Matt, what is your take on the grid stopping to exist? The way I see it is that it is too expensive to continue with a grid when the vast major part of all the millions of small consumers will have each their own DER and storage. 

We are right now building the cooperative organisational framework where the users of these DER's with local energystorage will become members. 

The result will be, the way we see this coming, that the large power stations will be clustering together with large power consumers, and pull their wires between them. We are here discussing paper industry, steel industry, glass industry, and all those heavy, large 24/7 continuous-power-industries.

SO - in this way I think you are right, decentralization of the grid will never happen - but in our view due to different reasons - namely that the distribution via a grid, all the way out to the real small utility-users will cease to exist - they will be totally self-sufficient/supplying.

As an example - we are currently building 16 MWh/yr systems in Kenya. It will later connect to a 500 Volt DC grid, where 500/48 Volt DC-to-DC "transformation" will take place. The major electrical power source will be TEG's fed by heat storage. For larger households, small hotels, restaurants and micro industries, we will provide Genius (Stirling) and Spilling (Steam) machines for power generation (electricity) and the usual heat.

We are targeting the low income households - in particular the lowest incomes at all. As an organisation of cooperatives - we expect to be able to have minor parts of the entire setup paid via CO2 compensations. 

The entire energy balancing will be supervised and controlled by for instance ZERA (Germany), a 3rd party calibration and measurement controlling corporate.


David Svarrer

Matt Chester's picture
Matt Chester on Sep 24, 2019 8:44 pm GMT

I'd say there are certainly applications and areas where building on the back of DER and distributed microgrids is important and crucial, but I don't know that turning away from the grid as we know it completely is the prudent immediate solution. Economies of scale for clean energy (whether wind, solar, nuclear, or otherwise) are still valuable to meeting energy demand that's constantly growing. Building out DER resources today can enable a completely transformed grid tomorrow, but the centralized grid with its existing infrastructure is still critical for us to meet energy needs today and continue to move towards cleaner generation (that's still reliable) in the coming years. 

David Svarrer's picture
David Svarrer on Aug 30, 2019 5:50 am GMT

Dear Bill from ESRI, 

We are building exactly what you are talking about. We have taken it a step further. We are installing the first prototype of our design of a 9.6 kiloWatt solar concentrator.

Yes, you got it right - a solar concentrator in household size. Not the usual, non-scalable fresnell-lense, or similar. It can be scaled up (if one has the plot size..) to maximum 12 MegaWatt as I write these lines. We expect 99% of the use to be in the range between 10 kiloWatt and 250 kiloWatt. 

With most of the human-inhabited world having more than 1200 kWh per square meter per year, it is not difficult to get sufficient with power, almost no matter how this is done. Someone calculated that in a distributed system, we can cater for the current 159 PetaWatthour annual world energy consumption, by around 100,000 square kilometer of solar receptors. In comparison, we currently NET - that is - when additions are being included - slaughter 73,000 square kilometer of forest every year.

If a few thousand men with machines (largely in Brazil currently) can slaughter 73,000 square kilometers of land, annually, then we (7 billion people) can also build 100,000 square kilometer of solar receptors!

Besides which - the occurrence of deserts or "useless" land areas all over the world, is rampant, so we do not need to "set aside" special areas. In fact, setting up a distributed system of energy in such arid areas, could cater for re-grabbing some of the useless land and make it more habitable (irrigation etc)

So. What is it, WE are doing, in Rational Intuitive ? (We are producing this, in Denmark). 

We are somewhere 5 times cheaper in energy production than solar panels.

Our systems are designed to last 50+ years with minimal maintenance.

The system is designed so that it can be produced in each country of the world. It can be built by a metal workshop, and it can also - largely - be lasercut in an industrialized process.

Once we have tried out the production of the system, ourselves, we will give it away to those who would like to produce it, against a license. 

So this is a fully modern, industry quality steel construction, with modular engineering for full scalability - heat storage for grey days (we expect, around equator, to be able to hold 30 days of heat consumption for a household, in a 20 tonnes of stone-storage) - and use of TEG's for electricity generation (and much more).

As we do not need electricity for cooking, baking, household heating, water boiling, showering - as that is covered by the solar heating storage - (to which we feed the solar concentrator) - all that is needed is a few hundred Watt for light, TV, music system, chargers... Light power consumption has come down from 1,000's of Watts to some few hundred Watt's as LED's came onboard. LED's are easily fed with DC power :-). Put 6 LED's in a string, and you can lit them up with no loss, from a 12 Volt source. Put 20 LED's in parallel and feed them with power from a TEG. None of this is unusual.


Your vision is indeed true. There may indeed be industries where we still think that we need large scale energy - in example - Cement factories, Paper mills etc. - however - even Cement can be manufactured in small scale. That was done even 1000's of years ago by the Egyptians and other nationalities and cultures. So. The only reason why Cement factories and other large scale factories were built was to make it more efficient, and to centralize production and / to profit.

A lot of the industrialized food production is apparently also going down the drain, as it is being labelled unfit for human consumption - full of chemicals, production optimizers, fertilizers, pesticides and what do you have. In general the agenda now is: Everything coming from a box from a factory is largely not edible.

So - yes, Bill, you are right - this development is happening as we speak. This is not theory. This is my reality every day, in Rational Intuitive. 

I am in a few minutes going down to my workshop - a shipping container - where I am building it. We are two founders of this.

To Matt Chester's comment here below - our solar concentrator construction is by far cheaper than charcoal and firewood. We expect it to be used 24/7/365 in the poorest of all households.. This will render the need for daily multiple hours of firewood collection obsolete. This will ensure that trees growing here and there, are not being cut down, but can grow, and hopefully, in time, regrow the forest cover on Earth.


Rational Intuitive IVS (Denmark)

David Svarrer / Thomas Høyer

CEO / Chairman

David Svarrer's picture
David Svarrer on Aug 30, 2019 6:13 am GMT

Dear Bill, 

I have chosen to answer the later part of your post in this step 2. You mention that the energy / utility grid is like the internet, and that we can deliver back to the net etc. etc. - yes, that is theoretically true - however - if you see how this went in Denmark (where I am from), it is like you are being thrown peanuts to, when you deliver back to the net. The rest is being absorbed in exorbitant "net, transmission" fees and costs. Some 5% of the revenue is then the energy, the rest is simply fees and cost.

There is an important part, which makes your allegory to the internet not hold: If I have energy locally, it is not like this energy has another flavour than the energy I would get from the utility. You mention a need for "extra boost"? Well - the solution we are putting up, based on a heat storage, can do all the boost you need. We set up a 5 kiloWatt generator (running on the heat), and we normally only need some 500 to 1000 Watt. SO, if we need to lit up the entire house, and garden and neighbour municipality - we will have plenty of extra power if we want. 

The energy is different from the Internet in that the energy does not provide another flavour. THe internet truly runs on a networked structure - but even that may become history soon. Did you read about the Hiperlan I and Hiperlan II ? These "Fishnet structures" are spreading slowly and surely, rendering the utility-grid-based-like internet also not working. We have serious problems with centralized structures - namely that these can be overtaken by people who have sinister motives - like we have seen in India, where Modi has closed down Kashmir - locked down phones, internet, and everything.

We have seen it in "Gods own country" (not so Godly anymore after the election of Trump), where huge magnates are abusing their powers against the people, against the constitution - but due to systematic under-education of the American population the Rama Scream which ought to happen - in the wake of Cambridge Analytica's assistance to Trump to get elected - NOTHING HAPPEN. It is like - people either do not have the energy - or the knowledge - or the insight - or - they have been segregated by their own addiction to devices - so they do not meet anymore - and - get alienated - and manipulable. 

So - the energy utility net is by far not the same as the internet - due to the enormous difference, that energy comes in one flavour - power or not - while the internet carries the at least currently broadly accepted illusion that its content is of huge/great value.

Therefore, you cannot disconnect the communications channels - but given that people have a local energy source - indeed there is no need for any "Cloud function". Let us just take the Cloud function, and the industrialized approach to everything (Centralize and your business is set) - given that the Internet is likely to become a massively distributed function based on massive local communcation cells forming the net by their presence - even that ICANN operated, centrally controlled, massively surveilled system will be rendered obsolete, and replaced by massively distributed, completely uncontrollable communication structures.

This is a natural counter-move from a more and more suppressed and oppressed global population. Suppressed and oppressed both politically and automatically, so to say. The automation leaves / renders lots of people without means to live, based on this also largely accepted falsehood that one must have money to live - and in order to have money, one either need to be running a business or having a job. It means that hundreds of millions of people, who are potentially valuable in terms of their capability, are lost on the ground, due to that the automation renders them unable to fit into the industrial watch-clock - there is no space for THEIR cug-wheel. 

Therefore, Bill, there are things coming up now and in the next decades - which you may see as the quietest revolution on Earth - No blood shed (hopefully!), no unrest, just slow change-over, gradually, where the new form of money will be in the form of energy - which cannot be abused like the current American  borrow-out-the-american-dollar-note abuse of outer countries. America is for instance printing their notes, free of any cost - it just cost the paper they are printed on - then borrowing them out to other countries - and thereby they finance an inflation while receiving goods for it. When the energy-backed notes comes out - and wait and see - they will -... This story of abuse ends. 

So - the energy-revolution where energy become owned by the people - is the first step. What is coming after that, is a disruption of a scale you may not have even dreamt about ... 

IF THIS DOES NOT happen - then you will see Jared Diamond's words become true about America (and many other so-called civilizations too) - they will become extinct, in a speed more rapid than your worst nightmare. America is - if you have not paid attention to it - on its way down the abyss. Canada is not. America only. Certain of the higher developed countries - including Denmark where I come from - are on the same death-path. According to Jared Diamond the descent into the abyss starts at that point where the rulers / political leaders finally manage to disconnect themselves from any repercussions of their misdeeds. If you therefore are in doubt - read "Collapse" by Jared Diamond. If you are in doubt about who Jared Diamond is - just check his background... :-)

Well. I am heading for my workshop - because I am massively heading to establish a more peaceful world, where everyone has their own, cheap, storable energy or their own consumption - and - to support their neighbours too when this big party is coming up...

Have a nice day

David Svarrer

Rami Reshef's picture
Rami Reshef on Sep 23, 2019 1:13 pm GMT

Hello Bill,

Thanks for your interesting post and we agree with your overall metaphor that tomorrow's grid will be like the IT cloud - here at GenCell we call it the "Energy Cloud" if you will. In this distributed energy ecosystem, in addition to the important role of the GIS, there is also a need for extremely reliable independent standby power sources that, in case of grid outages, can startup on-demand and contribute stored energy for any prolonged duration until the grid can be restored.

By connecting across the grid in a microgrid topology several of these power sources - i.e. fuel cells that rely for fuel on stored hydrogen electrolyzed from water - we reinforce grid stability, stability that is now more important than before because going forward the grid is increasingly incorporating numerous intermittent renewable energy sources whose availability is at times limited in certain weather conditions. It is important to note that the energy for the electrolysis can leverage surplus renewable energy in the grid that would otherwise be lost.

Bill Meehan's picture
Bill Meehan on Sep 23, 2019 6:08 pm GMT

Hi Rami,

Great comments on the post.  I agree with you.  thanks for contributing to this post


David Svarrer's picture
David Svarrer on Sep 24, 2019 7:13 pm GMT

On the Cloud comment - I guess you have studied that cloud systems are now being insourced by the corporate businesses. 

Thereby they run the cloud systems on their own bare metal. They then run their application on the cloud system which now runs on their own hardware. 

The cloud system ensures that there is a standardized, scalable system to run on. The normal hardware with the normal operating systems does not provide that. 

In your context it would now resemble that the existing utility companies literally cuts the cables (distribution net), and centrally controls the utilization of the DER's and coordinates (with their massive experience in handling this) the distribution in local / smaller energy nets.

There is a very interesting example of this, on Bornholm - (country: Denmark) - where 800 houses have entered into an agreement where they within certain parameters are coordinating their energy consumption and storage - See - (Click on Google Translate - from Danish language to English) - and they save up to 30% in cost - as peaks are being flattened. This is a predecessor of DER's. 


David Svarrer

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