Toward a Resilient Future: the utility case — Taylor Gillespie
Imagine a neighborhood, a row of urban apartments. A patch of light shines through a window onto a small square living room floor. It’s winter but the windows are wide open; the apartment thermostat is building controlled and it’s HOT inside. Picture a seldom-used rooftop, cluttered with chairs and a rusted charcoal grill.
Now, imagine this. Expansive windows let light flood into the living room and charge small appliances through a solar powered battery. The rooftop is now a garden oasis with small, efficient solar panels powering lights and an electric grill. A smart thermostat displays real-time energy usage and trades renewable energy credits with your neighbors and the utility company. These transactions are secured by blockchain, so power outages are a thing of the past.
To me, this is the Resilient Future. And as futuristic and as it sounds, this technology is being applied around the world, in small targeted applications. You might be asking, “If people become so energy self-sufficient, won’t this Resilient Future erase the need for large utility companies? What is the utility’s incentive to make this blockchain-enabled microgrid possible?”
Good question. The emerging energy landscape with more control and varied inputs is becoming essential to maintaining a stable power supply, the lifeblood of utility companies [1]. Climate change has affected weather patterns, making extreme weather events more frequent, less predictable and more damaging [2]. In the face of the shape-shifting climate change threat, energy providers must not only respond to changing consumer demands and a rapidly evolving regulatory environment, but also spend increasing resources on outage restoration, vegetation control and disaster response [3]. Because of this, utilities have a major incentive and a critical role to play in this Resilient Future transformation.
You may be thinking, “What are the key components of this Resilient Future and what’s the path to get there?” For the Resilient Future to be realized, we need the energy ecosystem, that includes utilities and their consumers, to embrace the following key components:
1. Renewable energy sources: to reduce the compounding future impacts of climate change
2. Microgrid integration: to create resiliency in the face of uncertainty through varied and sustainable energy sources to compensate for greater weather uncertainty that can dismantle utility infrastructure and balance inconsistent inputs from renewables
3. Secure energy trading with blockchain: to allow customers to trade energy with their peers and with their utility company to meet increasing energy demand and the varied inputs associated with renewables
Now that we understand the three components of the Resilient Future, we need to understand the utility incentive to transform the existing energy landscape to encourage the adoption of these three components. There are three main ways a utility could benefit from these components and should use the Resilient Future as their north star as they navigate the complex technical transformations in their futures:
1. Reduce the cost of climate change with renewables: Utilities can reduce the future and uncertain impact of climate change by preparing their infrastructure to integrate more renewables into their existing operations.
2. Keep the lights on, and customers happy, with microgrids: Uninterrupted power supply is key to customer satisfaction and revenue streams. Effectively integrating microgrids reduces utility dependency on a single source of power. This alleviates the financial impact and customer dissatisfaction of an outage by reducing maintenance costs and ultimately getting customers reconnected more quickly. It also helps utilities better manage their grid distribution, allowing them to supplement peak usage times with distributed resources, therefore putting less strain on their infrastructure and saving money.
3. Become an industry leader with blockchain trading: Using blockchain, utilities and their customers are well positioned to securely engage with evolving energy trading schemes. A secure trading platform encourages microgrid and renewables integration and allows customers to make informed decisions on where they source their energy. Distributed networks allow transactions to be streamlined, reducing the need for an intermediary and therefore reducing costs, eliminating a single point of failure and increasing transparency [4]. A utility that enable blockchain-based energy trading will emerge as an industry leader and early adopter of innovative, sustainable and secure technology with a business model that encourages microgrid users to engage with their services.
At IBM, we’ve seen our utility clients taking first steps toward this Resilient Future by deploying “smart meters” and advanced metering infrastructure (AMI). This upgraded AMI technology enables both utility and consumer to collect and analyze more data on usage and allow two-way communication between utilities and their end users [5]. AMI lays an essential foundation for establishing energy efficiency advancements, like the integration of microgrids and blockchain energy trading. In the Resilient Future, utilities may even incorporate “smart meters” in a blockchain, allowing for automated reconciliation of demand and supply in real time to better balance the grid [6].
In order for utilities to reap the long-term benefits of renewables, microgrids and blockchain trading, they need to keep the Resilient Future front of mind as they make their technology decisions today. Many utility companies are upgrading their enterprise technology one function at a time, as enterprise-wide changes are both expensive and disruptive. However, the potential cost of not developing and executing a long-term, comprehensive approach is far greater. Utilities must adopt an agile, holistic approach to their technology transformations to realize the benefits to their customers, to their bottom line and to the planet that the Resilient Future promises.
[3] https://www.bsr.org/reports/BSR_Climate_Adaptation_Issue_Brief_Energy_Utilities.pdf
[5] https://www.ibm.com/industries/energy/solutions/smart-metering
[6] https://www.eniday.com/en/sparks_en/blockchain-energy-business/
