Who’s afraid of the transactive grid?
This term “transactive grid” suddenly is getting a lot of attention. It seems the vacuum left by the late, great “smart grid” (ca.2004-2012) demands to be filled. So here comes another inscrutable buzzword to excite sales people, confuse politicians, and annoy engineers.
But like other such terms, “transactive grid” (or “transactive energy,” depending on your agenda) arguably is describing something that already exists. Just as “smart grid” described automation and control systems in development for decades, so “transactive energy” is another way of saying price-responsive demand and locational pricing. It’s nothing new … or is it?
More than a decade ago – just as Enron was imploding and the industry was digesting FERC Order 2000 (which created organized power markets in the form of RTOs and ISOs) – Fortnightly published an op-ed by Wayne Crews and Fred Smith (“Electricity Restructuring is No License for Central Planning,” June 2002). The authors – from the Cato Institute and Competitive Enterprise Institute, respectively – offered a contrarian perspective. They claimed that FERC’s market vision was actually stifling innovation in the more important part of the business, the grid itself.
They didn’t know it at the time, but Crews and Smith were advocating a transactive grid.