Editor’s note: This is part two of a two-part series about the power industry’s future. The first part, on predictions and trends, was published in the May/June issue of EL&P. This article was originally delivered as a keynote speech at the DistribuTECH Conference in January 2005.
As we discussed in part one of this article (May/June EL&P), you are architects of the future. And, you are the ones on whose shoulders creating a new grid for that future will rest.
Making investments in a new, intelligent grid of the future would be challenging enough in normal times. But, it will be made even more so by other changes that will transform the traditional core business of the T&D utility companies over the coming decades. Let me suggest a few potential breakthrough innovations that could turn your world upside down. For parallels today, think of what cell phones and the Internet are doing to traditional phone companies.
These kinds of radical developments don’t have to be bad. They can be great opportunities if you get into a position to take advantage of them and build appropriate business models. In an infrastructure business, though, where there’s a huge capital investment to be amortized over decades, one needs to be very careful to design and build in flexibility to accommodate new technologies.
Let me mention five technology areas in which we could see breakthroughs that could be fully incorporated into the infrastructure by the middle of the century.
plug and play distributed energy resources
When will we get to the point where a business can just plug a fuel cell into its energy management system and get automatic recognition and acceptance from the utility, along with automated net metering and billing? Or, when can I go down to Home Depot and buy a couple of solar arrays that I can bring home, install on my roof, plug into my home metering portal, and get automatic power exchange and billing on a net metering basis?
We can develop the technical protocols and systems to accomplish this today. In fact, some groups are working on it now. The question is, when will we have the willpower to do it institutionally? We’ve seen the marketing attraction of green power, and we’ve witnessed the political support for renewable energy, especially at the state level. With global climate change as the big environmental issue of the century, this public interest is only going to grow.
Offering “plug and play” flexibility to customers is a business opportunity. The question is, whose business will it be? Will distribution utilities continue to resist it, to avoid losing kilowatt hour sales, or will they find win/win opportunities and extend into this as part of their customer businesses?
Whenever this comes, it will significantly change the nature of the grid. The grid will truly become a network in which power flows in all directions, including to, from, and among customers. Instead of managing power flows among thousands of power plants today, we’ll be managing a network of several million power sources.
the smart house
We’ve been talking smart houses for 20 years. We even built prototypes 20 years ago. The difference is that now the technologies are coming together to make it more readily achievable with a viable business model. This is like the Internet-where the basic infrastructure had to be put in place, and then users and services developed that were never imagined.
Now, there are real, commercial pilot projects on broadband communication over power lines, smart consumer portal devices, smart appliances, and systems for using the power lines inside buildings for both power and communications. In my view, the question is not “if” this will happen, but “when.” Distribution utilities may want to move quickly into this online space, to “own” the customer connection. The wires going to every home and business may be one of the most valuable assets utilities have.
superconductivity that works in a wide range of applications and over long distances
Superconductivity’s progress has been agonizingly slow so far, but it is beginning to show real results, especially in specialized applications. One of those, for example, is in large motors, where superconductivity can reduce motor size and weight to one-fifth the usual levels and increase efficiency up to 97 percent. Superconductive equipment is also beginning to be used in transmission grid operations, to detect and instantly correct short term power fluctuations to improve overall power quality. Over the long term, superconductivity should be a significant contributor to both power quality in our grid operations and to energy efficiency in our economy.
cars plugged into the grid
We can already see the beginnings of electric drive returning to the auto sector in the form of today’s hybrid cars. This is a trend that makes sense, and one I believe will become standard in a decade. Ten years from now, I predict that a quarter of all the new cars sold will be hybrids, and, in 20 years, I think it will be half or more of them. When Toyota and Honda introduced the first Prius and Insight cars, the other manufacturers resisted the whole idea. Now, gradually everyone is getting into the act.
This is the cycle we’ve seen for many other technological innovations in the auto industry, such as solid-state ignition, antilock brakes and front-wheel drive. These types of new technology are more complicated and more expensive, but they bring consumer benefits and value. They start out in selected models and eventually spread to the rest of the fleet.
Now the auto industry has learned and solved the lesson we’ve all learned here in the energy field: Customers do not want to sacrifice anything for efficiency. And, they don’t have to. The new Honda Accord Hybrid is a great example of the right kind of energy efficient product. It has 240 horsepower, 15 more than a standard Accord, and accelerates faster, getting from 0 to 60 mph in under seven seconds, half a second faster than the standard Accord.
The additional change that I foresee is adding a plug to the hybrid car as an option. That, along with some additional battery capacity and some other electronics, will allow customers to top up their charges at night, so they can do a significant share of their driving on electricity. But the truly radical impact is that once there’s a plug on the car, the electricity can flow both ways. Customers can use the car as a power source, and can plug it in at home to supplement their grid power. And their home energy systems will be smart enough to know when to switch over and use some of that power if grid prices are too high, or even to sell some power back into the grid.
That doesn’t sound like a very big deal, until you run the numbers. Every five months, the amount of horsepower we put on the roads in new cars in the U.S. is equal to the total installed base of the nation’s electricity grid. Every five months. It doesn’t take very long to amount to a very large impact if you start to add plugs to just a few percent of the new cars.
biotechnology breakthrough to produce hydrogen
This can be the breakthrough that will lead to fuel cells everywhere, as a supplemental power supply. I am not one who believes that the “hydrogen economy” is coming soon. However, I do believe that fuel cells will be very attractive to businesses and consumers in providing assured reliability and quality at homes, offices and factories. And, it will be paid for in part by selling power back into the grid at peak load times when prices are high.
I believe we’ll overcome the technical challenges of fuel cells and bring their costs down and reliability up. The biggest obstacle, though, is how to produce the hydrogen. Producing it either by electrolysis of water or by reforming natural gas requires too much energy and is too costly, except for special market niches, such as extended life power supplies for cell phones and portable computers.
I expect the biotechnology revolution is going to provide our answer. I foresee a biological process of producing hydrogen that will be economical and that will not produce carbon-which is crucial for solving the global climate change problem. Once that is available, I expect we’ll work out the hydrogen storage and transport issues so that fuel cells will be practical in our businesses and even in our homes.
I expect my kids will have a fuel cell in their garage, next to the water heater, that will provide maybe 15 percent to 20 percent of their electricity-enough to guarantee that they’ll never have a complete power failure, to assure them a continuous supply of high-quality electricity, and it will be paid for in part by selling some power into the grid at peak load times. It may even be owned and serviced by the local utility or an energy service firm.
This is just a start. You can go on to identify many more technology breakthroughs that would have important implications for your organizations. I have not said anything about energy storage, for example. Or the impact of changing demographics in the future, including our patterns of work, commuting, recreation, and so on. Nor have I said anything about the impact of international developments, which have made us part of an ever closer global community.
Through all of this, recognize that technological change is not a spectator sport. We’ll all be affected by it. The choice for us is whether we’re on the bus or off of it. Are we willing to embrace the changes and develop strategies and business models to take advantage of them for growth and strength in the new industries of the future?
T.J. Glauthier recently moved on from his job as president and CEO of the Electricity Innovation Institute (E2I), an affiliate of the Electric Power Research Institute (EPRI). He can be reached at firstname.lastname@example.org.