Driving Change - The Automation of Energy Markets

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Thanks Matt for a most interesting treatise on this vexing issue – the new relevance of the utility. Having worked in the electricity industry for some 35years, the last 15 as a control systems software engineer, I find this a rather interesting topic of discussion which I feel is not being taken as seriously as it should in my own country of Australia. Having work in an organisation who was the first in the world in the late 1970/early 1980 to introduce computerisation to substations automation (done, I have been told, as skunk works through a maintenance budget due to the fact upper management couldn’t see the benefits of doing such a project) I feel this level of resilience and flexibility it being “weeded” out of utilities as “not core business.” I have seen many good engineers sent redundant - those who were the fringe thinkers, who dreamed of the “who if...” question – often dismissed as trouble makers or not having their focus on the business while a series of “yes” women and men form their replacements (is that an echo chamber I hear you ask?). As Matt points out, it is through thinking of the possibilities – both good and bad - where resilience will flourish and not a reliance on the, “Our strength is our customers because they all need us regardless of how much they might dislike us.” It is clear this waterfall model will no longer work, particularly in the electricity industry where the poles and wires which ubiquitously connected homes and businesses is fast being ripped apart by micro-generation, fast falling cost of energy storage, and the prospect of self sufficiency (even though this last point I feel is an illusion). Rather than seeing stranded resources (i.e. unable to realise their capital value) installed to address the needs of a legacy market they can be seen as a potential assets to act as enabler for new a business model. This will inherently mean a change in thinking from the Board Room to those who climb the poles during the aftermath of a severe storm and, most importantly, the customer of the service. Perhaps a couple of examples to illustrate. In the mid to late 2000’s a significant drought hit much of Australia and in particular Queensland the state where I live. Water storage’s levels drop below 15% which accompanied strict water usage restrictions. A long standing ban on houses hold water tanks was lifted after a public campaign. The little water collected in tanks were used in washing machines, toilets and garden systems. It also became possible to water the dying garden with grey water from the washing machine rather than having it go to the sewer. This drought had a number of other, what would appear unforeseen, flow on impacts. Sewers clogged as they were designed to work with a solid to water waste ratio which now increased significantly as there was less fluid entering the system. Another impact was an increase in water charges became necessary which is sustained to this day. The overall water usage dropped to such an extent it could not cover the infrastructure maintenance bill under that funding model. There has also be a sustained reduction in the water usage levels even 8 years after the drought ended: the public have changed their usage habits and respect for water as a resource. Though these changes were somewhat forced on the population through this natural, long term, disaster they were generally well explained and accepted. The second example I will give is from the organisation I use to work before taking redundancy in January of 2018 (for personal reasons). There was a big commercial push, starting some 20years ago, for domestic air conditioning. The mass installation of these devices has moved the annual maximum demand from a historical winter to summer peak and daily from afternoon/evening to midday/evening/night. Available to this organisation is a sophisticated load management system that allowed “discretionary” load to be moved from a peak time to a low demand period (e.g. from during the day to the early hours of the morning). Much of this load was through the powering of domestic hot water systems. The customer receives a benefit byway of a considerable reduction in the electrical tariff for the electrons consumed by those appliances that were connected to this discretionable, controllable load circuit. Now the time of peak demand has moved the controllable load of hot water didn’t match the supply/demand model. Throwing domestic solar into the mix gives a complex supply and demand model. Some 15 years ago a group of technologist and engineers within the organisation could see the coming impact on the demand curve due to the change in usage patterns. They were thinking about how customers could quickly and efficiently move appliances - such as washing machines, dishwashers, pool filters – to a “controlled circuit” and how energy usage could be measured. A number of effective and realistic solutions were tabled for discussion. A then middle level manager gave this group a good dressing down on hearing of the development telling them they had no ideas how the electricity industry ran and what it needed. As such the project was dropped and the ground work lost. A number of these insightful individuals were subsequently lost to the organisations as being considered “not in touch with reality.” Fast forward 10 year there was a flurry of activity engaging consultants and external designers to come up with a solution to move load (I believe under the watch of that same middle level , now a senior, manager). This is work still in development and trail but is showing promise at modifying the demand curve. In this example the vision shown by a small group and the lack of such in another has led to a utility finding itself behind the eight ball then trying to play catchup to ensure system stability. What does this example tell me: There needs to be an opening in the minds of those controlling funding and an ability to project and an ability to communicate the vision, insight or idea across an organisation. There will always be those who hold biases which a bound to their being (all of us in many extents are guilty of this) and those with “fringe” views unable to communicate. This essentially undermines resilience of the organisation. Both of these skills, free of bias and good communications, are required for good engineering outcome for the utility industry and the general public. And as I tried to highlight in the first example the key to public backing is general understanding which is through effective communications of both logic and emotion elements to the individual. If this is do effectively and honourably (the public will see through you if you are not genuine) the general person in the street will be willing to get behind the change and accept the unforeseen impact, though reluctantly, and in spite of those who are professional opponents (e.g. opposition politicians). Functional change in these infrastructure industries, as highlighted by Matt, is an important issue that needs addressing. The sooner this is grasped the better and less expensive it will be for the general community. Thanks again Matt for your thought provoking article. God Bless

Great post Matt.? I completely agree that the major forces for disruption will come from 'behind the meter', mainly because that space isn't as heavily regulated (yet...) leaving space for rapid innovation and the evolution of differing consumer expectations about what they can do with electricity - including trading it when it suits them.? Utilities will continue to live in the regulated space, although recent AEMO initiatives suggest that they would love to extend their reach behind the meter too.? None the less, I agree that innovation will proceed much faster behind the meter, potentially reaching back onto the rest of the power networks to disrupt those 150 year old business models that worked when economies of scale were the main drivers of power network expansion.

Not without us

Chris Pateman Jones