Welcoming in the Third Industrial Revolution - Part 2. The Virtual Grid

by Anna Gretz
December 29, 2016

[This is the second part of a series on the Third Industrial Revolution, the term used for the way our society is changing based on widespread digitalization. For the first time in human history, the collective human race is able to communicate, associate, and collaborate with one another directly. Economically, this has a revolutionary democratizing effect, giving virtually everyone access to digital connectivity, and the resources needed to work towards the adoption of renewable energy and smarter, easier systems of transportation. The result? We see ourselves different. We see the world differently. We see our role in the world differently. Now, we need to figure out what to do with it.]

Right now, in the state of Hawaii, you’re just as likely to run across residential solar panels as you are a backyard swimming pool. Photovoltaic solar panels are everywhere… and so is sunshine. But even though Hawaii is miles ahead of much of the rest of the country when it comes to solar generation capacity, it struggles to actually use all the power it’s generating. A lot of this has to do with the frustrating intermittency of solar power. When the sun is high and hot in Hawaii, they are generating so much electricity that their electrical grid is on the brink of being overwhelmed and destabilized. Working out how to fix this problem was tough. No utility company wants to experiment on the grid at the expense of its customers.

Enter: The Energy Systems Integration Facility in Golden, Colorado. The ESIF gets to perform solar-energy simulation, so power companies can keep the lights on. The ESIF took the case of solar-rich Hawaii, and worked on finding out what it would take to coordinate Hawaii’s solar power in a way that surpluses and shortages could be leveled out into consistent, controllable power.

The answer? The Virtual Grid

Stated simply, the Virtual Grid (or Virtual Power Plant) is a system that takes many different power sources, like solar panels, wind turbines, and batteries, and integrates them, creating a reliable, unified power source. Often, this looks like a distributed system with many different sites, all orchestrated by a central authority.

A virtual grid basically has superpowers. It can meet peak load electrical demands. It can provide on-demand power generation on short notice. It can take the place of a conventional power plant with more flexibility, and much higher efficiency. Power plants are often met with big fluctuations in electrical demand--something that has historically thrown traditional plants for a loop. The versatility of virtual power plants allow them to react quickly and appropriately to fluctuations, since they can receive the information of an influx and instantaneously adapt.

You’ve heard of the Internet of Things… they’re calling this the “Internet of Energy.” The virtual grid would tap into existing and new grid networks in order to seamlessly meet the demand of electricity to every customer… as well as any available supply they had to contribute through their own, on-site power generation.

Virtual power plants could make demand-related blackouts a thing of the past.

After the massive natural gas leak in Aliso Canyon earlier this year, Californian electricity providers were left racing to find new ways to replace the lost resources in order to avoid widespread blackouts. They explored the resources of other fossil-fueled power plants, but they also turned to a more virtual, distributed network. Distributed energy networks of independently-owned solar panels and energy storage units are tied together digitally to create a remotely-controlled, unconventional power grid that provides more stability and reliability than the traditional power grid can hope for. The Aliso Canyon case forced Californians to explore virtual grids in a way they may not have otherwise, and as a result, they became a test case, and in-turn a success story, for virtual power plants.

The virtual grid is projected to quintuple in size within a decade (according to Navigant Research), growing into a widespread, distributed network with almost 28,000 megawatts of energy potential by 2023. As a whole, the connectivity of the Third Industrial Revolution is motivating a movement away from the centralized electricity market (where huge, fossil-fueled power plants transport electrons through power lines) toward a decentralized, distributed, local network of low-carbon, independently-owned, power suppliers. Going back to the California case, the shortage in natural gas pushed Southern California Edison to up its investment in energy storage, a process that’s still underway. They’re also hustling to get more privately owned batteries and solar panels connected to the grid.

Solving the mismatch of supply and demand is what the virtual grid does best… which is exactly why ESIF recommends it for Hawaii. The virtual grid provides flexibility and reliability, which is exactly what solar power lacks. Before the virtual power plant, customers used fossil-fuels to supplement their intermittent solar power… which is a bit counterproductive. The digitized, distributed grid can replace the electricity from fossil-fuel plants, giving solar customers the ability to be just that.

The next step to upping the efficiency and connectivity of the virtual grid is the installation of advanced meters… everywhere. Emerging digital technologies, if distributed and used, can transform the electricity grid into a fully-connected system, monitoring the energy flow both in and out of a distributed grid. It’s this technology that will allow consumers to actively produce their own electricity, and sell it or exchange it on a de-monopolized market. This democratization of the energy market will force electrical companies to re-think the way they do business. It will change the game entirely, making them just one of the many players.

One way that utilities can take advantage of where the decentralized electrical market is headed is by morphing their business models to accommodate the Internet of Energy, focusing on becoming management systems, instead of solely providers. By collecting data from the new Energy Internet, utilities can up their value to consumers by using information to up efficiency and productivity, as well as working to lower costs. This data can be used to create invaluable algorithms that can manage energy flow well, which will ensure their usefulness to their consumers.

The Third Industrial Revolution doesn’t have to leave anyone in the dust… not even the power companies. But we will have to re-think the relationship between customers, providers, data, and management to take advantage of the progress that widespread connectivity makes possible.