Profiling Economic Actors for Transactive Energy

This post is part of the continuing Paths to Transactive Energy series. You can find them all listed by clicking on the matching metatag at the bottom of each post. These posts were written because the GridWise Architectural Council's Transactive Energy Conference begins tomorrow.

p>The communications defined in the common transactive services (CTS) can be used by every actor in transactive energy.

The needs of particular environments may require an actor to use different communications profiles. Security needs will be different for different environments. Security standards will change over time. Actors that participate only in small non-critical negotiations where both parties share a common owner may opt for lighter-weight standards to record transactions. These communications requirements will be expressed as profiles. These communications profiles will change over time without changing the fundamental information exchange between each actor.

There is profiling along a different dimension, profiling systems as economic actors, which can assist the system developer, the system integrator, and the system owner. These profiles describe the type of ends the actor has for participating in the market. They help system owner to understand how a new actor will affect the resource market.

Basic business interactions start with knowing who is a supplier, and who is a buyer. A similar distinction might distinguish the wholesaler from the retailer. A buyer approaches the farmer’s market and the supermarket chain differently, even when the goal is fresh produce either way. One is intermittently available in certain locations, one is available on a wide schedule and in many locations. It is useful to the seller to know which he is when designing his business. It is useful for the buyer to know whether transactions will be in cash or by card, and how to find the market location. Although the economic interaction is the same, these economic actor profiles help each market participants to meet his needs.

The purpose of the agents in the home (or in the office) is to enable meta-drivers to reduce complexity. I run windows. And when I plug in a device, and watch closely, I can see a human interface device arriving, being replaced by a pointing device, being replaced by the mouse I am using. My computer quickly drills down past the general to the specific, with specific devices offering specific functions. In the same way, a transactive energy capable device registers with the brain. In my model, it then describes what kind of abstract device it is. In this analogy, it goes as far as the “pointing device” but need not go all the way to device and control specificity. 

Start with a Zombie Fortress

In smart energy, it is easy to get distracted by utility incentives and demand response and other tariffed actions. Utility tariffs are set in stone months or years before an actual set of market conditions arise. Demand Response events miss the supplier’s pain-points while ignoring opportunity for the building owner. “Running a meter backward” is a silly demonstration project that works only so long as very few people do it. All of these are regulatory fantasies that violate the laws of economics and physics. For a smart energy engineer, it is better to start with a more realistic fantasy.

Smart Energy starts with a Zombie Fortress.

Many today who are uneasy about politics and culture and technology dream of a place to get away if things fall apart.  Zombies have no politics, no ideologies. They are mindless, and ugly, and the perfect nightmare for a time when any judgment potentially offends. The coming Zombie Apocalypse is the perfect non-specific eschatology for our time.

The Zombie Fortress is where you go to be safe from the world. Folks can share their desire for a Zombie Fortress without getting into discussion of politics with their friends. The Zombie Fortress names a non-political escape, a bolt-hole to go when everything goes wrong. (Some might claim that the editor of Automated Buildings has retreated to a Zombie Fortress.) Plans for a Zombie Fortress cannot assume that the grid will work, or that the neighbors will be a useful source of supply or resilience.
The challenge of the Zombie Fortress is to live a full life within the site-generated power. System efficiency is critical, certainly, but it is swamped by the power usage efficiency; the operating margin must go as close to zero as doable. This means no power spikes, and no wasted power. Systems must be negotiate so that intermittent systems do not run at the same time. Any extra power, moment to moment, must be pre-consumed or stored.

Above this is a policy layer. If you habitually use power into the night, that is the basis for the power storage goals. Weather reports may set to pre-consumption goals. Systems must decide how important they are and run, or not run, accordingly. Engineers will be in short supply after the Zombie Apocalypse, so the systems in the fortress must integrate themselves.

But maybe the burning times have not yet come. For now, you decide to use the Zombie Fortress as your Party Pad in the in the mountains. Maybe the Fortress cannot produce enough power each day to keep the lights on, the water pumped, and the environment comfortable during sustained use. If the Fortress plans, if it it stores power all week, though, it can support a two day weekend. Maybe a three-day weekend requires two weeks of storage.

But you want to throw a big party. The last party was automatically base-lined by the Fortress. You contact the Fortress from afar, and ask when it will be ready. The Party Pad / Fortress informs you that it will need four weeks to accumulate enough stored energy, five if you send in a cleaning crew during the week in advance. This is the right level of owner interaction.

Transactive energy within the fortress is the simplest integration strategy devised. Traditional integration requires detailed knowledge of all systems, solving what economists call the knowledge problem. Transactors don’t need knowledge of their trading partners, merely common agreements. New systems must merely introduce themselves to the market. Each system, to participate competently in the market, needs to understand its own patterns of use and load shapes.  Operating parameters are created by setting budgets for systems and functions.

Proposed regulations are already making some power producers nervous about next winter. More intermittent power sources are going to make the power grid a less reliable partner. The Galvin Perfect Power Initiative states the reliability comes from within each node, and resilience from a node’s neighbors. The Zombie Fortress is the ideal node to participate in a smart microgrid, whether it encompasses the back-country bolt-holes, or an in-town neighborhood. Zombie fortresses are self-aware, at least so far as energy use, and ready to trade.

Don’t plan for short term inducements and temporary incentive. Design systems the self-integrate with other systems in the facility. Design systems able to negotiate with their peers for predictable load curves, effective pre-consumption, aggressive storage and full use of “excess” energy

We need systems designed for the Zombie Fortress.

Solar Consultants are a Big Barrier to Smart Energy

Smart energy names the techniques and technologies needed to manage energy flows and energy supply and demand when energy generation and energy storage are as distributed as energy consumption is today. During the early years of distributed energy, distributed energy resources were so small as to be losable in the noise of the grid. Installations were treated by utilities as if they were just another utility installation. This design approach has become the single largest barrier to distributed energy. So when are we going to get smart about distributed energy?

Grid assets are managed by central control. This only works so long as the assets are central and the assets are centrally owned. Distributed assets should have distributed ownership. Their purpose is often local, and the local owner has their own reasons for deploying them. As I have written before, today’s integration techniques actually discourage distributed storage. Distributed storage may be the single most critical requirement for smart energy to succeed. 

The first generation of PV consultants are so focused on the utility that they do not even know why the consumer is installing the system. Their reports to potential customers emphasize gaining payments from the utilities over obtaining on-site benefits. The reported risks to the customer are regulatory, i.e., will the local commission hold firm in forcing the utility to pay these rates. Even financial matters look to the utility: will utility throttling of generation interfere with PV as an annuity.

When asked about local benefits, of self-sufficiency and of resilience and of local control, few of the first-generation consultants have any answers. They look discomfited for a minute, they go back to reciting interconnect rules. From their actions, one would induce that they see no value to the site at all, merely an opportunity to loot the public weal.

This looking to the utility reduces the value proposition to the customer. The central control model reduces innovation in systems. As many realized after Sandy, forward assets of a central authority are of no use after a crisis. Without central control, they simply turn off.

The answer is to turn this model on its head. Smart energy manages from the edges, not from the center. Smart energy treats homes and commercial buildings as microgrids responsible for their own power. Each of these microgrids is a node within its neighborhood, able and willing to share its excess power as needed. A microgrid that contains generation or storage may even decide to serve those neighborhood needs before those of its constituent nodes. Those decisions, though, must be negotiated using sound market approaches.

If Solar consultants would start acting as if they believe solar energy is a good idea for the customer, and not just a way to extract regulatory rents then solar installations would increase. Until they do so, every installation will take longer, and cost more, than it should. Customers currently in the process find the solar consultants, and their regulatory-centric models, to be the biggest barrier to installations.

Forget Efficiency and Demand Response, Load Bank for the Grid

All the Smart Grid attention is on Demand Response, that is, on the half dozen times a year when the grid runs out of energy or has to turn to expensive energy sources. All the building attention is on efficiency, using the least energy inside the building possible. Neither approach supports renewables, or distributed energy resources. Efficiency may reduce the ability to respond to Demand Response signals. Buildings should turn to productive load banking instead.

When I am at home, my smart thermostat turns my home temperature up and down. In the winter, the temperature setting goes way down at night. The house becomes parsimonious just as the local wholesale power market goes negative. The price goes negative because it is expensive to turn up and down the power generation. I don’t see wholesale prices, so efficiency is what I do for now. In a better market, I would increase my use at night, and turn the temperature down when I get up. Instead, I efficiently use more energy by using it at the wrong time.

Load banks are familiar to those who test and install generators. Generators can burn out the circuits they are on, or the equipment on those circuits, if there is not adequate load to consume the power generated. Load banks are paired with generation to use any excess energy. Most load banks do little more than heat the air to burn off excess energy. If we can make our building systems create value while load banking, we will turn grid economics upside down.

Renewable energy, or rather intermittent generation, often generates energy when there is no market for that energy. Wind farms often produce far more energy than they can sell at that time. Just google “wind farm Texas toaster” for description of the problem. The problem is not, as many decry, subsidies. The problem is lack of markets. With no place to sell enough power when the wind is blowing, the great Texas toaster load banks wind power into heat.

Building systems should look at what they can do to use more energy, but at the right time. Ice Energy, which chills water at night to avoid air conditioning during the day, is better thought of as a daily load bank. The real impulse behind utility support of electric cars is that if charged only at night, they provide load banking while expanding their market.

I always laugh when I go to a conference “powered by wind”. I know that they are paying un-economic fees to a power source that is not the wind, which promises to buy wind at some later time. If you want to encourage renewable energy, you need to buy it when it’s available and cheap, not on some pretend market which sells you conventional power, and promises to buy wind later when it is not needed. If we instead bought energy when the wind is blowing, we would increase the value of wind energy. I the great wind farms could sell more than 40% of what they generate, they would be instantly more economic, without waiting for new technologies. Think of it as canning fresh tomatoes in summer. You don’t can tomatoes in summer to heat the house; that would suggest canning in winter. You can tomatoes in summer because that is when they are fresh and cheap.

The most efficient place to store energy is in the middle of a process you were going to do anyway. Ice Energy is effective because it stores cold in the middle of the air cooling process. My home well would be a great load bank if I had a means to store several days of water pressure. A maker of home water heaters marshals thousands of home units to provide fast 4-second load banking to meet the needs of the gird—and radically changes the net cost of water heating. Load banking that performs a useful service creates value you can see every day.

Look at your buildings, and ponder, what you can do in advance, and do it when there is a load banking opportunity. Look for ways to productively load bank your distributed energy resources rather than sell excess to the grid. Look for ways to use more energy, right now.

Demand response happens now and then. For the last couple years, with a down economy and lower industrial demand, it might not happen at all. Load surplus opportunities happen every day. If your building systems can take advantage of this surplus, consume energy when it is cheap and plentiful, to provide service when it is expensive and scarce, you can find new value streams from energy engineering, renewable energy, and building systems.