EnergyIoT Article 1 – Get Your Head in the Cloud - A Call to Action
- April 22, 2019
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EnergyIoT Article 1 – Get Your Head in the Cloud - A Call to Action
By Stuart McCafferty, Eamonn McCormick, David Forfia
Disclaimer: The viewpoints in this article and others in the series are the personal views of the authors and in no way are meant to imply or represent those of the companies they work for.
What if we could create a bridge between the world of physical devices in the energy industry and the world of virtual processes in the cloud? Such a bridge would enable a whole new era of opportunity to change our world for the better. We would no longer be handicapped by siloed architectures and industrial era technologies. We would have the freedom to tether the power of our silicon driven civilization in a new way that transforms the physical world. We would be able to dynamically add and manage clean assets on the grid. We would be able to rapidly enable new business models and make positive change happen in a reliable, safe, scalable, resilient and economic way. If you think back to the role of android in the cell phone market, having a common operating system that mediated between hardware and the “world of apps” was a prerequisite for the age of the “smartphone”. The android-enabled smartphone has changed the world and opened up a whole new universe of opportunity, innovation, and economic development. Creating such a bridge between the world of energy-consuming and energy-producing devices will be similar, enabling a fundamental revolution in the way that utilities, transmission operators, customers, and third parties interact with the electric power grid.
The world of energy must change.
The physical world of the grid and its connected assets is becoming more and more distributed with dramatic growth in electric vehicles and Distributed Energy Resources (DERs) that includes renewables and batteries. A common bridge with energy-specific software services between that physical world and the world of “apps” will simplify integration and unlock the profound power of today’s digital world. This will unleash a whole new era of smart energy optimization, resilience, green energy, carbon reduction, distributed control, and innovation. The Energy Services bridge will propel the energy industry from an industrial revolution “electro mechanical” paradigm to a truly scalable “digital world”. Most of the components to enable this cloud-based platform already exist, and we simply need to assemble it and recruit a user community to build and consume these services. By tethering the virtual world to the physical grid, we will be taking a dramatic step forward in being able to manage and control our energy devices for the better. It also promises to enable a whole new era of innovation and opportunity globally that our children and children’s children will benefit from for years to come. We’re not sure what to call this vision yet – the Green Cloud, The Energy Cloud, EnergyIoT, the Digital Grid or something else. Regardless of what we call it, this vision promises to digitize the world of energy and bring what is arguably the most important industry in the world into the 21st century. Just like the “race to the moon” propelled humanity on its way towards an interstellar future, this initiative will propel a sustainable energy future here on earth – and beyond.
Energy is the driver of our civilization. It has shaped our history and will likewise shape our future. Over one hundred years ago there was an energy revolution we are all familiar with that was driven by fossil fuels and centralized electricity generation. Today there is another energy revolution underway driven by growing global and local societal mandates for clean energy, a steep decline in the costs of sustainable energy sources, an accelerating pace of technological innovation and the continued expectation for delivery of energy to be safe, reliable and affordable. There can be no doubt that the energy industry is in a period of epic transformation and these drivers are a global call to action to make this change a reality.
Driver #1 - Societal Mandate for Clean Energy
Policy changes are occurring at the global, national and local level to address the observable impacts of a changing climate. 2016 was the hottest year on record. 2018 was the fourth hottest year. We are experiencing regular "100 year" events every year now. Natural disasters are more frequent and more severe.
Whether the cause of the increase in CO2 levels is by humans or is nature doesn't really matter because regardless of the cause, we are in unprecedented territory with the amount of atmospheric C02 going back 400k years. Those periods of higher C02 concentration correlate to increased global temperatures. There is something going on here that jeopardizes our planet's ability to support life as we know it.
People have slowly begun to act.
There are now widely accepted global agreements to reduce the impact of climate changes by targeting the top sources of greenhouse gas emissions.
Transportation and Electricity are the leading sources of emissions. In response the US at the national level created tax credits for renewable generation and transportation options. Across the country states and cities are mandating 100% renewable requirements for their electricity generation. Increasingly individual customers will pay a premium for renewable electric suppliers and for electric vehicles over their traditional counterparts.
The change is already here. The time to act is now.
Driver #2 – The Economic Advantage of Renewable Energy
Figure 3- Lazard’s Levelized Cost of Energy V12
Strictly from an economic point of view, the cost per megawatt hour for renewable generation is now at or below the cost of other generation sources driving investments in renewable energy deployments at the grid, distribution and building owner level as an overall cost savings mechanism for the utility and customer alike. In fact, the graphic above shows the rapid decline in PV “Levelized Cost per MWh” in comparison to fossil and other generation sources, where it is now the second least expensive source next to wind. This economic reality is driving the replacement of traditional fossil generation with renewable sources across the globe.
The National Renewable Energy Laboratory’s Annual Technology Baseline report shows that this trend is likely to continue with utility scale solar costs decreasing another 60% by 2050, making the likelihood of investing or operating traditional fossil fuel power plants unlikely strictly from an economic point of view.
However, the sun does not always shine, the wind does not always blow and weather forecasts are not always accurate. The variability and predictable output decline at sunset of renewable generation sources will still require the mix of controllable loads or spinning mass generation to ensure balance across the grid and address rapid load ramp rates famously described by the California duck curve.
Addressing the operational challenges resulting from higher penetration of renewable generation is now a daily event in Germany, for the utilities in Hawaii and the Independent System Operators and utilities in California and Texas. It is inevitable that the economics will continue to make the price difference wider, and what are now issues being experienced by a few jurisdictions will expand rapidly to a broader base.
The change is already here. The time to act is now.
Driver #3 – Technological Change is Accelerating
A person born in 1930 in the rural United States can probably still remember the day the “juice” was brought to homes and an electric bulb replaced the kerosene lamps used for lighting that night’s homework assignment. A person born in 1970 can’t remember a time when electricity wasn’t widely available, but can recall the times when storms or an operational issue caused power losses for several hours or even days. A person born in 2000 can’t remember a time when LED light bulbs needed to be replaced or couldn’t be verbally controlled by their cell phone or smart speaker.
Technology change is happening faster than ever in history. Ray Kurtzweil’s concept of “Singularity” predicts that by 2029 the artificial intelligence of machines will match that of humans. The exponential advances and growth in technology has become the norm and humans quickly adapt and expect disruptive technologies to enhance their lives. The same will be true of of the electric power industry, which is ripe for disruption.
There are financial benefits to driving and meeting the increasing expectations of technology’s ultimate consumers. Uber officially launched its mobile app in 2011, which originally was more expensive than cabs, but allowed riders to share costs in an easy, mobile transaction. By 2012, Uber created UberX which was a cheaper ride hailing service than taxis. At that time, Uber had a valuation of around $346M. Just 7 years later in April 2019, pre-IPO pricing has Uber valued at more than $120B. The same fortune cannot be said for companies like Yellow Cab, whose “dinosaur” thinking and lack of technological foresight have made them virtually obsolete. And, ancillary companies like car rentals have equally felt the pinch of users opting out for the sheer convenience of the Uber mobile application. The difference between those companies’ fortunes can be traced to setting new consumer expectations and leveraging technology to simplify the experience and reduce their costs. The devastating effects to the incumbent industries are not lost on utilities and their traditional vendors. In order to survive, companies recognize that they cannot be the dinosaur that ignores technological change.
The same disruptive technological change and increased consumer expectations are inevitable for the energy industry with a scale and pace of change that is unlike anything ever experienced. While disruption and change is somewhat simpler for Uber, in the energy space these changes must also support those “pesky laws of physics” and policy rules set by local commissions. The base expectations ensure that electric power delivery is safe, reliable and affordable..
Adapting to the disruptive forces ahead will require the same thought process that Amazon, Google, Microsoft, Alibaba, Uber, and other highly successful technology companies have adopted to support dynamic, data-centric, elastic ecosystems within an adaptable regulatory structure that ensures the core principles are met.
The change is already here. The time to act is now.
We are Out of Time to Act
Addressing any one of these drivers alone is challenging. Addressing all of them and those not yet contemplated require the marriage of policy and technology. There will be enormous economic opportunities for innovators to create new capabilities, for utilities to provide new services, and for consumers to choose to participate in markets, contribute to a greener climate and utilize cost-effective renewable resources. The scale of the coming change is unlike anything experienced in the energy industry and will require different thinking from current central command and control system-centric architectures and the policy changes needed to efficiently and economically make that transition.
Arguably our greatest challenge is the lack of time we have to be successful in this transformation to address these drivers.
Driver #1 - Societal Mandate for Clean Energy - The Intergovernmental Panel on Climate Change (IPCC) 1.5 report indicates that we have only ten years to “bend the curve” related to atmospheric carbon and atmospheric methane emissions. This means that in the next 10 years we need to be significantly reducing our carbon and methane emissions on an “annual basis”.
Driver #2 – The Economic Advantage of Renewable Energy is currently an operational issue driven by high penetration utility scale and distributed renewable generation “canary in a coal mine” occurring today in Germany, Hawaii, California and Texas.
Driver #3 – Technological Change is accelerating. The change of consumer expectations is difficult to forecast because all energy decisions, like all politics, are truly local decisions. However, as the economic and demographic drivers detailed will occur suddenly and without sufficient lead time to respond.
Fundamental Architectural Changes are Required
We are hitting the limits of what a top-down hierarchical grid (generation->transmission->distribution->consumer) and the hub and spoke architectural paradigm can accommodate. It is becoming clear to many utilities and other stakeholders that there is in fact an inherent limitation we are facing related to how the current energy grid is constructed, and it constrains our ability to transform the industry to meet the coming challenges. The energy industry is struggling to meet the transformation challenge, especially in integrating and fully leveraging bottoms-up intermittent clean energy assets and technologies. There are many that believe we need a bottoms-up hierarchical architecture, yet no new fundamentally different architectural constructs have been proposed or discussed that can support a bottoms-up, scalable system that can also accommodate existing legacy assets and systems.
Going forward, we need to think differently to truly unlock the climate change, economic, and technology driven opportunities by:
- Enabling markets (see DSO Organizational Models for Utility Stakeholders and The Gridwise Architecture Council’s Transactive Energy Framework to spawn dramatically greater adoption of renewable energy such as rooftop solar and democratized inclusion of anyone that is connected to the grid
- Creating scalable, extensible, flexible, data-centric architectures that support rapid change from primarily fossil-fueled energy generation to primarily clean energy generation
The transformed energy industry includes these characteristics:
- Is fair and functional for large and small alike – the industry must serve and preserve our investor owned utilities, and enable a new generation of distribution services organizations. It needs to serve municipalities, industrial customers, microgrids and, most importantly, individual customers businesses and households.
- Is aligned to both societal and operational drivers – locally representative, equitably funded and available to all while remaining safe, secure, reliable and resilient.
- Provides solutions for the critical “deep electrification” challenges facing the industry:
- Generation mix decarbonization
- Solar and other Distributed Energy Resource (DER) integration
- Energy storage integration
- Transportation electrification
- Sustainable air conditioning and heating
- Is flexible. The global energy industry needs to enable multiple business models – integrated utility, DSO, islanded microgrid for large industrial or community, connected microgrid for large industrial or community.
- Is adaptable and extensible - Supports new technologies and capabilities over time without requiring re-architecting the system
- Supports immediate and urgent needs of stakeholders such as enabling ubiquitous DER integration
- Provides pathways for existing and new innovative energy ecosystem service providers stakeholders whether SAAS providers, vendors, utilities, etc.
- Allows pathways towards the “fantastical” ideas that we haven’t thought of yet
Make no mistake. The electric power industry is ripe for disruption. When you step back and consider the implications of where we are as an industry, the challenges we are experiencing with scalability, siloed applications, stranded assets, DER integration, enabling edge intelligence, and just keeping customers from “opting out” and building their own microgrid . . . You recognize that change is imminent. Just like many other industries, the Internet of Things is a transformational technology that is rapidly maturing and has very compelling advantages over today’s top-down, system-centric, siloed, centralized architecture.
This is a “moonshot” opportunity for our generation. It is no less daunting a challenge than was faced by the early explorers who went off into the uncharted wilderness or the Apollo 13 support crew that needed to safely return the crew back to earth. We can’t wait for a government agency or traditional utility vendors to solve these societal issues for our electric power industry. The time to act is now.
This is a “call for action” to like-minded technical and policy professionals. We cannot continue on the path we are on and address the current and coming challenges. We need to address these forces head on to keep power delivery reliable, safe and affordable, adaptable to consumer needs and enable policies to move to a greener industry and reduce the impacts of greenhouse gases.
This is the first in a series of articles addressing the challenges we are experiencing and proposing a fundamentally different architecture to solve the problems of today and tomorrow. Our second article, “EnergyIoT Article 2 – Architectural Challenges to the Energy Transformation”, will be published in two days on Energy Central and LinkedIn.
 Erich Gunther, Smart Grid Subject Matter Expert and Evangelist, CTO EnerNex, 1959-2016
Stuart McCafferty, IoT Architect, Black & Veatch
Stuart McCafferty is an accomplished Smart Grid technical executive with an innovative history, strong relationships in the utility and vendor communities, business and partner development, platform and solution design, go to market planning and execution, and practical application of existing and emerging/disruptive technologies. Prior to B&V, he was VP of EnergyIoT for Hitachi America, where he led the architectural design of a distribution system platform supporting microgrid and Distributed Energy Resource (DER) related businesses. At B&V, Stuart supports the utility, technology, and vendor communities in strategy and pragmatic application of DER that combines IoT best practices and technologies with energy standards and protocols.
Thought leader in the Internet of Things (IoT), Big Data, Cloud Computing, Artificial Intelligence (AI), Machine Learning, and connected home with practical application within the Smart Grid ecosystem. Expert in utility IT/OT and the application of DER and microgrids for resilience, economics, and reliability.
Stuart is a US military veteran, Air Force Academy graduate, an Energy Fellow for community resilience at the National Institute of Standards and Technology (NIST), an Energy “Expert” for Energy Central, and Vice Chair of the Open Field Message Bus (OpenFMB) user group.
David is the Chair of the GridWise Architecture Council since 2015 and has been a council member since 2013.
The GridWise Architecture Council (GWAC) is a team of industry leaders who are shaping the guiding principles of a highly intelligent and interactive electric system. The Council is neither a design team, nor a standards making body. Its role is to help identify areas for standardization that allow significant levels of interoperation between system components. More about the Council can be found at www.gridwiseac.org
David is the current chair of the Technical Advisory Committee and a former member of the Board of Directors of the Smart Electric Power Alliance. He was also Chair of the SGIP Board of Directors from 2015 until 2017, and as a board member beginning in 2011.
In his current role, he is the Director of Technology Architecture and IT Transformation at the Electric Reliability Council of Texas (ERCOT). He began his career at Austin Energy Director of Information Technology Services for Austin Energy and was Deputy Director and Chief Information Officer for an $18B pension fund. He holds a BBA from the University of Texas at Austin and an MBA from St. Edward’s University.
Eamonn McCormick, Chief Technology Officer, Utilicast
Eamonn McCormick is the CTO at Utilicast, a leading energy industry consultancy. Eamonn is a passionate believer in the bright future of the energy industry and the importance of collaboration as the foundation for solving for our current industry challenges. He is a results driven technology leader with a track record of success. He has implemented strategic technology change at several large energy companies over the last twenty years in the areas of wholesale markets, transmission and energy distribution primarily. In addition Eamonn is currently chief architect of the Energy Block Chain consortium.