The proliferation of Distributed Energy Resources (DER) such as distributed solar, wind, battery storage, electric vehicle chargers, etc., is having a profound effect on the utility industry. This threatens existing business models, as well as the stability of an aging grid. The smart grid is key to addressing this trend, driving an entirely new breed of technology innovations to improve electricity network design and power flow management. 

Connected energy internet and transactive energy networks
The industry is moving towards an electric power system in the form of a restructured energy internet, where energy can come from anywhere and be connected everywhere. Utilities will evolve from "wires and pole" companies, to distribution energy services providers or independent distribution system operators (IDSO), supporting a vibrant multi-sided network for DERs. Power flow will be multi-directional and managed amongst a large number of active energy participants. DER operations will not be managed passively or solely via direct controls. Instead, multi-way negotiated controls will be enabled between DERs and the grid services platform. The value of DERs will reflect full electric system benefits (grid and customer), and will be dynamic, locational, and real time - to promote delivery of the right energy, in the right place, at the right time, with the desired price and reliability.

Tomorrow's grid will ultimately lead to the energy internet as a transactive energy (TE) network. Markets, tariffs, and operational systems will allow resource providers to monetize products and services, and the distribution utility will become the purchaser and aggregator of DERs. The future of the electricity grid will be a network where customers will have a greater role in how they use energy. 

The real power behind a "connected energy internet" will be the unprecedented level of intelligent power engineering algorithms, and advanced analytics capabilities, that will give utilities real-time management and control of the grid. Today's utilities may understand the value that comes with integrated data analytics systems, but are they using this intelligence to its full potential? In most cases, the answer is no.

Technological innovations for the smarter smart grid
Two-way distributed power flow: 
Utilities today typically rely on historical information to determine worst-case scenarios of maximum distributed generation and minimum load, in order to develop operational plans which ensure reliable operation of the grid. These plans evaluate additional DER connection impacts to the grid to determine grid operating parameters. As penetration increases, the distributed and variable/intermittent nature of DERs may lead to two-way power flow, and cause grid operating parameters to exceed standards for reliability and safety. The result is an ever-increasing complexity in planning and operation of the grid. This can potentially require infrastructure upgrades like cables, wires, switchgear, transformers, controls, and grid communication, to accommodate the extra capacity from DERs; a major impediment to the further proliferation of DERs connected to the system. An advanced distributed energy resource management system (DERMS) is needed to effectively manage the penetration of DERs. 

Two-way distribution service platform for DER management:
What is needed is a transformation of how the grid is managed in real-time, complemented with new business models recognizing the value DERs can provide to customer choice and reliability, as well as grid resiliency. A distribution services market must attribute the mutual value of DERs to customers and the grid. This is getting early support by progressive legislation in New York State (Reforming the Energy Vision, (REV) program), and California's DER regulations. 

New DER business models
Electricity markets form the foundation for economic value exchange between market participants, such as load serving entities (LSE) and generators. Markets today (e.g. locational marginal based, ancillary services) are also centralized in structure, managing major power transfers within a province, state, or region with DERs typically under fixed contracts. The industry has looked at centralized markets to provide value quantification and extract value of energy resources, to validate the business case. However, current markets have little to no consideration for decentralized energy resources which are typically priced on fixed price contracts and unmanaged operations. New, vibrant business models are needed to enable open, fair, transparent, and competitive participation of DERs, which will promote usage and align operations with provincial, state, regional, and local distribution objectives.

Multi-level system integration
With the advent of the smart grid, the electricity network has become more siloed than ever. These silos come from an emerging decentralized network of DERs, such as solar and storage, as well as a decentralized network of distributed information resources (DIR) like meters, sensors, relays, controllers, and enterprise data systems. This has led to incompatibility in communications and control between DIRs and associated DERs. While there has been much progress in interoperability and standards development, a much deeper and more complex incompatibility arises from misaligned and conflicting operations amongst grid "participants" at different levels. Such participants include the independent system operator (ISO), utility system operator, and individual DERs. 

The evolution of a "smarter smart grid" will require new value models to be recognized through intelligent data and animated market structures that are further enabled by new regulations and integrated technology. The overall objective is to deliver the lowest available energy cost, effectively, by leveraging intelligence and distributed energy resources.

Joshua Wong is CEO of Opus One Solutions Energy Corporation.
 
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