How the Evolution of the Electric Utilities

Affect the Consumer Through the Smart Grid

 By Peter Wung

IEEE has nine Smart Grid Domains that were created by members who were inspired by the
National Institute of Standards and Technology (NIST) Conceptual Model to create technical
communities to advance the development of the Smart Grid.

The IEEE Smart Grid Customer Domain is the only one that directly links Smart Grid activities with
the customer. This was not an intentional bias, it is because the concept of the Smart Grid is
amorphous, based on broad vision rather than details. Indeed, the issues that affect the customer as
a result of the Smart Grid implementation were too far into the future to concretely address in 2011.
In addition, customer-related issues are closely dependent on prior decisions made by the
policymakers, the utility industry’s implementation of the policy, and the resulting system and market
responses to the implementation.

In the ensuing five years, while the Smart Grid concept has burgeoned into a viable reality, and this
work has in turn flowered into executed actions, the Customer Domain can now be considered in the
overall discussion. Indeed, it is probably quite timely, as the global trend is becoming in synchronism
with the rapidly developing technology flow that has buoyed the Smart Grid and Internet of Things
conversations in the general press.

“Customer” is a broad term describing the average consumer, but it also describes commercial and
industrial users of electrical energy. While there is a Non-Bulk Generation Domain as one of the nine
domains, the intersection between the present definition of the Customer and Non-Bulk Generation
is an area of open development, subject to the rapid evolution of the utility business model.

The initial logic behind the Customer Domain is developed along the line of traditional customer
service philosophy that includes:

 restoration of service in the event of outages

 economical delivery or energy to the customer
 energy management strategies to make the energy costs attractive to the customer while
also profitable for the utility
 the ramifications of new customer loads on the electric power supplier
 means of measuring customer usage of electrical energy and ways of leveraging that
information to best serve the customer as buyers of electrical energy
 impact of utility technical decisions on the customer electrical energy usage habits

All of the ideas are rooted in the traditional business model of the customer being the load. The
paradigm is that the utility is the generator and deliverer of electrical energy while the customer is
the consumer. The flow of energy is unidirectional, the price and methods of interchange between
generator and the consumer is regulated by the Public Utility Commissions of each state. As a result
of this paradigm, the subdomains for the Customer Domain had been limited to: Customer
Enablement, Demand Response, Plug-In Vehicles, and Smart Metering Systems, while the
extended reality of the Customer Domain had outgrown those limited sub-domains.

In the meantime, there has been a trend that is a result of both technological development and
market evolution. As a response to the difficulty of building future large central generating plants in
combination with the small capacity margins that exists on the central national transmission network,
distributed generation has been tapped as a viable supplement and possible replacement for the
large central generating plant. An unintended consequence of the distributed generation
phenomenon, “cascading natural deregulation” became a theoretical possibility.

“Cascading natural deregulation” can be described as follows: as the electrical energy sector strives
towards energy efficiency, as well as, working towards distributed generation, the total demand for
electrical energy drops, i.e. consumers stop purchasing kilowatt-hours as their needs have
diminished.

According to the U.S. Energy Information Administration the rate of growth in electricity demand of
the United States experienced a downward trend, between 1950 and 2010. The last few years
indicate that the electricity demand has diminished to the point of having negative growth. ; that is,
while the early load growth projection was on the order or 7 percent per annum, the actual annual
load growth has diminished to the 2-3 percent per annum level.

As consumer demand drops, the amortized cost of the high capacity large generating fossil fuel
plants continues to sit in the debt column of the utilities, which causes the utilities to charge higher
prices to the consumer, which, in turn, make the energy efficiency and distributed generation all the
more attractive since the utility generated energy rate is rising in comparison to the new initiatives.

In addition, the combination of energy efficiency, distributed generation and the evolution of energy
storage technology will not only give the consumer cheaper prices, but also more independence
from the central generation model since the need to be constantly connected to the electric utility for
their generation needs evolves to being unnecessary. While there will always be a need for the
central electric grid as the stability and reliability of the national power system depends on the
central electric grid, the business model of the public electric utility must respond to the “cascading
natural deregulation”. Indeed European countries, notably the UK, Germany, and the Netherlands,
amongst others, have enacted legislation and regulations which serve to decouple the electric utility
business model from strictly being based on energy sales.

The combination of the advent of distributed generation and the “cascading natural deregulation” has
created an environment which transforms the Customer Domain from one that deals theoretically
with a subject that is just a passive consumer of electrical energy to one that breaks through the wall
created by the distribution switch and loosen the constraints that had existed between the traditional
energy producer and energy consumer.

The customer can now be both a consumer and a generator of electrical energy, and by
incorporating the micro and nano grid concept, the customer could theoretically island their systems
from the central grid, even as the central grid becomes dependent on the distributed generation
derived from the customer as a portion of the system generating capacity. The energy flow can now
be bi-directional. This particular result will motivate technological developments in bulk power
devices, such as smart bidirectional switches, power electronic devices to both monitor and actuate
the distant devices from the central grid as well as doing the same thing for the distant load with
regard to the central grid.

The open market that can possibly result from the anticipated policy and legislative actions will also
motivate manufacturers to enter markets that had been closed to them. The micro and nano grids,
for consumer, commercial, and industrial customers enables the customer to make economically
efficient and effective decisions. Which could allow a cornucopia of possibilities: the utility could
remain the energy management service provider, a third party vendor could act as an intermediary
between the customer and the power generator, or the customer can manage their energy usage
themselves. In all three scenarios, the development and evolution of technology, policy, and
legislation will transform the present Customer Domain as it exists now to a very large degree.

In addition, with the rapid acceptance of the Internet of Things and the Industrial Internet of Things,
the enhanced ability of the customers, service providers, providers of electrical energy to
communicate with vast numbers of devices and measurement points, capture and analyze data in a
timely manner, and actuate devices in accordance with operational efficiency will revolutionize and
complement the Smart Grid in unaccountably many ways which, in turn, will enrich the Customer
Domain even more.

The untapped potential of the Customer Domain can be so large and progress at such a rapid rate
that the Customer Domain can conceivably dwarf the other domains. It is an exciting time to be
involved in the Customer Domain of the Smart Grid, because the potential for growth and
revolutionary transformation seem limitless.

Contributors 

Sustainable Microgrids for Energy-Poor

Communities: A Spotlight on the Planning
Dimensions
 By Daniel Akinyele, Ramesh Rayudu and Richard Blanchard

Remote microgrids currently account for over 50 percent of the total installed microgrids worldwide.
Such systems have a huge potential to electrify isolated parts of the world, but they have to be
carefully planned to achieve a sustainable energy supply. This article presents the planning
dimensions for microgrids in energy-poor communities. It underscores the framework necessary to
design, develop, manage and ensure a long-term viability of the systems. Such a framework
integrates the social, technical, economic, environmental and the policy perspectives, thus,
providing a sound understanding of the processes and the stakeholders over the life cycle of the
systems’ development.

About 20 out of 100 people in the global community still do not have access to a modern energy
supply. Most of these people live in the Sub-Saharan Africa and South Asia. These factors, among
others, made the United Nation in 2014 launch the Sustainable Energy for All (SE4All) initiative.
SE4All aims to achieve universal access to modern energy supply, double the share of renewable
energy and double energy efficiency measures. In addition, in 2015, the UN also produced the
Sustainable Development Goals (SDGs), a 17-goal agenda to transform the world, creating a
pathway for achieving global sustainable development by 2030.

One of these goals focuses on access to affordable and clean energy for all. These strategies are
intended to advance the Millennium Development Goals (MDGs) that ended in 2015. However, if
these targets are to be realized, huge investment in eco-friendly decentralized energy generation
infrastructure will be needed to increase the global electricity access in the short- and medium-term.

The electric energy sector is continuously evolving worldwide. One current development is the
gradual transition from centralized to decentralized energy generation technologies. This is
constantly being demonstrated in different parts of the world both in on-grid and off-grid applications,
i.e. microgrids. Interestingly, remote microgrids currently account for more than 50 percent of the
total installed microgrids worldwide. Such systems have a huge potential to electrify isolated parts of
the world, but they have to be carefully considered and planned by the energy designers,
policymakers, governments, developers, and independent producers, especially in countries with
appreciable energy resources.

The electric power industries around the world are progressively recognizing the relevance of
microgrids. One of the reasons is that they serve as a key alternative for meeting people’s energy
needs where there is no access to the electricity grid. In the not-too-distant future, such interest is
expected to open new opportunities in developing countries that will lead to widespread use of
renewable energy, such as wind, solar, water and biomass, and the storage systems. However,
because microgrids based on renewable energy resources are different from the conventional
energy systems with which most are familiar, the process of designing, planning, developing and
managing such energy solutions requires new ways of thinking. One fundamental strategy for
planning and ensuring sustainable microgrid systems for energy-poor communities is a user-
centered approach. This approach is a pre-design process that considers the user requirements as
the starting point and as one of the most critical aspects of the design tasks. A sound understanding
of the design process from the users’ perspective is a requirement for achieving practical microgrid
solutions.

Such an approach addresses one of the reasons several existing off-grid decentralized generation
systems in some developing countries have failed. The energy models either have not appropriately
included the users’ needs or have not taken their specifications into account. Detailed and accurate
information about energy consumers is important. A field-based approach is an effective technique
for obtaining such information. This includes a contextual inquiry, on-site surveys, interviews and
observation. This approach allows interaction with the people that are involved. The information
obtained then takes into account the available energy resources of the locations in designing
suitable microgrids for the users. This process is typically a socio-technical dimension of the
planning, as the users’ social characteristics form the basis for the technical analysis.

Traditionally, electricity system planning and development is approached as a technical and

economic problem that considers both the technology and costs of the proposed energy models.
This is currently the platform on which most existing renewable energy microgrid systems design are
based, and it is an important aspect of the planning process. However, for successful energy
solutions, planning and management requires more than the technical-economic analysis. The social
aspect is also crucial. Thus, a third dimension is added, with a social analysis added to technology
and economics.

Furthermore, because the social, the economic and the environmental analyses are central to
sustainable development, it is also vital to consider the environmental performance of the proposed
solutions. This creates a four-dimensional framework: social-technical-economical-environmental.

Economics identifies the cost-effectiveness of the solutions and the financial footing for the
continuous operation of the systems, while a life cycle environmental impact assessment ascertains
the extent to which the solutions can be eco-friendly. These three aspects must then be effectively
integrated with the technical perspective if sustainable energy systems are to be developed.

These dimensions cut across the four stages of microgrid development - the pre-design, detailed
design, implementation and post-implementation. However, if the desired social, technical,
economical and environmental sustainability benefits are to be achieved, effective management of
the energy systems in the post-implementation phase is critical. There cannot be a widespread
application of microgrids in the absence of a sound policy and institutional framework.

A “PESTLE” approach provides an all-inclusive strategy for effective planning and management
analyses: Political, Economic, Social, Technological, and Environmental. Such a model can provide
a sound basis for better understanding and planning microgrids for isolated communities in
developing countries. As part of the technical scheme, the following are also crucial for achieving
sustainable solutions:

 Complying with global standards such as IEEE Std. 1562, 1013, 1361, 1561 and 1661
 Applying best practices
 Using standard/approved materials
 Using effective maintenance schemes

A holistic systems approach is needed for sustainable microgrid solutions that integrate the
framework identified here through the full life cycle of the development.