Until recently, the electric utility was the sole guarantor of a healthy grid—one that’s resilient to natural and man-made threats, efficient, and reliable even under extreme demand.
While the utility’s role remains paramount, it now has a partner: the customer.
With today’s new technologies, distributed energy resources, and third-party developers, customers can produce energy and manage their own energy consumption. For utilities, these new options mean less control, and even lost revenue, but they can work in a utility’s favor when it comes to maintaining the grid.
Keeping the grid healthy now requires utilities to strengthen their relationships with customers, especially as more distributed energy and Internet of Things devices (such as smart thermostats) come into use.
Utilities need to educate and guide customers, while instructing them to choose and operate new energy offerings and technologies.
What is a healthy grid?
Educating customers means defining the standards of a healthy grid and help customers understand how they benefit directly.
So what does a healthy grid look like?
A healthy grid provides a customer with electricity that is reliable, resilient, and priced fairly.
When a customer flips the switch, the lights come on. If a storm or other calamity knocks out power, restoration is quick.
The customer can count on a healthy grid to be resilient in the face of cyber risks. The local utility remains abreast of threats, installs proper software protections, and educates its employees on how to ward off phishing and malware.
And finally, a healthy grid produces fair and predictable prices, not subject to sudden rate hikes because of poor management of supply, demand, or infrastructure. At the same time, regulators would ideally assure that the utility receives proper compensation to account for its obligation to serve all. A grid is not healthy if it cannot serve all who want electricity.
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Three paradigms recreating the grid
A series of events make now the opportune time to focus on grid health.
First, we can now “green the grid"—that is, add low- or zero-emissions generators—without driving up energy costs. This is because the prices of four key resources have fallen dramatically: from solar and wind to energy storage and natural gas.
- Solar photovoltaic prices fell 52 percent over the last five years
- Wind energy costs have dropped 90 percent since the early 1980s
- Prices declined 79 percent for lithium-ion batteries since 2010
- Natural gas prices have hovered in historically low prices since 2010
Second, we’ve entered the age of smart energy management thanks to growing use of digital technologies. These technologies allow both customers and utilities to visualize and fine-tune energy use, production, and delivery for maximum efficiency.
And third, the power industry is now competitive, largely because of industry restructuring. Customers in much of the Northeast, Mid-Atlantic, Texas, Ohio and Illinois can choose their own electricity supplier. This puts pressure on utilities to keep up with fast-moving changes in technology, consumer preferences and pricing. Fortunately, utilities are well-positioned to do so because they are familiar with their customers and their customers with them.
The power of the “Prosumer” in a healthy grid
Gone are the days of the one-way relationship between utility and customer, as smart technologies and appliances increasingly become the norm. Through grid modernization efforts, utilities can have a clear visualization of the distributed generation installed by customers—solar, wind, combined heat and power, energy storage, etc.—so that it can integrate and manage these resources. With sophisticated software, the utility will be able see all of these devices on its system and understand how to orchestrate them in a way that supports competing demands.
Timing is also key. Utilities will soon collect data in near real-time, giving utilities and customers constant feedback so that they can adjust usage and production for best price, maximum efficiency and lowest emissions.
Masters of their own energy supply—and part of a dynamic system that changes based on when and how they use or produce energy—the new energy consumer becomes something more. Some call them “prosumers” because they both consume and produce energy.
New business opportunities for utilities
These changes are exciting, but they also create complexities—there is no single path or silver bullet. Not all customers will want to take the time to manage their energy supply, track pricing, or install solar panels on their roofs or electric vehicle chargers in garages; even those who do often need the utility’s help. This opens a new business opportunity for utilities, which is good news in an era of flat electricity sales.
Utilities throughout the U.S. are uncovering a broad spectrum of new services they can provide to increase their revenues and create a healthier grid. These range from simple installation of energy efficiency equipment and smart meters to serving as whole new entities.
For example, New York’s new energy policy, known as Reforming the Energy Vision, gives a utility the opportunity to act as a distributed system operator, upon which it would run exchanges for the buying and selling of energy from distributed energy resources. Utilities in the state already are offering programs to test this approach.
What do these changes tell us? It may be time to stop thinking of the customer as a consumer or even a prosumer. The customer will soon have so much influence on the grid, you might even say the customer is the grid. Let’s continue to explore how we get there.