Five Questions about Transactive Energy for David Forfia

David Forfia is the Chairperson of the GridWise Architecture Council and Senior Director of Information Technology Services at the Electric Reliability Council of Texas (ERCOT), the Texas system operator that creates the wholesale market, manages reliability functions, and enables retail switching for customers across Texas. Grid Insights recently sat down with Mr. Forfia to discuss the definition of transactive energy, the security issues and risks, and the technology needed to move forward.   forfia

Grid Insights: What is your definition of transactive energy and when do you think the industry will get to a collective definition? 

Forfia: I define transactive energy as a way of using economic techniques to optimize and simplify the delivery of electricity. We're pretty close to a collective definition. One of ERCOT’s work plans for next year is creating a decision maker's checklist for what policy will actually need to do. Part of that requires us coming up with specific use cases and demonstrating how they apply to transactive energy and why they fit within the definition. We started with a framework, which provided a lot of discussion, but not a lot of direction. The next iteration will distill the discussion down to what transactive energy means from a decision-maker's perspective.

Grid Insights: What are the security issues and risks to consider when implementing transactive energy and how do we get past them? 

Forfia: There are a lot of domains where you can implement transactive energy, one of which is within a house or an individual building. Another is within a micro grid. If you own the campus on which the system operates it's much easier to secure because you are fully responsible for administering cyber security behind one meter. However, once you get out into residential and distribution networks, cyber security is a big concern. It's those concerns that lead to the creation of advanced metering infrastructure (AMI), following standards, implementing best practices, and working together making sure to engage not only our local officials and law enforcement but also federal guidelines. That way we're aligned from an operational and response perspective as to what should be done in terms of cyber security.

Grid Insights: What technology is needed to move this forward? Is anything needed that doesn’t exist today?

Forfia: Lots of the technology exists but the challenge is how to make it inter-operate and exchange value signals. I recently had an introduction to the power matcher and an open source way of achieving value exchange. The challenge remains how to make technology small and fast enough to handle data exchange at the proper speed and optimize problems so they can be solved on a small scale without having to send data to broad scale solutions. Determining what, and how much, data to exchange between each point in a potentially transactive distribution, home, or micro grid up to the wholesale level is the technological challenge moving forward.

Grid Insights: What policy barriers to transactive energy and benefits to various stakeholders exist and how do we get over them?

Forfia: We have 100 years of policy evolved around recovering rates for distribution systems, costs for wiring, transformers, meters and the labor required to maintain them. Changes in the electrical market caused by declining loads and energy efficiency are different from what regulators are used to dealing with. Currently, there is not a policy to allocate costs and recover common, shared expenses and that creates a barrier to transactive energy. We need to figure out how to allocate those costs fairly to pay for electrical infrastructure that's already deployed and still has to run even if a user is at net zero.

Grid Insights: Where do you think we'll be in five years with transactive energy?

Forfia: In five years, we'll have transactive frameworks and platforms that can work in a micro grid. You don’t actually have to exchange money to be able to optimize things within a micro grid so there are fewer regulatory challenges as far as determining who's responsible for costs. Inside university campuses and micro grids behind the meter are probably the first places we’ll see things roll out. We’ll have limited implementations of transactive energy that go outside the meter because that requires completion of regulatory and policy discussions to determine who’ll pay for the infrastructure.