Three Consequences Of The Transition Taking Place In The Electric Sector

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Our increasingly digital world has raised expectations for speed:

Speed of communication = smartphone (iPhone, Android).

Speed of travel = car sharing (Uber, Lyft).

Speed of information = internet search (Google...well, just Google).

Speed of financial transactions = real-time payment (Venmo, Stripe).

There appear to be few barriers to accelerating the speed of anything to its utmost physical potential using the miracle of 21st-century information technology. For the flow of digital information, if it is not in real time, it might as well arrive by horse and buggy.

This phenomenon took the telecommunications industry by storm during the early part of my career, and the world has never been the same. Real-time, secure communications worldwide is a reality that has fueled the burgeoning digital economy.

A transformation not unlike what I witnessed then is now taking place in the electric power grid. Lest we forget, without the ever-present availability of electricity, the world as we know it does not run. This makes it all the more egregious that it is running on obsolete, 20th-century technology.

An Electric Sector In Transition

The holy convergence of economic competitiveness and consumer demand is driving the exponential growth of renewable energy, with energy storage soon to follow. In 2016, new capacity added to the grid from renewables exceeded that from traditional coal and gas sources for the first time. What is taking place is much more fundamental than just technological substitution. The entire character of the electric grid is changing, from centralized, large-scale generation to a proliferation of smaller-scale, distributed energy resources that are cheaper, more efficient and much faster to deploy. In concert, the energy regulatory environment is shifting to accommodate the addition of new distributed generation while simultaneously injecting competitive market forces. Similar to the breakup of Ma Bell, dismantling arguably the largest remaining monopoly in the country is stimulating more innovation -- and creating challenges -- in a “network” business known as the electric power grid.  

Consequences Of This Transition

1. The Dilemma Of Big Data

While these technological and regulatory advances are transforming the business models of utilities and their energy retailer cousins, a challenge looms -- big data. Yes, big data equals big problems in an industry that is still running billions of dollars of transactions using Excel spreadsheets.

This energy transition has created exponential growth in data and complexity, which, if left unresolved, will stymy the growth of renewables and distributed resources and keep the electric grid stuck in the 20th century.  

Again, the reason comes back to data -- a truck-sized firehose of complex power data that is impossible to make sense of using current information and transactional systems. To put this in perspective, there are more than 12 million backup generators in the U.S. This number dwarfs the number coal-fired generation stations (over 700) operating in the U.S. Just in backup power capable of serving as a distributed asset behind the meter, this represents an exponential increase in data and complexity for the grid.