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The evolution of utility power


JERRY FRANKLIN

The evolution of utility power

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THE RAPID ADOPTION of renewable energy systems across the world and the increasing discussion of 100 per cent renewable energy in many countries is challenging the status quo of utility power companies.

The increasing investment in and development of power storage solutions is accelerating this situation. So what does this mean to the incumbent power company, new independent power producers (IPPs) and any country’s power stability? The short, simple answer is no one knows, but the legacy power companies are understandably concerned about a future in which the only certainty is that renewable energy solutions will gain wider and wider acceptance.

The quest for cheap power has many far-reaching implications if not implemented carefully while considering the impact on all the stakeholders. This is where Government has to play a very critical role. The regulatory framework must facilitate the reduction of energy costs over time, foster the development of a new sustainable energy industry and last but not least, it must ensure the continued stability and reliability of the power network. We must start with a vision of the renewable energy future. This vision needs to be articulated by the Government and it needs to come soon. Emera which will be the business entity most impacted by the future changes in the energy market, already has drafted one possible vision for Barbados.

The limitation for the ubiquitous adoption of solar and wind energy for power generation is the fact that these sources of energy are intermittent. The use of energy storage technology can mitigate that limitation and up until now the cost of implementing storage has been too expensive to consider. With international companies like Tesla investing heavily in the development and commercialisation of storage solutions, with a clear focus on revolutionising power generation, today’s energy storage problem is about two to three years away from being a commercially viable solution for the masses. This will open the possibility of each household generating their power requirement from the sun during the day and storing what they need for usage at night.

There are other limiting factors to consider. For instance, there will be some of us who will not be able to invest in a solar powered system, there will be households and companies who don’t have enough space to install the number of solar panels they need to be self-sufficient.

There will be no “one size fits all” solution. This has already created some panic in other utility and regulatory entities around the world and they are dramatic counterproductive actions being considered. So should we restrict people who can afford it? I say no, I am one of those people. What about IPPs?

There are companies ready to invest in a wind or sun generation plant to resell the power. Should we restrict them? I say no. Should we be concerned about the survival of the utility company? I say yes. The incumbent is best placed to manage and operate the smart grid. So how should all of these power generating stakeholders co-exist in a new renewable energy industry?

The smart grid must be the one common infrastructure, like the public road system that will be the key to the changing energy landscape. Therefore, it needs to be maintained and operated independently of power generation. Every one using the grid must pay to maintain it.

This would be a concept no different than that of road tax payable by the owners of licenced vehicles, with the guiding principle that the combined cost of grid access fee plus the kilowatt hours cost of power will be cheaper than the current cost of power. Distributed power generation and storage will be an integral part of the evolution of the network. This will create the environment for all players to co-exist and allow market forces to decide who survives. Additionally, this will create an environment where householders who own a solar photovoltaic system with storage can contribute to the stability of the grid. There will also be opportunities for utility company to create new products and services to supplement the revenue lost from the new environment. Services like home and building management and home and building security systems would be possible with a power network that has two-way communication.

While I believe that the survival of the incumbent is important, I also believe strongly that the status quo must change. We must embrace a new environment that allows many new players to be involved. If we look to the telecoms industry evolution we can see this is possible. International calls were the main revenue source for telephone companies (telcos) for many years up until the end of the last century, then the development of VoIP technology brought new cheaper players in the market. Telcos resisted initially and took great measures to stop the evolution of this technology, but they quickly learnt that once this disruptive technology was providing value to the masses that it was impossible to stop. Now, we have Magic Jack and similar services provide cheapest calls on a wide scale but the telcos are still around and thriving. Power now has to go through this evolution and can do well to learn lessons from the telecoms industry.

Jerry Franklin is managing director of EnSmart Inc. Franklin is an engineer, energy auditor, equipment tester, and energy solutions provider.

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