How Duke Energy is preparing for the utility evolution
There recently has been a good deal of press concerning the potential for electric utilities to be caught flat-footed in the face of the scores of new technologies coming onto the market.
Consider this: Installed solar costs have fallen 80 percent in the past five years, and a new solar unit gets installed every four minutes someplace in the U.S. Fully half the total photovoltaics installed in the U.S. has been in the past year. At the same time, electric vehicles are beginning to enter the scene in numbers that are beginning to matter. Smart meters are allowing many consumers to see their consumption for the first time, and smart thermostats are reducing consumption and automatically resetting themselves based on customer behavior. The list goes on and on, and it will grow over time. And while some utilities appear to be adopting a purely defensive stance, others are adopting a more proactive approach.
Duke Energy is one of the handful of utilities evaluating technologies to make sense of this brave new world and determine how best to chart its course. It is evaluating all kinds of energy technologies – including solar and wind installations combined with batteries, automated demand response and EV charging (combined with batteries and solar panels).
The Charlotte, N.C.-based company is also closely evaluating all of the data and the information technology affiliated with these new technologies. Its goal is to work out new approaches to the customer and develop new business cases for the future.
To get more insight into what Duke is contemplating and where it sees the potential utility of the future evolving, I tracked down David Mohler, Duke's VP of emerging technology. His job is to evaluate new technologies for interaction in the power grid, and figure out where they fit into the bigger picture.
He described his Emerging Technology group as follows:
"The way my group works, we take a technology application from concept to demonstration of operability on our system, and then we transfer it to the operating part of the business. Post-transfer, we do more work to ensure scalability is possible and to make sure technology is incorporated into the organization."
Sounds easy, doesn’t it? With the welter of technologies coming from all angles, different communications protocols, changing customer expectations and an antiquated regulatory structure aimed at keeping the lights on but ill-fitted to adapt to change, it is anything but.
How does the big picture look from Duke’s perspective?
"We see a number of forces that are telling us that the things we have been working on and tracking for the past six years (since the group existed) are really coming to fruition," Mohler said. "Costs are coming down -- I call them embedded energy technologies -- not just solar, but storage and controls, communications, information technology, and energy-and grid-related technologies that are actually being more embedded in the system. When done properly, they can provide multiple value streams.
“In states like California, Arizona, Massachusetts and New Jersey, as well as countries like Ireland and Spain, we see these resources coming onto the system and creating operational challenges and opportunities. We want to be able to understand and proactively be prepared for the operating challenges. Wind and solar are not predictable and dispatchable – you’ve got to be prepared for that. We’ve got two-way energy flows in a system that was constructed to flow in one direction."
Mohler sees the utilities as having to become a good deal more proactive in developing their roles in the middle of all this. This will require developing new capabilities and understanding. At a minimum, the utilities will need:
1. More information and data at all levels to gain better understanding and insight into the functioning of the entire system.
2. A more detailed understanding of various technologies and their unique characteristics.
3. More insight into customer behavior.
4. The development of a new regulatory construct that moves well beyond the traditional cost-of-service approach which has served relatively well over the past century.
Mohler says that utilities will need "a good system optimizer," which in the past was done by ensuring enough supply to match demand, as well as by working to optimize for low cost and reliability.
“But in the future, when we have more assets and information and customers who expect more, we will need to understand how to balance the system and choreograph load so we can serve customers in the best way possible,” he says.
Mohler highlights an example of what that might mean. In 2006, Duke put 35 customers on advanced systems and controls, and choreographed their five largest loads in order to stagger them and shave peak demand. As a result, peak load was reduced between 9 to 20 percent.
Duke determined that it would have been able to reduce customers' bills and increase its margins, had the regulatory system allowed it. That kind of system optimizer role will become more important for utilities, he explains. New technologies are getting cheaper, he adds, yet the big issue is getting the regulatory construct and business models right.
That new vision has yet to materialize in a big way, but Mohler may have some answers:
“We have the capability to site assets and create value in more than one way. Let me give you an example. I have a 2.8 kW solar panel on my own roof. When I’m on vacation and nothing’s running at my house, what if it could be used to power the neighbor’s air conditioning and relieve stress on the transformer? If I’ve got a utility system view, I can actually utilize the asset that can create a whole lot more value than just serving one person’s house."
Adopting that systems approach is one way the utilities might thrive in the 21st century, and avoid the obvious potential of disintermediation, for other entities to step in and serve the customer. Indeed, some larger solar companies have not been shy in their claims to this space.
Mohler understands the dynamic and points to a way out, but it will take time, effort, intelligent thinking and regulatory design:
"For example, some customers want fixed bills and will pay a premium to know exactly what their bill is going to be. We could provide that. We could bundle services a different way. Say you go buy a [Nissan] Leaf. What if you could call the utility and say, 'I need a charging station and all the electricity I need for my car – what price can you give me?'
“Apple started making computers, but today really what they are is a platform. Ideally the utility would be a platform analogous to Apple, where the technologies are apps. But in order to be a player in that arena, we have to be able to give customers what they want, and today’s regulatory construct doesn’t really allow that.”
In order to better understand the interplay of technology and information platforms, Duke wades into the thick of things. It tests wireless EV chargers. It develops solar-powered EV stations combined with storage to see what works. It combines batteries with wind to determine the optimal configurations.
One big challenge is the integration of systems and data. One example has been an effort to firm up solar power. In Charlotte, N.C., Duke established a pilot to integrate grid-scale batteries (250 and 400 kWh) with one megawatt of solar.
“If a cloud passes over, we want the battery to pick up and fill in for it. But the problem is communications," given that there are proprietary systems for the battery inverter, meters and voltage regulation, he says. "Then all the things have to flow back through those proprietary systems and then flow through our distribution management system and then back to field before any activity can be enacted. That can take up to 15 minutes, and by then the cloud has already passed by.
“So we experimented with a Raspberry Pi. It’s a tiny credit-card sized computer. It costs $35. My guys took a Raspberry Pi and open standard software and configured a communications and information processing loop in the field, so information went into the Pi and signals came out from it. We went from delays of 15 minutes to 500 mili-seconds, for $35. What that points to is how the next great innovations in energy are likely to be from IT.”
Mohler’s parting observation highlights the challenges the 21st-century utility will need to address in order to thrive:
“Part of what the utility industry is going through is like what telecom went through 30 years ago. We’ve got a big need to change the culture and texture of the conversation within the utility. We need to be much more creative about the kinds of things we can do to improve our operations and to serve the customer better.”
To learn more about utilities and the convergence of sustainability and technology, be sure to check out VERGE SF Oct. 14-17.