Transactive Energy and Farm to Plug

I just got back from the Third International Conference and Workshop on Transactive Energy in Portland. There is wide consensus on the inevitability of transactive energy even as there are struggles as to how to get there.

Transactive energy was initially conceived of as a way to set spot market prices for electric energy (power) during times of peak demand or temporary supply shortfall. Transactive energy is based on the path-breaking research of Clearwater and Huberman at the Xerox Palo Alto Research Center (PARC) published in 1993. At PARC, they created moment-by-moment thermal markets to manage data center cooling; an agent on each server bid for the cooling it needed. This approach eliminated hot spots and reduced energy costs even as it eliminated the need to develop ever more complex control and sensing strategies.

Distributed energy makes the problems of effective grid operation worse. Distributed energy refers to the developing model in which every node on the grid is potentially a power source as well as a power user, driven largely by renewable energy such as solar photovoltaics (PV) and wind. Distributed energy changes the centrally managed, essentially hub-and-spoke distribution model in which energy flows down into what is potentially a two-way peer-to-peer network over the same infrastructure. Sites which contain Distributed Energy Resources (DER) can choose whether or not to come to market at any moment. Transactive energy is the developing means to manage this growing complexity.

Distributed energy is local, so distributed energy markets (and prices) must be local. Traditional local prices in power, referred to as locational marginal pricing (LMP) or nodal pricing is based on physical limits of the transmission system—a single bottleneck can affect all “downstream” points. LMP can be set centrally, calculated based on line physics and historical use. DER potentially places the power sources downstream of the congestion, and alongside the power customers. Nodes containing DER can decide whether the energy available is used to support the grid or internal purposes. Only actual markets and set clearing prices for DER.

There is no effective ownership of DER without local storage. Without local storage, grid nodes are always price-takers. Grid operators have a strong and legitimate interest in throttling how much DER is dumped onto the grid at any moment. Without local storage, grid operators must be able to turn off DER, i.e., set when a node can come to market. Even if a node invests capital in DER asset, if a third party determines what prices the node must take for the product of that asset, and controls when that asset can come to market, then the owners of that node cannot be said to own the asset.

Local markets will not really work without local storage. Local storage is necessary to create actual economic ownership of DER.

The best use for DER is and will always be local consumption. A building need not be Net Zero Energy (NZE) to consume power locally first. Use energy locally first. The next best use for DER is to store energy locally, perhaps for later consumption on site. Any excess, or any deficits in local power can then be made up through market operations. This is the essence of the new power movement, sometimes called Farm-to-Plug.

Leaving IB-CON with Microgrids and DC Distribution in mind

I write (and post,you have to be amazed at the technology we so take for granted) this on a plane flying away from a great IB-Con, the REALCOM Intelligent Buildings Conference. It is a trade show like no other, with deep involvement of both the technology leaders in Real Estate, i.e. CIOs and CTOs of the largest REITs and those that would sell to them. The panel discussions were embued with new issues tied to deep adoption of IT not only into the corporate operations of estate, but into the operations of the hidden systems within.

Deep analytics and deep security concerning embedded systems, BAS and others were recurring themes this year. There were frank discussions of using the BAS to get to corporate information, and of using hacks to destroy building internal operations. There was just enough White Hat “think like a hacker” to keep the talks interesting.

But what really stands out at REALCOMM in the focus on emerging technologies. Jim Young and Howard Berger have a genuine interest in start-ups, identifying the ones that could do a lot of good, and helping them to meet their early hurdles. New companies may get coached on messaging and presentation. They go out of their way to introduce potential risk-takers with the new technologies. I have even listened in as companies just out of angel funding get coached through their next steps. The unseen services these two provide are immense.

On the other side, they create a real community among the technologists on the ownership side of real estate. Some come back year after year to challenge each other with the changing world of real estate. I have written here before of the challenges of setting up start-up office for millennials, of coffee shops and food trucks replacing the in-house conference rooms and in-house sandwich shop.

Some of these owners have set up their own coaching for new tenants, helping them with marketing, and financial planning, and other topics the young founder of a new venture may not know. At one level, this is raw self-interest, for a tenant that goes out of business is a tenant that breaks his lease. But at another level, and I think a truer level, it is a commitment to helping other flourish, so long as they learn and work hard, so that we all flourish. And I think this commitment and community starts with Jim and Howard.

My most immediate concerns this year were microgrids and semantic frameworks, as well as the Energy Mashup Lab. These topics are no surprise to my regular readers.

A moderated a microgrid session with CleanSpark and Stem, two technical companies with quite different focuses. Because another vendor, an early start-up, dropped out, I expanded my own comments on personal microgrids. What was remarkable was how each participant agreed on the big issues, the big benefits, and the driving forces. As an industry, microgrids are now know where they are going. Years ago, I moderated similar sessions, and the speakers were coming out of the labs, with vision, but not yet much delivery. Today, either of them, and maybe a dozen more vendors, can deliver systems out of the box.

Those systems are quite different though. They share a commonality of benefits: lasting reduction of energy risk, capabilities to work with real energy markets to reduce costs, a capability of consuming local storage for local purposes rather than the dead end of net metering, and privacy and security for the building and its occupants. The prices are coming down, leading to three-to-five year ROIs on pure energy costs without pricing the other elements. The risk is now low. The question is now moving toward “Does a microgrid make sense in this state with these regulations?”…and regulatory frameworks are starting to predominate. Keep an eye on these technologies, because if you have a site with greater than average price risk, or reliability risk, or security risk, you should be considering a microgrid now.

At the end of the day, I finished in a discussion of low voltage DC lighting. Again, long-time readers know I have been enthused by this technology for five years. It is now coming to market (LumenCache) with standard parts, standard high-performance LEDs, modular component s anyone can install and maintain. I hope to learn more about this company and its products in the weeks ahead.

Which makes me look ahead. Is it time, at last, for the eMerge alliance, and for DC-based distribution inside the building to come to the fore? Storage (batteries) are DC. Solar PEV is DC. Digital electronics and LEDs are DC. With less need for heat shields and conversion, LEDs are cheaper, safer, and more reliable. Without the need to convert from DC to Ac to DC (storage) and from DC to AC to DC (storage to use), there is a 30% “free” increase in efficiency. With enough distributed energy generation, DC power, as Edison thought it should be, may be back.

That’s all for now. I’m tired and travelling.