“The world hates change, yet it is the only thing that has brought progress.” Charles F. Kettering, American inventor of the electrical ignition system and early distributed generation devices, made this observation. As an inventor, he had ample experience as a change agent in trying to explain new ideas and technologies to skeptical potential customers and investors.
The Smart Grid business sector is facing the same skepticism about many initiatives ranging from large-scale renewable energy grid integration projects to smart meter rollouts. The nay-sayers point to costs of new renewable energy sources versus existing fossil fuel-based sources. Critics of smart meters focus on the incorrectly installed or inaccurate meters as reason enough to stop deployments. Yes, utilities must ensure that every customer has an accurate meter, but should car manufacturers who routinely recall percentages of their fleets every year be barred from continuing to produce cars?
Changes are coming that will (r)evolutionize our relationship with electricity, and some of them are happening with less fanfare. Perhaps the lack of a spotlight aids in their progress. For instance, feed-in tariffs (FiTs) are adopted in some states and under consideration in others. FiTs require utilities to purchase electricity from individual producers of different renewable energy sources at set prices. There are a couple of variations of FiTs, but their benefits are generally the same. First, FiTs ensure that renewable and locally-sourced energy will be added to the grid. Second, FiTs eliminate costly one-off contracts between utilities and customers – simplifying the producer/retailer relationship for the benefit to both parties. The term for this is TLC – transparency, longevity, and certainty in this generator/purchaser relationship. What does this mean for Joe and Jane Ratepayer? It means consumers purchase locally-generated power, setting the stage for a vastly different grid that has many points of distributed generation instead of reliance on far-flung centralized power sources. That means improved grid reliability, reduced greenhouse gas (GHG) emissions, and avoided investments in transmission facilities, which often cost $1million/mile to construct. And that all means more bang for your buck.
Another change that is frequently in the news is the continued momentum of electric vehicles (EVs). From the recent initial public offering (IPO) of Tesla stock to the announcements of planned electrification of more existing car models, there is growing interest in EVs and their role in the Smart Grid. There’s even an acronym for one of these roles – V2G or vehicle to grid, the practice of using stored energy in EVs as dynamic sources of energy capable of discharging electricity back to the grid. The coming changes apply to new business models and policies too. For instance, a recent study from Zpryme cites activity from the state of Delaware that mandated something similar to FiTs for EVs. Their V2G policy requires utilities to buy back energy from EV owners at the same price that those owners would pay to charge their EV batteries. This means that an EV can make money for its owner.
It’s hard to oppose a change that makes you money, but it illustrates the challenges for utilities, industry associations, policy makers, and vendors face in educating taxpayers, ratepayers, and consumers about Smart Grid changes that have immediate impacts, but may not have immediate benefits. The education can occur, and should occur, but it will require concerted efforts by all Smart Grid players to ensure that the changes on the horizon are enthusiastically supported by taxpayers, ratepayers and consumers.