Buildings Transform into Prosumers with the Smart Grid

The Smart Grid will trigger many transformations.  Chief among them is the change in the relationship that consumers have with electricity.  We can transform from consumption roles to prosumption roles – producing electricity as well as consuming it.  One of the most prominent enablers for us to engage as prosumers are the buildings we inhabit as work and home spaces.  Buildings as prosumers will have profound impacts on the Smart Grid value chain.  It is also a harbinger of another transformation – the shift of “power”, so to speak, from being concentrated in the hands of utilities as the sole owners/distributors of electricity, to prosumers on a vastly distributed and decentralized basis.

Buildings use 40% of the nation’s energy.   From an energy efficiency perspective alone, the National Academy of Sciences noted in a study that the “full deployment of cost-effective energy efficiency technologies in buildings alone could eliminate the need to construct any new electricity-generating plants in the United States” until 2030.

But a building functioning as an electricity prosumer goes beyond energy efficiency programs and investments.  Energy efficiency is a passive tactic that delivers firm negawatts* through reduced electricity use on a consistent and reliable basis.  Automated Demand Response (ADR) is an active tactic that enables buildings (commercial, industrial, and residential) to produce negawatts on an as-needed basis and receive ongoing payments for it.

The most common manifestations of DR programs are voluntary reductions in energy use within buildings, often accomplished by modulating interior lighting, or HVAC temperatures.  But the advent of more embedded intelligence in the forms of sensors and actuators with remote communications can create more opportunities for participation from greater numbers of buildings.  The OpenADR initiative is focused on standardizing, automating, and simplifying Demand Response programs and technologies.   It’s the most comprehensive and widely used IP-based communications standard for electricity providers and system operators to exchange DR signals with buildings and equipment within buildings.

For building owners and managers, participation delivers payments for reductions in electricity use or lower rates throughout the year – nice impacts to their operating costs.  Another benefit currently in pilot is to offer LEED credits for participation in ADR, which means that buildings will receive sustainability recognition too.

That’s not to say that there aren’t challenges to OpenADR adoption.  And these challenges map the same three drivers that consistently frame the pace of Smart Grid deployment.  Those drivers are technology, policy, and finance.  For instance, regulatory policy is extremely balkanized across the states.  While 50 states may be a great laboratory for democracy, it’s not so great to develop national cost justifications of OpenADR investments.  It is difficult for vendors to quantify the benefits of ADR to a property management firm that operates in 20 different states, with 20 different regulatory directions, multiple tariffs, and various building codes.  Technologies are still lacking in multi-tenant solutions for both commercial and residential buildings.  And green leases, one interesting financial innovation that can accelerate Open ADR adoption rates, are still at the early stages of gaining industry acceptance.

Despite these challenges, OpenADR has good momentum in some utility territories in the USA, and there are interesting information exchanges occurring between Lawrence Berkeley National Lab resources and research counterparts at labs in the Netherlands that I wrote about here and here.

This topic will be discussed in greater depth at the upcoming IBcon event in Orlando, Florida on June 12.  I’m one of the panelists in the session titled Smart Grid and ADR – How Far Have We Come?  Join me there to hear about the intersections of innovations in technology, finance, and policy that are transforming buildings in the Smart Grid.

* Defined in the Smart Grid Dictionary as Watts of electricity saved through a reduction in electricity use or increase in energy efficiency.  It is the greenest form of energy.


What Does Japan’s Top ICT Company Think (and do) About Smart Energy?

Japan’s national energy strategy experienced a 9.0 quake of its own in 2011 as a result of the twin incidents of the March 11 tsunami and subsequent Fukishima nuclear accident.  It rattled many assumptions about energy sources and electrical grid configurations for its major corporations too.  A recent Silicon Valley Technology Forum hosted by Fujitsu served as an excellent opportunity to hear how these large-scale events have shaped thinking and R&D in the leading information and communications (ICT) company in Japan, which also happens to be the third largest ICT company in the world.   Their thoughts and R&D can help contribute to North American ideas and directions to improve our energy surety as well as grid reliability and resiliency that the Smart Grid’s modernization activities must deliver.

Fujitsu’s Smart Energy vision focuses on three trends:

  1. local generation and consumption
  2. increased sensing and remote control in transmission and distribution grids
  3. increased demand response (DR) technologies and distribution grid-sited storage.

Local generation and consumption has a fair number of terms associated with it such as decentralized generation of renewable energy, in wide use in Germany as part of their Energiewende vision.  The phrase distributed energy resources (DER) enjoys more use here in North America, and covers more technologies like energy storage and DR programs rather than have a focus solely on generation sources.  While there are subtle differences in these terms, the end goals are the same, to use technology disrupters like solar panels (disrupted by virtue of technology, policy, and finance innovations) to redefine existing models of how electricity is distributed and managed.

Increased sensing and remote controls rely on technology innovations that are delivering a supply of cheap, low-powered, long-lasting wired and wireless sensors for a growing range of machine to machine (M2M) applications.  Smart meters and phasor measurement units (PMUs) are two of the first applications within the energy sector, but there are emerging applications in smart cities, transportation, and personal health too.  There will certainly be disruptive services as a result of M2M technologies.  Smart meters enable proactive outage reporting – obviating the need for customers to call in to notify utilities of service interruptions.  But other sensors attached to other equipment used in generation, transmission, distribution, and consumption of electricity will help us move from unrestricted consumption to sustainable consumption.

This transformation of consumption models is where DR and energy storage come into play.  Consumption changes from a passive state to an active state and enables market participation in generation of negawatts or kilowatts.  While negawatt generation is typically focused on DR programs, energy efficiency (EE) activities arguably could also be included in consumption.  Manufacturers like Fujitsu are developing new circuits that reduce energy consumption by reusing energy stored in specific transistors.  These circuits could show up in the power supply units of servers by 2014.  Fujitsu demonstrated their OpenADR 2.0 server software which could send messages on a wide scale to devices enabled to receive signals and reduce energy usage in reaction to those signals.  Ability to communicate at a scale of thousands to millions of devices, as opposed to today’s hundreds, will be crucial for residential or commercial DR programs to be fully effective in the future.

Fujitsu researchers described a very interesting variation of the typical DR program.  In this scenario, specialized plug loads that have their own battery resources (ie laptops) are controlled in an office building to “disconnect” from the grid and run on battery power.  When aggregated over a sufficient number of devices, building loads decrease.  It’s a creative alternative to the usual reductions in lighting or HVAC loads for organizations that want to participate in DR programs that reduce energy use at peak times and save money for building occupants (reduced energy bills or increased DR payments) and ratepayers (avoidance of investment in new generation assets).

The Smart Energy trends discussed by Fujitsu during their Forum illustrate significant synergies.  If we have intelligence in the grid and the associated communications networks to build situational awareness of devices, regardless of their status as generating, storing, transmitting, or consuming electricity, we can create completely different grid that co-locates generation (or storage) with consumption.  Reducing reliance on geographically remote generation reliant on vulnerable transmission and distribution wires does deliver energy surety as well as grid reliability and resiliency.