In 1882, when Thomas Edison’s Pearl Street Station came online, the electrons that it generated traveled by wire directly to the consumer. But in the decades since, the grid has changed. The complexity of today’s distribution matrix, coupled with the high costs of producing energy, is forcing utilities to rethink their business models and adapt.
The energy grid, as it is structured today, was not designed to manage the elaborate exchange of electrons that contemporary demands require. Rather than follow a simple linear path from generation source to consumer, energy follows a more intricate, multidirectional course today, made increasingly complicated by the addition of distributed energy resources such as solar, wind power, and batteries.
As the grid evolves, experts predict that it will become increasingly complex. “The next 10 years will bring a level of complexity far beyond what we’ve experienced thus far,” Mike Power, GE’s Chief Digital Officer, wrote. “The rise of prosumers, plus new mandates focusing on renewable energy from states like California, mean that disparate resources will continue to increase. The growth of electric vehicles has also put new pressures on the grid. By 2040, over half of all vehicles will be electric…”
In addition to the challenges associated with emerging operational demands, grid operators also must work harder to ensure that the grid remains secure as it is increasingly a target of attack. Russian hackers claimed “hundreds of victims” and gained access to the networks of US electric utilities in 2017, according to officials at the Department of Homeland Security, Reuters reported.
Furthermore, energy generation is simply more expensive today. A new report by Uptake Technology explains that “Investor-owned utilities that represent nearly half the US grid’s electrical load saw the effective cost of generating one megawatt of electricity rise 74%.” As a result, producing electricity is becoming a less profitable business.
So what does this mean for utilities? How can they accommodate an increasing number of distributed generation sources while simultaneously earning less for their product? How can they manage issues like distribution complexity, rising costs, security, and grid defection?
Simply increasing prices for the consumer is not the solution. A recent WIRED magazine article compares the energy industry’s current grid dilemma to the telecommunications industry’s challenges to support and maintain landline infrastructure. “As customers started switching to mobile, the phone companies had to raise rates on the cord keepers to cover the cost of their telephone lines. That only pushed more people to defect, exacerbating the problem—and increasing the cost.”
What are your recommendations? How do you see the grid evolving to accommodate these shifting energy demands?