New technologies are opening the utility domain to innovation and competition. Traditional utilities will shrink as outsourcing providers and competitors grow. Survival in this new market requires...
From Grid to Cloud
A network of networks – in search of an orchestrator.
The power sector is transforming. It's changing from a centralized, one-way hub-and-spoke grid - based on large centralized generation assets like fossil fuel, hydro, or nuclear power plants - toward a more decentralized grid, with an increased role for renewables and distributed energy resources (DERs).
We call this new grid the Energy Cloud. 1
This shift encompasses technologies and solutions like integrated demand-side management (iDSM), microgrids, virtual power plants (VPPs), storage, electric vehicles (EVs), and others. It also includes advanced software and hardware to enable greater control and interoperability across grid elements. These changes will necessitate new business models, new players, adapted regulations, and new ways of financing, building, maintaining, and operating the grid.
The Energy Cloud will change the way we generate, store, and consume energy. It marks a change from a one-way power flow to a dynamic network of networks supporting two-way energy and information flows.
We need only quote the current U.S. Secretary of Energy, Dr. Ernest Moniz, to verify what's happening: "I believe we are actually in the revolution...right now." 2
Consider these tipping points and what they mean for the future:
- Distributed Generation. Annual installations of new distributed generation capacity are projected to surpass new centralized generation by 2018, both in the U.S. and in many other countries.
- Gas-Fired Generation. U.S. generation of electricity fueled by natural gas exceeded coal-fired generation in April 2015 - for the first time since EIA began collecting monthly generation data in 1973.
- Solar PV. The installed cost of distributed solar capacity is projected to fall below $3/Watt for residential photoelectric capacity, and below $2/Watt for commercial PV by 2020 (if not sooner).
- Utility-Scale Solar. Utility-scale installed solar energy production has fallen in cost to levels less than $40/MWh in U.S., and is expected to come in around $10-20/MWh within the next 3-5 years.
- Storage. Investments in storage are projected to exceed $13 billion by 2020. 3 Tesla's announcement of its home and business storage solutions will give home and commercial storage a big push, further accelerated by key partnerships with utilities (Enel) and other DG vendors (SolarCity).
- Renewables. Spurred by carbon regulations in Europe and the U.S. (proposed), investment is shifting toward carbon-efficient resources such as renewables, as well as energy efficiency.
- California & New York. Regulatory reforms underway in California (e.g., Assembly Bills 327 & 2514, and Rule 21), and New York (Reforming the Energy Vision or "REV") are driving transformation.
- Microgrids. Weather-related outages have prompted various states (New Jersey, New York, Connecticut) to boost resiliency by adopting policies that to support distributed