NERC and Utilities Commissions are unintentionally hindering Distributed Energy Adoption

For significant use of distributed energy to arrive, it must be managed and used locally first, the variability and storage managed locally, and only then traded with others. This mode of operations is termed a microgrid. Legacy business models that assume irresponsible end nodes require direct control of energy distributed in residences. Commercial sites are treated as bulk generators subject to NERC regulations that require months of filings for each configuration change. It is time for a new regulatory and operational model.

The microgrid model lends itself recursion. Twenty home microgrids on a neighborhood street can federate themselves as a microgrid. Such microgrids should manage variability internally first, trade power first amongst themselves, perhaps incorporate additional storage as a group, and then trade with the larger distribution network. A similar logic flows up through the larger neighborhood, the district, and potentially the town.

In a similar manner, a commercial site could produce and store energy locally, manage variability locally, and trade with the larger grid only to rectify systemic shortage or surplus. Perhaps the initial microgrid is the office park. Sites and facilities with the office park then evolve themselves into microgrids, to gain additional energy surety and local control.

At some point, these microgrids that are aggregations of microgrids reach a scale comparable to the bulk generation that current NERC requirements (I’m thinking CIP 5) were written for. These include cyber-security, and configuration management and filing configuration changes way in advance. These standards are important to manage stability of the overall transmission grid. These regulations do not recognize that failure modes for these composite microgrids are quite different than for bulk generation.
Managing these composite microgrids will require changes in thinking, similar to those seen in IT for storage and for cloud computing.

A composite microgrid shares failure characteristics with a RAID array. 30 years ago, one paid a premium for disks above a certain size and above a certain data throughput. Today one pays a discount. The reason is Redundant Arrays of Inexpensive Disks (RAID), although that acronym has morphed into independent disks over the years. RAID technology multiple disk drive components into a logical unit for the purposes of data redundancy or performance improvement. By the late 1980s, it was recognized that the top performing mainframe disk drives of the time could be beaten on performance by an array of the inexpensive drives developed for personal computers.

Although RAID technology was developed for price and performance, it was soon recognized that it offered superior failure characteristics. A drive could fail without any externally-visible loss of data. A replacement drive could be added to an array with only a temporary reduction of throughput. RAID arrays properly managed nearly eliminated catastrophic loss of data.

It is an interesting side note that the first control of electricity took the insignificant charge generate by two pieces of metal separated by salt water (an electrolyte) and made it useful and predictable by stacking many such pieces of metal and paper soaked in electrolyte. This type of technology was initially called simply a pile (or voltaic pile), but was later renamed a battery by Ben Franklin, invoking an artillery battery. So it would be appropriate, albeit confusing, to say that a microgrid can consist of a battery of microgrids.

While batteries and RAID arrays offered more capacity and greater predictability, it is the reliability and failure modes I want to concentrate on here. Just as a RAID array does no fail when a single, perhaps inexpensive component fails, so a microgrid does not fail when one of its components fails, or changes in capacity. Cloud data often uses hybrid RAID, in which RAID arrays are themselves components of or RAID systems. In these, entire RAID arrays can fail without reducing throughput or availability.

An analogous increase in redundancy, availability, and resilience is the expected outcome of the aggregate recursion architecture for microgrids, or what some are calling more elegantly, fractal microgrids. Just as RAID architecture enabled data centers to incorporate inexpensive “unreliable” disk drives into mission critical systems, so reliable aggregated microgrids can be built upon small, inexpensive microgrids that are currently prices out of the heavyweight NERC-required processes.

A similar logic encompasses residential control standards. To prot the distribution grid, utilities are granted direct control of low-level devices inside homes. This results in two systems that never meet, the home-based distributed energy system and the home based energy use.  Homeowners realize this out to their dismay when they have no access to their distributed generation when the grid is down.

The model of the home microgrid instead rewards the customer to install local storage. Solar installers could develop businesses around optimizing cooling when the sun is shining brightly. Such development will never happen so long as utilities commissions mandate direct control, or require a heavy process for connecting microgrids.

We need new lightweight regulatory models that embrace the coming microgrids.

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.