Decentralization and its relationship to cities

Published: Fri 18 Jul 2014
A blog entry by Smart Grid Watch

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In an earlier blog post, I described a movement in the utility industry toward decentralization of energy resources and distribution design. In my mind, the simplest definition of decentralized energy is "energy supply produced close to where it's used." It reduces energy losses, improves security of energy supply, and can offset energy costs. Decentralized energy systems establish local resources that can help manage impacts of consumer-installed distributed and variable generation. They provide more transparency into the actual conditions of the local network, and respond more quickly to changes requiring voltage and frequency control. They include efficient generation, monitoring, control, automation and protection for the local grid, with complementary consumer metering, load control and demand response. 

As one might imagine, this approach could fit a number of customer profiles, including developers, universities, hospitals, municipalities, utilities and "cities". Siemens has spent considerable time and effort to better understand and approach this emerging cities market.

In one case, Philadelphia, we worked with the World Business Council for Sustainable Development (WBCSD) as the lead vendor in a consortium of vendors to help the Philadelphia mayor's office identify options for improving the sustainability and resilience of their city. You can download the results report and watch the video to learn more.     

Most states' legislation for utility franchises prohibit any other entity from using their infrastructure (distribution and transmission lines), and importantly, from having their own infrastructure in parallel on rights of way. This, for example, would restrict a building owner with generation on one side of a street from adding a cable to another building they own across the street. However, Connecticut, changed legislation governing the utility franchise to allow parallel infrastructure and encourage microgrid deployments. This allowed for the state's Microgrid Pilot Program to award $18 million in funding to nine different projects. New York also recently introduced a $40 M microgrid initiative. These actions and others are capturing the attention of cities and developers nationwide that own the land and infrastructure and are interested in changing the energy landscape.     

All the cities we have approached have displayed a significant degree of ongoing interest, particularly in states where funding and legislation has changed to promote greater resilience of the electrical infrastructure. More specifically, those cities that have their own local utilities that are dependent on a larger regional utility to provide the majority of their energy needs through a few transmission substation connections (i.e. municipalities) seem to be a natural fit for this approach. Similarly, land developers that carry infrastructure rights for a significant parcel of land fit the profile.  

All in all, significant changes are happening in the utility industry, providing a strong potential for growing partnerships with cities in the coming years. 

Read more at Smart Grid Watch Blog!