The Smart Grid – It’s More Than Grid Modernization, It’s Grid Transformation

The Smart Grid is all about grid modernization and transformation. When we modernize the grid, we update technologies, but leave in place existing energy sources, existing business models, and existing policies.  When we transform the grid, we exchange old energy sources for new ones, reinvent business models, and revise policies to support the transformations.  Of the two, transformation is ultimately a much more difficult objective but it also holds the greatest rewards.  Why?  Simply put, transformation delivers energy and economic security.

The current grid has taken modern society as far as it can, but we’ve seen its shortcomings magnified on a global scale over the past few years.  Reliance on fossil fuels for electricity generation and transportation has real downsides to the health of the citizens of Beijing.  Their ongoing “airpocalypse” of hazardous air quality is a public health emergency.  In the USA, reliance on centralized, just in time generation has expensive downsides to our economic vitality as witnessed in prolonged outages caused by derechos and hurricanes.  A grid that is built to meet performance expectations based solely on reliability and not on resiliency cannot adequately support an electron-based economy.

Development of alternative energy sources that replace fossil fuels has been a top priority for electric grid transformation.  For example, the US military is concentrating on buildouts of microgrids into their fixed and mobile bases that integrate renewables as energy sources. The prime mover, as noted by Vice Admiral Dennis McGinn (USN, ret.), president of ACORE (American Council on Renewable Energy), is that renewable energy is essentially free.  That’s real economic security.

We are enjoying the results of several years of advances in solar technologies and services.  The costs of panels are doing down as the harvestability ratios go up.  We’ll continue to see exciting innovations in technologies and services.   The recently announced peel and stick solar cells can make more devices self-generating.   Companies like Geostellar create online solar marketplaces that connect potential solar customers with information, suppliers, and services.

Energy storage is a critical technology to aid the transformation to the Smart Grid, and serves two purposes.  First, it helps firm the intermittency of renewable energy sources like wind and solar.  Second, it can deliver much-needed resiliency to grid operations when it is deployed in distribution grids at points of consumption.  Like renewables, energy storage technologies will benefit from enlightened federal and state policies that encourage R&D and pilot deployments that stimulate innovation and build practical knowledge applied to further technological, policy, and market improvements.

The recent history of renewable energy illustrates how policy can accelerate grid transformations.    California’s Solar Initiative has 1 gigawatt of rooftop solar in production already, and New York’s recently announced NY-Sun program calls for an annual investment of $150 million for 10 years to stimulate solar deployments.  The introductions of Green Banks like those forming in Connecticut or announced in New York use public and private funds for energy efficiency and energy generation projects.  California may allocate all the revenue from a tax loophole closure to fund energy efficiency and renewable energy projects at primary, secondary, and community colleges, and reduce energy bills.

California took a first step on a similar trajectory for energy storage in 2010, directing the state Public Utilities Commission (CPUC) to study the feasibility of energy storage on a widely distributed scale. The CPUC could set mandates for each state Investor Owned Utility (IOU) to procure energy storage, and the final report is due soon.  What remains to be seen is if other states move to consider similar policies, and the forms that financing takes for energy storage as standalone or integrated components in renewable energy projects.

Technology and policy are relatively easy challenges compared to the changes needed to business models and operations.  These challenges will get more detailed exploration in future articles.


Simulating the Sun – Using Analytics to Expand Solar Markets

Installations of solar systems that generate electricity are coming down in price due to materials innovations and manufacturing efficiencies.  But it’s been a challenge to wring costs from the part of the value chain that is focused on business origination – identifying and marketing to qualified opportunities, conducting site assessments and system design, and financing the projects.   It is labor-and time-intensive work.  According to David Levine, CEO of Geostellar, a solar installer can expend an average of $4000 per deal on these activities.  For the average 4kW home, that works out to be about $1/watt, or 25% of the total installed price.  His company has an innovative answer that harnesses the power of data to improve operating efficiencies for business origination activities.  

Residential and commercial solar installations at the sales proposal stage require data about the best rooftop or ground potential for harvesting solar energy, coupled with detailed knowledge about utility rate structures, load profiles, and incentives like renewable energy credits (RECs) and net-metering and/or Feed-In Tariffs (FiTs).  These proposals need data about local zoning ordinances, and the impacts of vegetation and structures such as chimneys on overall solar productivity.  This data is extremely siloed, meaning it exists in a variety of unrelated information sources and is difficult to aggregate and ensure overall consistency.    

Geostellar uses advanced data analytics that include proprietary predictive algorithms to simulate the sun in 15 minute increments that account for atmospherics, slope and orientation of rooftops or ground, and shadowing from obstructions.  Their geomatics (geographically-referenced data analytics) solution estimates the solar energy production potential for any site.  The solution breaks down the silos between various sources of rates, building codes, and financial data to calculate internal rates of return and prioritize sites for marketing or deployment.  And most importantly for solar installers, the solution delivers a 75% drop in the origination costs to about $1000 per home. 

That’s good news for states like California, which just increased the cap for net metered solar generation and whose investor-owned utilities have aggressive renewables generation targets to meet by 2020.  It’s also good news for property owners (individuals to REITs), utilities, and companies that install or finance solar equipment.   Cost reductions make solar more feasible for a larger number of properties.  And not just solar technologies for generation of electricity.   Geostellar’s solution has equal applicability for determining the best insolation and ROI potential for solar water heaters, solar attic fans, and solar pool heaters – energy efficiency and storage plays.   

Knowledge is power, and that’s never been a truer statement than now as we see more innovative ways to apply advanced data analytics in the Smart Grid.   This detailed knowledge helps consumers become prosumers, and the proliferation of these technologies in the distribution grid will drive demand for other Smart Grid-enabling technologies and services, such as community and residential energy storage and companies that serve as energy négociants.

Knowledge is also money.  The Geostellar solution produces the sort of data that is the equivalent to the crown jewels of the oil companies – their maps of oil and gas potential.    That’s one reason why they recently closed a Series B investment round led by NRG Energy.  As quoted in the June 5 press release, NRG’s Denise Wilson, Executive Vice President of NRG Energy and President, Alternative Energy Services stated that “Educating and informing the public on the solar value of their properties is an important first step in creating a thriving market for clean, green and renewable energy solutions.”  That’s a Smart Grid impact that will be profoundly influential in transforming consumers into prosumers.