June 2015

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Time for Buildings to Participate as Distributed System Platforms

At last, as a matter of regulation and law, every commercial building, industrial site, or home can see new opportunity by acting as a microgrid.

Toby ConsidineToby Considine
TC9 Inc

The New Daedalus

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After all these years, after all these standards, the laws and regulations necessary to unleash smart energy are coming to the fore. In the US, Power Markets are state concerns, and those concerns are managed by the Utilities Commissions. The Utilities Commissions--ever mindful of black-outs, angry citizens, and low costs--want to see the future before they mandate it.

Ever since the dawn of the Age of Energy in the late nineteenth century, there has been no economic policy of any kind more important than energy policy. The age of Green Energy started out with increased expenses, less reliability, and a looming destruction of the business model of the regulated utility. It is easy to complain about the American Utility, but they have enabled for us the greatest life-style the world has ever known.

But now something new is appearing.

In New York, the Utilities Commission wants to recast the management and distribution of electrical power as a distributed systems platform. There can be disputes about what this means, but to me, it means the triumph of the Galvin Perfect Power vision, the microgrids within microgrids that Christine Hertzog has termed Matryoshka Microgrids, after the nesting Russian dolls.

Those who own and integrate smart buildings now have to begin to consider: “How do I make my building present as a distributed system, able to participate in the platform?” Long-time readers might recognize this as the architecture I (along with William Cox and Ed Cazalet) presented at a DOE-sponsored energy conference in 2012. It won the best paper of the conference, and describes this high-level architecture in some detail.

But Distributed System Platforms do not make much sense without transactive energy, real transactive energy, with markets, and market positions and position trading. Few buildings are ready for that. A good place to start thinking about this is in the soon-to-be-released ASHRAE Facilities Smart Grid Information Model (FSGIM).

You can’t have real transactions without markets. Markets for distributed energy are the game changer.

The American Legislative Council has been developing a model Electricity Freedom Act for three years. This year, it is being pushed forward in many state legislatures. It frees consumers to make their own technologic and economic decisions for distributed energy systems on their own property.

This one makes everyone play on the other side. The model that requires distributed energy to be directly controllable by the grid operators dries up alternate financing.  The mandates for distributed energy put whatever financing costs there are into the utility rate base (meaning guaranteed ROI). In many states, “green energy funds” get funneled through a few select providers. Many utilities have applied the FERC engineering and cybersecurity standards developed for bulk generation (the big generators) to any assets that they do not control (the solar panel on your barn).

Under the various Electricity Freedom Acts now in legislatures across the country, owners can control their own systems, and thus can attract more creative finance. In the North Carolina version, any home or business can sell up to 150 per cent of its normal monthly load without additional regulation. The favored organizations that have long divvied up green energy surcharges are being cut out of the loop. For the political watcher, it is time to put in a supply of popcorn….

Reliable Controls To the integrator, these Acts open the doors to more creative application of distributed energy systems within each site and building. No one disputes that the distribution grid operators must have a right to throttle the power being dumped on a loop. Today a distribution grid operator might disable the inverters. Under the Act, the homeowner or commercial building operator can choose instead to store energy for either later use or sale, or to pre-consume water pumping, or anything else that makes sense inside the building.

It is easy to see that the re-casting of utility regulation in New York, and variants of the Electricity Freedom Act moving through half the states in the country, will enable rapid innovation. At last, as a matter of regulation and law, every commercial building, industrial site, or home can see new opportunity by acting as a microgrid.

So how will this change your next project? Let me know your thoughts.


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