The Impact of the Energy Cloud on the Power Sector Part 1 of 2: Understanding the Role of the Energy Cloud

Sep 1, 2015 11:53:00 AM by NuEnergen

lightning_safety_300.jpgFor years, the power sector has remained an unchanged staple with the status quo generally accepted as being something that we all simply had to live with. This left users with very few, if any, options and until recently, there wasn't anything that could be done about it.

All of that is currently going out the window as the industry now undergoes a fundamental transformation. While it has traditionally been based upon a centralized hub-and-spoke grid approach that was reliant upon hefty centralized generation assets such as cold-fired power plants, we are now seeing major shifts towards an increasingly decentralized grid that utilizes renewable DER (distributed energy resources).

These changes are far more widespread than DER, though. A diverse suite of technologies must be embraced for energy storage and efficiency, demand response, and advancements to software and enabling hardware that allow for improved interoperability across the elements of a heterogeneous grid. All of these components make up what is known as the "energy cloud", and it's reshaping the utilities industry across the US. This 2-part series will explore exactly how the energy cloud is changing the way things work, and how utilities companies will need to respond.

What is the Energy Cloud?

There's no way to fully appreciate the transforming landscape of the power sector without first understanding what the energy cloud actually is. The energy cloud is designed to help with the process of managing supply and demand across the grid, and actually shares a number of characteristics with cloud computing. Just as it would in the digital computing world, these cloud networks are used to boost efficiency in the allocation of of DER, such as solar, wind, and energy storage systems -- even across a very broad consumer base. Where these technologies might otherwise be relatively expensive, the energy cloud assists with gaining market share within the electrical grid, as well as embracing the advantages of economies of scale, all while increasing the efficiency of electron usage as they flow across the system. In a nutshell, the energy cloud enables customers to take on an active role in both the generation and utilization of electricity. However disruptive this may seem to the status quo, proactive utilities will enjoy numerous opportunities to capitalize on the energy cloud.

Understanding the Impact of the Energy Cloud

Although we aren't able to fully measure the impact of the energy cloud with precision just yet, what we do know is that it is significant. In fact, experts are estimating that as much as one-third of the country's market will be directly impacted by DER by the year 2017. That number is expected to rise to nearly one-half (42%) by 2020 (according to General Electric). This is a direct result of the fact that DERs and renewables are going to continue to grow exponentially throughout the next 5-10 years, being driven via expanding customer choices and an ever-evolving technology landscape. Ultimately, this will lead to dramatic differences in relations between utilities and customers. Equally significant is that it will increase the complexity of utilities' day-to-day operations as renewable DERs spread, energy storage helps to shift electrons and allow for a lot more flexibility in terms of balancing demand and supply loads, and the grid becomes increasingly digitized. It's a whole new world for utilities operations.

The energy cloud represents the ability to significantly alter the power sector for good; that much is obvious. But how will utilities respond to this technology disruption? Be sure to check out part two of this series in the next couple of days to see how utilities are adapting throughout the nation. Or, for more information now, contact one of the professionals at NuEnergen today.