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Building a Better Utility

Many of the obstacles and strategic issues that utilities face today are all too familiar. This time they must be solved with a different business model.

Fortnightly Magazine - June 2005

would happen to your load forecasts if the majority of your customer growth is siphoned off by DG installed for stability and reliability, not cost.

Another rather clever reason: Digital power is DC. We generate power at DC, convert it to AC, and then convert it back to DC. That is not efficient. And because all those converters weigh a lot, take up space, and consume unnecessary energy, someday that will change. Someday a small DG unit may sit in the basement and a dedicated circuit in all new housing will service digital equipment.

Smart and Reliable

So if the future is distributed generation, why not get there as fast as possible? Why even consider building 30-year assets that require years to license and build when forecasts just 10 years out are a roll of the dice?

And think of the value for gas companies in a distributed generation future. One where small units distributed throughout the system are networked in to a smart and reliable grid. A network of units (think of them as agents) that "learn" and "adapt," that design the most efficient system, the most efficient network, the most efficient combination of supply and demand and price possible without any input from us mere mortals.

Sound a bit crazy? Perhaps. But I believe it is the future—"smart matter" in John Seeley Brown's words, or matter that can remember and learn, matter that can distinguish where high quality power is needed, where and when energy has a high value, where and when interruptions might be tolerated or even disregarded.

Today's electric power system is not flexible, scalable, or economical. It is a command-and-control system. Yet the most powerful systems in the world are just the opposite. The more powerful, the more complex a system, the more it can neither be understood nor operated and controlled by a central point of intelligence.

The electric system could be designed and operated just like the Internet. It could be controlled by algorithms, not by human system operators. Sound futuristic? Sound crazy? Sound expensive? If so, consider what such a system might prevent: siting and building a new 1,000-MW plant; $10 gas prices; constructing an LNG terminal; and costly, erroneous forecasts.

Get the prices right, and the rest shall follow.

Prices to Customers, Shareholders, and Employees

John Maynard Keynes wrote, "Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally." We need to prove that wrong. This industry does not have the luxury of doing things conventionally.

Customers need lower prices. Shareholders need to be rewarded for the risks they take. Your utility employees are the only ones who can make that happen. Technology can help them.