Utility of the Future – The Beginning of Transformation

This is the second in a series of articles written by this author for Intel. Following articles will focus on expanding on the concepts introduced in this article. The last article set the stage for the kinds of changes that are being seen in the utility industry. In this article, I continue to expand on those changes by using a hypothetical case study.

Energy_future“I just returned from Houston and my friend got a message on her cell phone that the power was out at their house, but that it would be back on in two hours, so we kept playing tennis. When she checked the app, she also showed me her car was only charged 80 percent but it was ok, because she was using her solar cells to charge it and it would be complete in three hours. She smiled and said she sold $75 worth of power last month back to her retailer and it paid for lunch today. She said her electricity bill now only includes a connection charge, unless she does her clothes washing and baking on the same day. I am calling PSE to see what they can provide.”

—Charles Filewych, CEO, Smart Grid Interconnect. Used by permission.

A slightly deeper analysis of the situation provides the following context for what really needed to be in place for the conversation to be real. Let us follow the conversation:

1.) Direct communication from the utility: Through an app on her smartphone, this friend in Houston was able to get an exact status of the outage in her home, an update on the charging status of her electric car, and other specific billing information.

The key is that all the information was in one place and the customer had easy access to it.

2.) Command of severe weather implications: Whether the outage was planned or unplanned, the utility was able to take full advantage of the automation and sensors in the field to derive specific outage times, which are always based on severity of the outage, availability of crews, availability of spare parts, and so on.

3.) Reducing outage times and providing a reliable partner to restore power on time: Her confidence in the length of the outage period allowing her to playing tennis for a little while longer is an important observation because she trusted that, at the end of that time period, power would be back on in her house and she could go back.

The key is that customers are now part of the equation and can plan their schedules around utility plans.

4.) Monitoring and control of energy usage: The utility had a full-featured AMI system in place, with net metering capability, and was able to determine exactly how much energy this person was consuming and how much energy she had delivered back into the grid.

The key is that the customer could take advantage of the energy tools available.

5.) Personal acquisition of renewable energy: This person had installed solar cells—and possibly other storage—on her own in her home and the utility was able to take advantage of it.

The key is that the customer and the utility worked together to take advantage of other nonutility options.

6.) Customer choice: Net metering and unbundling of the retail rate were both tariffs already in place, so she was able to then purchase her power from a third-party retailer.

The key is that the utility is the intermediary in providing other options to the customer.

7.) Rewards for reducing consumption: The fact that she was able to reduce her energy consumption so much—and almost completely depend on renewables and other equipment installed in her house—was significant to her, leading to the $75 rebate from the utility that paid for her lunch.

The key is that the customer and utility are now working together to resolve potential issues.

8.) Regulatory directive for energy efficiency: The connection to TOU (and other) rates—where she only had to pay the utility if she did her washing and baking at the same time—is significant.

9.) Plug-in electric vehicles: The full integration of the electric vehicle into the grid—from a storage availability perspective, using solar cells to charge the car—is a significant connection.

The key is that—similar to DR and TOU rates—the customer and utility are now part of the same energy equation.

It is important to note that what the typical consumer expects from other industries is much higher than what they expect from a utility, but it will get there in time. Which means that, in the next 10 years, utilities need to get their automation (and other) systems in place to deliver on this expectation. In addition, as New York’s Reforming the Energy Vision (REV) and California’s Better than Smart initiatives go operational, other states will start looking at their initiatives and push their utilities to change in the same direction.

Conclusions and Closing Thoughts

The utility front-office, back-office, and mid-office systems are all integrated, most importantly, around the customer. All of that is not the focus of this report, but much of the fundamentals come from the automation and the supported business architecture that is being defined here and which need to be in place prior to delivering on the customer mandate. If the architecture is not in place, then the utility will need to implement them on a piecemeal basis, leading to increased cost to the customer and inefficient operations at the utility.

About the Author

Dr. Mani Vadari is founder and president of Modern Grid Solutions (MGS), delivering consulting and training services to a global set of smart grid companies seeking deep subject matter expertise in setting the business, technical, and strategic direction to develop the next-generation electric/energy system. Dr. Vadari’s Smart Grid Training is delivered to educate the executives and management of the new workforce and his book, “Electric System Operations - Evolution to the Modern Grid,” is being received with five-star reviews by industry leaders. Dr. Vadari has published more than 50 articles and more than 30 blogs in leading business and technical journals.