The utility of the not so distant future

Published: Tue 25 Mar 2014
A blog entry by Smart Grid Watch

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Utilities are continuously put under significant pressure to evolve their businesses to account for a variety of challenges. 

Among them:

-Integration of distributed renewable resources on distribution feeders

-Corresponding changes to protection and safety practices 

-Emerging microgrids 

-Limited visibility into the state of the distribution network with largely manual processes to address problems

-Limited knowledge and predictability of individual consumer loads to aid operations decisions

-Difficulties in forecasting fluctuations in weather driving corresponding variation in renewable generation 

-Coordination of operations reserves and potential use of advanced storage technologies

-Retirement of significant fossil-fuel generation resources 

-Expense and value proposition for AMI and electronic meters 

-Difficulties in developing incentives to encourage participation in demand response programs 

-Increasingly devastating storms and decreasing tolerance of communities to outages

-Regulated business models that are inflexible to account for cost recovery of new technologies and delivery models

-A limited and diminishing skilled workforce

A common element driving these challenges is the appearance of significant distributed generation (DG) on many utilities' distribution systems. This has been supported largely by state and federal incentives for efficiency and sustainability. Its growth has essentially been consumer driven, not coordinated with/by the local utility in regard to placement, capacity, and control for reliability, protection, and safety. In some states, like Hawaii, New Jersey and Arizona, the growth has been astronomical, reducing utility revenues, placing the utility delivery system at risk, and resulting in interconnection restrictions, slowdown in DG technology deployment, and general consumer dissatisfaction. Combined with lengthy restoration efforts in recent extreme events, many utilities are scrambling to manage the situation with their consumers and propose improvements to the current infrastructure acceptable to their local regulatory commissions. The bottom line is: the current delivery infrastructure design is challenged and must change to account for local generation not within its control, both distributed and variable, where the flow of power in the distribution system could be bi-directional. 

Some utilities see this as a significant threat to their business while others perceive it as an opportunity, and the model for the future utility business. I tend to agree with the latter, and we are seeing significant activities in some states like Connecticut, New York, New Jersey, Hawaii, Arizona and California that would support this direction.

I was recently interviewed for an article for the March edition of Public Utilities Fortnightly about the concept of “utility 2.0” where I echoed many of the points above. Although some of their questions addressed the utility of 2050, I emphasized a lot of the technology is there now. Good products are available today. But the other part of technology is network design. It was a radial distribution grid, and now we're getting uncontrolled sources popping up and creating problems for the central design. There are two ways to solve those problems. One is with quick fixes, some form of local upgrade, or controllable storage or DG. But those are Band-Aids to accommodate uncontrolled DG. The other approach is to redo the system design. That might include dropping in some controllable storage or DG, but it will happen as part of an overall design solution.

Ultimately, this represents movement toward a more decentralized energy delivery design that supports reliability, efficiency, sustainability and resilience. As an industry leader, we must assess and account for the effect of "decentralization" within our solution strategy, product capabilities, and services offerings as we move forward. We need to wrap it into our daily thinking as to how we can better serve our customers, plan our product roadmaps, craft our service offerings, and increase our presence in the market.   

To read more about the current “State of the Utility” I recommend taking a quick look at the recent survey conducted by Utility Dive that I mentioned in my previous post. I think you will see that many of the concepts facing the “utility of the future” are ones that many utility executives are already thinking about today.