Architecting the Smart Grid Using the Industrial Internet of Things
1.
SOLVING REAL WORLD PROBLEMS WITH IIOT SOLUTIONS
The North American electric power grid has been described as the biggest machine in the world.
It was designed and incrementally deployed using the fundamental architecture of centralized
power generation with mass transmission and distribution to end users at the edge of the grid.
This system worked well for a century, with regulatory bodies overseeing utility grid deployments
to ensure consumer value and fair business return on long-lasting investments. Utility companies
evolved into companies intent on selling more electricity, since the regulated markets rewarded
them based on volume. The best way to make more money was to build more bulk generation,
more transmission, and more distribution.
Times have changed. Utilities are now looking at ways to do more with less, creating more
efficient and resilient electricity delivery systems that take advantage of clean energy and hi-tech
solutions. Moreover, the regulatory environment is slowly changing to demand cleaner, more
efficient energy systems. Some are even looking at regulatory changes to embrace today’s
technology, and at times even reward utilities when they deliver.
Still, some changes will take time. Regulated utilities are still required to provide their regulatory
agencies with full business plans including investment justification, consumer benefits and 20year amortization schedules, to compensate them for grid modernization efforts. This creates a
conundrum and utility risk where new technologies are deployed only to be obsolete well before
the 20-year payoff concludes. It also allows non-regulated fast technology adopters to erode
some of the utility’s margins with new business models. Utilities call these obsolete technology
solutions “stranded resources”, which in essence means they are assets that will never achieve
the cost benefit or payback the utility and regulatory agencies expected at the time they were
approved.
The electric power grid is undergoing profound changes in the way power is delivered to end
consumers. Instead of large, centralized power plants burning fossil fuels or using nuclear power
to drive spinning turbines and generators, Distributed Energy Resources (DERs) have emerged as
decentralized, greener, local alternatives to bulk power, that do not have to transmit electricity
over long distances. DERs are typically clean energy solutions (solar, wind, hydro, geothermal)
which take advantage of local environmental and market conditions to manage the local
generation, storage, or consumption of electricity.
So the challenge for utilities is how to deploy DERs in a decentralized system that still provides
high reliability while also minimizing or eliminating stranded resources. In other words, how do
we safely deploy decentralized systems with distributed intelligence that manage themselves
based on local conditions and can also evolve as technology solutions change and improve? And
how do we ensure the current electric grid backbone, essential to today’s society, remains funded
and managed during a transformation period?
IIC Journal of Innovation
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