Back when the light bulb was the killer app of 1879 and the nascent electrical grid was shaped by a series of technological innovations, reliability was the most important metric to structure grid performance expectations.   People had much less reliance on the grid then.  The economy could get along with the technologies from a pre-electrical age – gas lamps or kerosene; wood burning stoves; and localized steam generation to power equipment and heat buildings.  Mobility was managed by horses or trains that burned wood or coal.  Prior to 1903, electric appliances like washing machines didn’t exist.  Gradually, people learned and embraced the value propositions that electricity could be delivered at a steady state and unlike other energy sources, and didn’t need to be constantly replenished at their home or businesses.  And electricity started finding uses that existing energy sources couldn’t match, like illuminating the first night-time baseball game in 1935.

We now have a complete and utter reliance on electricity.  And although reliability remains an important measure of grid performance, the current designs lack resiliency – the ability to recover from failures.  Consider the blackouts that occurred in India on July 30 and 31 2012.  The economic damages are still being calculated, but it could have been worse.  The grid in India had islanded pockets of resiliency at the distribution grid level to overcome known grid reliability shortcomings.  Many businesses and residential districts still functioned because they had microgrids and local generation to support their requirements.

In the USA, we need to consider how innovative technologies and markets could deliver similar resiliency on a managed and coordinated scale.   And yes, innovations will disrupt existing stakeholder models – particularly utility and regulatory entities.  As noted in previous articles, technology and market innovations changed the wireline telecommunications and computing sectors, and there aren’t many defenders of the old business models left today.  We will see tensions regarding disruption to the status quo unfold with electricity markets.

You can watch it in action in California, where an innovative change to local electricity markets is being debated.  California Senate Bill (SB) 843 – the Community-Based Renewable Energy Self-Generation Program – proposes to create new electricity markets where subscribers buy kilowatts from a renewable energy source and receive credit against their electricity bill for the kilowatts produced and sold back to the utility.  This means that renters (residential and commercial) or condo owners who live in multi-family housing with shared roofs could participate in the burgeoning DG electricity market that is bolstered by Feed-in Tariffs (FiT) and net metering.  More consumers can become prosumers – producing consumers – through this type of program.   More participants may trigger more opportunities for DG investment.  More DG results in assets that could potentially fit into virtual power plant (VPP) plans managed by utilities or other energy service providers.   VPPs are important assets to build grid resiliency.

A truly Smart Grid will look and perform differently from the grid we know today.   DG provides clean, locally-produced electricity that is the foundation for a redesign of the electrical grid into one that is reliable and resilient.  This proposed legislation leverages technology innovations in solar, microwind, and other clean energy sources to redefine retail electricity markets and participants in them.  It helps set the stage for low-voltage electricity generation to be transformed into “cloud-based assets,” and concepts of peer to peer generation.   It will be interesting to watch how this legislation proceeds.