The utility industry has made great progress in grid transformation and modernization since the rst edition of this book was published in 2012. In my view, one of the most signi cant changes has been at the “grid-edge”—the area of the distribution network close to the customer and at the customer interface. Distributed energy resources (DERs) and the IoT (Internet of Things) will be key technology deployments at the grid-edge. While the deployment of smart meters and advanced metering infrastructures in the USA seemed to reach a plateau when the rst edition of this book was published, the meter communication networks are now proving to be valuable foundations and operating experiences for real-time communications to the grid-edge. Pervasive and cost-effective sensors and controllers will also be essential for the smart grid IoT, and to enable transactive energy exchange between customers in an open retail market. The emphasis will be on device interoper- ability and data connectivity.
We have seen recent changes in the USA net-metering programs for retail customers signaling the need for an increased focus on DER energy exchange on the grid. Both wholesale and retail markets will need to support DERs and the dynamic balancing of supply and demand resources across the grid by moving toward real-time, market-based locational pricing of transactive energy exchanges, and while maintaining equitable cost allocation among all customers. An increase in customer- and third-party-owned DERs will preclude utilities from earning rates of return on infra- structure investment in the current policy and regulation environment. In addition, the demand and supply paradigm may shift to include the need for a more distributed architecture requiring a differ- ent grid con guration and energy exchange management solution. Therefore, there will need to be a fundamental change in the way electricity is economically and safely generated, transported, and distributed. Microgrids and DERs may be this solution, but while the current focus is on developing cost-effective technologies and adjusting policy and regulation to facilitate integration of DERs in the grid, there are far more challenges to consider; not only the real-time and secure management and operation of the DERs, but also how to ensure the DER supplies are reliable and available for delivering power to the grid when required. Distribution system operators (DSOs) will play a key role in bridging this open energy market framework, and performance-based and decoupled rate structures will continue to be a priority. Policies and regulation will need to be more forward-look- ing, and will likely shift to the responsibility at the state level. Regulators in the USA are already making moves in this area, as seen by competitive DER market options and a rate of return allowed on Software-as-a-Service (SaaS) in New York’s Reforming the Energy Vision (REV) initiative; and the proposal to encourage utilities to invest in DERs and open DERs to the wholesale market in California. With the focus on the grid-edge, DERs, and microgrids, the smart grid now provides a fundamental technology framework for smart cities, smart towns, smart communities, and inte- grated approaches to energy systems and public infrastructure.
Signi cant advances in the convergence of enterprise and operational technologies are proving to be very bene cial. The utility industry will continue along the path of digital transformation while looking to other industries for proven successes in the areas of cloud computing, data analyt- ics, visualization, and social and mobility applications. Digitization efforts and, in particular, the emphasis on the grid-edge, will result in a tremendous amount of data exchanged in real-time that will need to be managed and transformed into meaningful information in order to improve utility operations and better serve customers. There will be some point in the grid modernization process where the application of advanced technologies, energy ef ciency, demand response, and distrib- uted energy resources reaches the point of diminishing returns. While higher ef ciencies and lower
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costs of advanced technologies will keep moving that point forward, some level of signi cant capi- tal investment will also be required to upgrade the aging grid infrastructure (wires, transformers, substations, etc.). Utilities are realizing the need for both technology and infrastructure upgrades, but while technologies continue to advance, and policies, regulations, and standards evolve to guide the path to grid modernization, the journey will have challenges, not the least being costly and decidedly slow. Grid security and resilience, shrinking demand growth, and the aging grid infra- structure and workforce will still be a priority in the USA. However, I think we will continue to see waves of smart grid advances, and, as the industry continues to move past initial pilots and proof of concept projects, the learning experience will hasten the progress, and the time scale of change will accelerate. The number of stakeholders in this grid transformation journey will continue to increase. Digitization, IoT, DERs, and open markets add a new layer to the technology and vendor ecosystem. This will help to speed up the smart grid adoption process.
Essential with the shift in focus on the grid-edge is the need to view the customer not as a rate- payer, but as one of the key stakeholders in the smart grid, as both producers and consumers of energy—prosumers. Utilities need to move away from being the commodity, cost-based supplier, and generate greater customer value through more energy choices and services, while allowing cus- tomers to participate in the open market in real time. Disruption will not only be in terms of tech- nology advances, but also about transforming the way utilities do business with new processes and revenue models. Innovation will ultimately be the driver of the disruption and transformation. Will utilities expand their dominance in the energy supply and delivery market, or will they focus on customer choice while facilitating energy exchanges? Or will utilities resign themselves to merely owning and maintaining the physical grid infrastructure?
Above all the smart grid successes, let us not forget the millions of people worldwide who do not have access to electricity, or have unreliable electricity supplies, and determine how the technol- ogy advances and innovative way of thinking with smart grid can help to overcome such obstacles. More importantly, we should not lose sight of the future of the energy industry, and what it will take to continue the transformation and modernization journey. I think, rst and foremost, we need to instill the desire and passion in our younger generation to pursue ful lling careers in engineering, technology, and science, and ensure they have the knowledge and skills to build a smarter, sustain- able energy future.
