Utilities: The last innovation needed to free up the energy market

We all are prisoners of the utility power market. This has been true for the last century. Will today's approach with renewables allow us to free ourselves? Yes, but the innovation and the concept will not come from the usual suspects. Here's why.

Most of today’s approach on renewable must rely on 2 central paradigms that funnel their innovation. The first paradigm relies on the technical and organizational legacy centralized over large grid that can only be orchestrated by a single entity (usually a control area). That centralization of the decision needed to operate the grid and the obligation of having extensive planning of the resource limits the capacity to quickly adapt to new technology. The second paradigm is a corollary of the first one. Because of the planning nature and the central decision process of the grid, only innovation that serves to maintain this hegemony is subsidized or can be financed by investor. This is similar to the centrally planned economy approach use by the east country in the post-war era.

We need to rethink this approach. The next innovation frontier is to remove the necessity for a central auction and control approach in favor of self-forming, peer-to-peer energy trading nanogrid. We should innovate to the point of the possibility that any new energy source can be added or removed in the grid as appropriate without affecting system stability. Local customer and innovator will then be able to figure out the best possible way to solve local and global energy needs. This means innovation in technology (distributed grid control and optimization), Regulation (ending monopoly and centralized subsidies) and reinventing the utility business model. This approach will enable tremendous energy efficiency to emerge. This will also lower the barrier to entry for renewable technology and allow for a fast pace deployment of new technology.

Transactive Energy (a concept developed by the U.S. based GridWise Architecture Council and Pacific Northwest National Labs (PNNL)) is another illustration of how this new approach can enable market. TE is both a technical architecture and an economic dispatch system highly reliant upon price signals and rules allowing for markets to develop that enable a wide variety of participants to provide services directly to each other in a “peer-to-peer” fashion,

Ossiaco Inc. of Montréal, Canada is a pioneer in the quest for technically sound and economically viable approaches and products to enable TE. They have developed a first-of-a-kind product called NanoGrid(TM) which is tailored for residential and SME commercial and industrial prosumers.

NanoGrid(TM) is a local "control center" relying on a full distributed architecture that do not rely on any central decision point. It manages and optimizes generation and storage from any and all available sources, in real-time, and interfaces with most demand side management solutions, to meet site demand for electricity at the lowest possible cost and significantly improve the return on investment of the small grid owner. Finally, it allow peer-to-peer real-time energy trading without any central auction intervention.

The main beneficiary of NanoGrid is the prosumer however the local utility can also derive benefits from more accurate load forecasts - resulting in substantial savings in ancillary services - and from peak shifting to protect and extend the life of the aging distribution grid.

It can be further argued that the technology is win-win-win because governments can accelerate the reduction of costly and market distorting subsidies.

And win-win-win-win as consumers worldwide benefit from more available, affordable cleaner power with all the attendant economic, health, educational and quality of life benefits.