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Industrial IoT data disrupting energy sector

Microgrid movement, behavioral data are changing generation/distribution paradigm

As data generated by Industrial IoT appliances creates a clear picture of how consumer behavior impacts the power grid, the energy sector is becoming increasingly aware of the disruptive potential of hyper local power generation.

Growing traction around microgrids, small-scale energy generation, storage and distribution that can be independent or tied to the larger power grid, is flipping the longstanding paradigm of centralized generation and bringing into focus the need for a pivot to a new business model.

Meet Pecan Street, an Austin, Texas-based nonprofit that got its start installing home energy monitors, but the organization has grown into something more.

CTO Bert Haskell explains: “We installed devices, off-the-shelf, instead of using the utility’s smart gear. We developed our own understanding of collecting that data.” Third-party data hosting gave way to in-house servers with an eye on “value-added participation. We have end-to-end capabilities now. We can deploy our own sensor devices, we pull the data into our cloud, we do our own data analytics and we parcel the data back out to make it available to universities free of charge.”

In addition to data collection related to energy, water and gas usage, Pecan Street also develops products in its interest areas including the Energy Switch, an energy storage and management system designed to help residential customers take control of their energy needs; users can go off-grid or integrate with the larger grid and potentially sell power back to utilities

“People can install their own solar panels and a home battery. They can even buy back-up gas generators,” Haskell said. “But the pieces don’t integrate well, so they are far less effective than the sum of their parts. If we want smarter homes that take advantage of innovation in solar and energy storage, we need tools to make sense of all the new customer options.”

That’s what Energy Switch does on an individual level, but if you pull the reference frame back, the broader goal of Energy Switch is to pave the way for broader adoption of microgrids.

Haskell highlighted the disruptive potential. “The infrastructure is based on centralized energy production and then distribution of that centrally-produced energy. It’s just an architectural feature which is going to be disrupted if all these customers that were paying for that generation and for the maintenance of that distribution infrastructure no longer need either. In the short term, there’s some people that are going to get disrupted.”

This idea of customer-driven disruption was explored during the 2016 Energy Thought Summit, which has held in Austin March 29-31.

Starting with the concept of customer focus, Ken Cornew, CEO of Exelon Generation, outlined the balance between process-based “operational excellence” and the need to embrace innovation. “Those are two conflicting cultural elements,” he said. “I think…what we really have found out in the last four years of having that combination together is we need to think differently.”

“We talk about matching products to customers,” Cornew said. “Where the innovation is coming from is competition and customers, what customers want. Those types of things are things we need to really think about and not just think about if we run plants well, we’ll sell the power and everything will be fine.”

Scott Prochazka, president and CEO of Centerpoint Energy, said the energy sector needs to ensure that, as renewable sources of energy continue to gain adoption, the power grid is able to accommodate new associated generation and distribution models.

“As we look at distributed generation, we look at alternate sources of renewable…I firmly believe the grid becomes the space to make this happen. I see a very exciting future in terms of meeting consumer requirements.”

But there are technical challenges associated with creating reliable connections between microgrids and the larger grid. That tension is at the heart of why Energy Switch was developed.

“We’re creating something that takes away the technical so-called problems that solar batteries are causing and forces the utility to face the real issue,” Haskell said.  “It takes away the utility’s technical objections to having those kind of resources on the grid. It doesn’t take away their business model objections. Their revenue is going to go down based on their business models.”

So what’s going to happen?

“Ultimately I think it’s going to be some type of quality of service business model where you basically pay for the connection, the capacity of power…and the level of reliability that the utility will guarantee for the connection. The amount of energy you use would be a relatively unimportant part of your bill to the point where that might not matter.”

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