A very important conference occurred in Portland, Oregon last week – the Gridwise Architecture Council hosted the first international Transactive Energy Conference. The topic of transactive energy is so new that there’s no formal definition yet, but as the author of the Smart Grid Dictionary, here’s my suggestion. Transactive energy is a software-defined, low-voltage distribution grid that enables market participation by distributed energy resources (DER) bidding generation of negawatts or kilowatts. Transactive energy describes the convergence of technologies, policies, and financial drivers in an active prosumer market – where prosumers are buildings, EVs, microgrids, or other assets.
Transactive energy will play a critical defining role in grid modernization and shaping the Smart Grid. Buildings, as noted in last week’s article consume 40% of the nation’s energy. And while building owners can justify purchase decisions on energy savings as well as sustainability values, there’s another crucial factor for building owners to invest in technologies that reduce energy use and deliver self-generation. That reason is to address the increasing vulnerability of the electrical grid to momentary and sustained power outages to both natural and human causes.
Buildings and their occupants are impacted by grid-related power outages. The negative impacts range from reduced work productivity and decreased occupant safety and health to reductions in lifestyle standards. Just like real estate values are higher for green buildings with LEED recognition, in the future, buildings that are grid-hardened may command premium prices because they preserve delivery of services regardless of grid status. It is a compelling new variable in value propositions for tenants and occupants.
Conference presenters from the Department of Energy, Pacific Northwest National Lab, and utilities including Bonneville Power Administration and Portland General Electric asserted that buildings and microgrids can and should become part of the solution. Buildings and microgrids can become “hardened” nodes in the grid – meaning they can provide some or all of their own energy as situations dictate. To do that buildings need to be much more intelligent and energy self-sufficient than they are today. They need to be self-configuring in energy needs and engaged in continuous commissioning through data accumulated from energy generation, storage and consumption assets, occupant activities, and other sources like weather reports.
A quick gap analysis reveals that today’s technologies such as building energy management systems (BEMS) need to improve in several ways. First, they need to become more ubiquitous and deployed in small and mid-sized buildings – not just large ones. Then, disparate BEMS made by different vendors will have to exchange data building to building, not just building to grid. Finally, BEMS have to be easy to retrofit into existing building stock. In short, BEMS need to be affordable, scalable, use open communications protocols, and be easy to deploy and user friendly.
Other gaps are policy-related, with more immediate impacts on utilities rather than building owners and facilities managers. Regulated utilities are not incented or funded to be innovative, aside from the Smart Grid Investment Grants (SGIG). Regulated utilities are also not motivated to build resilient grids, and today’s metrics for reliability are just regional guidelines rather than a national benchmark for a minimum uptime requirement. The real costs of outages are not factored into regulatory decisions today.
Finally, we need to build transactive markets for assets that could be microgrid generation, building-based energy storage, or negawatts generation through ADR (Automated Demand Response) programs. Simply put, the current market that exists at the wholesale or bulk electricity level has to be pushed downstream to the retail or distribution grid level and expanded to accommodate energy storage. A challenge yes, but one that has been solved by Wall Street to create a large-scale distributed and decentralized market for stocks with participation by large funds as well as individual investors.
It will take time to get from point A, today’s grid and building technologies and power markets to point B, a Smart Grid with intelligent buildings and transactive markets, but it can be done. And after participating in the Transactive Energy Conference in Portland and hearing about the initial plans and progress being made, I’m convinced that it will happen in my lifetime.
Building strategies to prepare for a transactive energy future will be discussed at IBcon in the session titled Smart Grid and ADR – How Far Have We Come? I’ll share more insights into how buildings can be major transactive energy actors in the Smart Grid.