Three weeks ago, I participated in a symposium sponsored by the Pacific Northwest National Labs (PNNL) for the GridWise Architectural Council. It is a fascinating conference, and one with more chance of meeting green and environmental and conservation goals than just many other initiatives hosted by folks who wear their hearts on their sleeves. It was also grounded in good economic theory and humble enough that it might just succeed.
The first principle of GridWise is that while the folks in the room are smart (and they were – this was no small part of the fun), they are not the only smart folks in the world. To actually address the needs of the future grid while moving to new models of energy production, we must create structures that encourage innovation. To encourage innovation, we must create means of realizing value propositions for new energy usage patterns and for non-traditional power sources.
Current market structures are a boat anchor on innovation. If you invent a gizmo that talks to the power grid and somehow saves energy in the house, today, you can only sell it to around 30 customers – all big power companies. Each of them will be required to run an extensive pilot before they can get anything through their local Utilities Commission. This means your initial sale will have to be, say, 50,000 units warranted for 10 years. Then after a year installing those units, the power company can propose a rate structure for them The Utilities Commission may nix the whole project, or ask for more research.
The other problem with current market structures and demand limiting approaches is that no one likes their power company. They spend half the year cursing them. They feel that the standards of reliability, built upon keeping an incandescent bulb lit, do not really describe the house that too regularly, they come home to find with the electronic devices 12:00 flashing. Each month the local power company includes with their bill statements about their quality, and an advertisement for a service that, for an added fee, will come with a guarantee that they will not destroy my home electronics again. Why would I, as a consumer, trust them to get further into my house?
GridWise, instead, imagines an intelligent home or office negotiating with the intelligent grid. The agent doing the negotiation may be in my home, or may be with a third party who negotiates for several homes. Those negotiations may be based upon price, or upon my personal interest in green power, be it renewable, or carbon-free, or habitat-safe. Whatever I want.
The other big part of GridWise is across the board Time-Of-Day billing. This will go beyond virtue, beyond social acquiescence, to let people find the real value in load shifting. Value means different things. In open source circles, they say “Free like in Speech, or Free like in Beer”. Well, finding value is similar. Thirty-day cost avoidance, generating a lower aggregate rate, is something less. Perhaps this is “Free as in Pepsi Free”. But GridWise finding value in immediate market decisions is readily visible cash. Live Dutch auctions to shed load are cash that is visible. *That* is finding real value.
Finding real value means people will spend real money to find it. Individuals spending real money bring the power of markets to bear on innovation. Markets free adoption and mean rapid innovation. And that is the real gem of GridWise AC.