Tom Sloan is serving his ninth term in the Kansas House of Representatives. Currently, he is Chairman of the Vision 2020 Committee, the Legislature's long-range planning committee, and is a member of the Energy & Utilities, Local Government, and Agriculture & Natural Resources Budget Committees. Grid Insights recently sat down with Mr. Sloan to discuss transactive energy in his state and what utilities need to be thinking about when it comes to the changing energy marketplace.
Grid Insights: What do utilities need to know about transactive energy and what's the most important thing they should be thinking about in order to move forward?
Sloan: Utilities have to recognize that the marketplace is changing. Companies have choices today they didn’t have 10 years ago. IKEA, for example, has a corporate objective that all of its electric and heating needs for its warehouses be met through ground source heat pump and rooftop solar and other things it will self-generate, making its stores 80 percent self-sufficient. In the residential market you have socially engaged citizens reducing their energy consumption which further changes the marketplace dynamic.
Grid Insights: How do wind, solar and other alternative energy sources play into this and how big of an issue will that be?
Sloan: Renewable generation and storage are key. Rooftop solar and wind power are intermittent so the ability to balance power stream continuity by integrating energy storage, either in the home or through the ancillary services of a plug-in electric vehicle for example, is very important. Storage on a utility or neighborhood scale will look at a different type of energy system. We'll see self-generating grocery stores become neighborhood energy anchors. In a lot of cases they also have backup generators to keep their freezers working when power services fail. We'll find relationships where utilities, large retailers and public organizations accustomed to having backup power generation will plug-in, creating mini-grids to help keep the neighborhood lights on.
Grid Insights: What's the most interesting thing you've heard about transactive energy that surprised you?
Sloan: Many private and government agencies are working on transactive energy. But I’m constantly surprised by the lack of collaboration in terms of the educational component for the populous, public utility commissions, consumer advocates and policy makers. I’ve had conversations about how the Department of Energy could more effectively communicate the results of their pilot and demonstration studies but the initial inclination is that a project done in Kentucky, for example, has no relevance to Kansas or Montana or California. My conversations with the DOE have been about how we can do a better job of explaining how parts of pilot projects are relevant to all utilities and consumers, and getting that word out.
Grid Insights: What operational and business requirements are needed to enable a shift from traditional demand response to continuous participation in the transactive fashion?
Sloan: As a public policy person it’s figuring out how to change the rules by which public utility commissions regulate utilities to allow new types of relationships. We need new marketplace rules that don’t restrict a customers’ ability to self-generate, acting as buyer and seller of power, while protecting the integrity, reliability and affordability of the electric system as a whole. The public education aspect is another huge operational requirement. Communicating with the citizenry about what's coming, and why electricity costs may continue to rise at the same time people are asserting more control over their own consumption, and in some cases their own generation.
Grid Insights: Where do you think we'll be with transactive energy in five years?
Sloan: In five years, utilities are going to have to change their business models. They need to be a lot more interactive with customers where they’re actively buying power when it makes sense for both parties and selling power when it doesn’t. They’ll have to recognize that traditional communication, generation, and delivery models have changed. They're going to have the same problems that the landline telephone companies did when wireless devices came in. Customers began to realize they had flexibility, greater choices, and began to release themselves from the wire. Similarly, lots of electrical customers will release themselves from traditional grid delivery systems and utilities will need to find ways to provide ancillary services. Things like charging for back-up power, so if the sun's not shining they’re still delivering power.