The primary Smart Grid transformation drivers are technology, policy, and financial innovations.   Of these three drivers, technology and policy are much further advanced than finance.  Perhaps no country has been more aggressive in its policy innovations than Germany.  The Energiewende* or Energy Transformation is a natural experiment to transition the current centralized electricity grid architecture and model to an architecture that supports decentralized and renewable sources of generation.  It’s a brave new world of energy autarchy or surety that the Energiewende is crafting.  But there’s a downside to this grid transformation in the form of grid resiliency.  The stability of the grid is impacted by the large amount of distributed solar that exists in the grid.  The intermittency of solar can create balance of system issues.

Christoph Burger, energy expert of the European School of Management and Technology, and a co-author of the book The Decentralized Energy Revolution said, “Security of supply has become a focal point of the political debate surrounding electricity market design as renewable energy creates instabilities in the grid.  At the same time, new market solutions such as demand response initiatives, virtual power plants, storage parks or energy-autonomous regions are in development, being tested and implemented.  Regulators and political parties currently discuss two approaches for solving the challenge: capacity markets and strategic reserve.”

There’s no question that these transformations were caused by regulatory policy, but the evolving grid requires market changes that encourage the entry of new participants delivering kilowatts or negawatts.  In Christoph’s opinion, “The markets will decide on the prices paid for security of supply. It should be in the spirit of regulators and policy makers to not undermine these incentives.”

The evolving grid also requires new technologies to assist in its oversight.  Enrico Amistadi, Smart Grid Industry Solution Director for Ventyx, an ABB company, emphasizes that the solutions utilities need now must support proactive rather than reactive management.  As the grid integrates more distributed resources, grid managers must anticipate critical grid events before they happen. Enrico noted, “A modern grid control room has to include much more than just grid monitoring and supervising to be truly effective. Sophisticated forecasting techniques, power flow models, demand response and advanced analytics should be used all together to anticipate how the existing and new resources will impact the grid in the short term. The system should also account for the corrective actions and support and advise the user based upon the respective impact of the available operational options..”

Ventyx is working with E.ON to create the “next-generation” control center for the Smart Grid.  The control center in Malmo, Sweden, is expected to be operational in early 2014.  The project scope is ambitious and reflective of the scenarios confronting utilities around the globe.  Today’s control centers were designed for a different set of assumptions about electricity generation and consumption.  Power system environments are becoming more complex as new sources of generation are added into the distribution grid, and as Demand Response programs can scale up to include greater numbers of intelligent devices that can modulate their electricity consumption.  The solution embodies what we often describe as the convergence of OT (operations technology) with IT (information technology) to deliver more granular remote monitoring and control of grid operations as well as improved power flow models that address grid congestion before it becomes a problem.  In other words, there needs to be much more melding of hands-on management with planning and forecasting of generation and consumption that share the characteristic of increased variability. These are key requirements for a successful transition to grids that support Transactive Energy concepts.

Is the Energiewende paving the way for the future European business model, or will it remain uniquely German?  We’ll hear more about the policy responses and the business model evolution as part of Christoph’s presentation at the Building Resiliency in the Distribution Grid session at European Utility Week on October 17.  Enrico will provide more detailed information about how technology innovations for the next generation in control centers can support the transitions to more decentralized and distributed generation.  These are important lessons to absorb as we transform electric grids into Transactive Energy grids.

*Note:  What’s the difference between Energiewende and distributed energy resources (DER)?  Energiewende is a concept focused on distributed generation.  DER is popularly used in North America, and encompasses energy storage and DR programs plus generation sources.  Regardless of the differences in these terms, the objectives are the same – to use technology, policy, and financial innovations to redefine existing models of how electricity is distributed and managed.

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