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May 07, 2019

What Providers Need to Know about the Decentralization of Utilities

By Paul McRoberts, President

I’m going to lead off this blog post with a bit of old news: Today, much of our energy comes from a variety of new, non-traditional sources.

The Rise of the Microgrid

Thanks to technology innovation and pushes to reduce fossil fuel production, many large, centralized power plants have become energy distributors as much as they are providers, a transition that has shifted the makeup of the traditional power grid. 

In this new paradigm, emerging private (and in some cases public) companies have created smaller microgrids within legacy power grids by building environments like solar and wind farms and even micro-cell fossil fuel plants. Leveraging these microgrids enables companies to harness the benefits of cogeneration and generate power more affordably and efficiently.

Now, like I said, this decentralization of utilities is nothing new. What is new is how fashionable and easy the trend has become to execute.


The Demand Beneath Decentralization

Alternative power sources are more readily available than ever before. According to the Solar Energy Industries Association, the U.S. installed enough solar PV capacity in 2018 to power over 12 million homes. On the wind power front, the World Wind Energy Association estimates that the U.S. will soon join China as the only other nation to reach an installed capacity of more than 100 Gigawatts.

It should be seen as no coincidence, then, that the rising prevalence of solar and wind energy coincides with heightened concerns about climate change and fossil fuel production. The Deloitte Resources 2018 Study found that some 68% of survey respondents were very concerned about personal contributions to climate change, and nearly half wanted more access to green energy sources.


What the Decentralization of Utilities Means for Providers

So the decentralization of utilities is here, alternative power is widespread, and consumers keep eating it up. What does this mean for you, the utilities provider?

1. Your responsibility has shifted to managing various systems.

Today’s power generators are also power consumers. Instead of operations being powered by a centralized power plant, providers can tap into microgrids running solar, wind or micro-cell fossil fuels when these alternatives are more affordable or efficient. However, to do this effectively requires a thorough knowledge of the disparate systems within your network and the ability to manage them seamlessly. Maybe it’s a cloudy day, and you need to switch from generating power through solar panels to an electrical generator. Or maybe rates are low, and it’s cheaper to use wind power than it would be to generate your own power. All of these systems working at once create a moving target that can only be hit when you have broad visibility over your network and actionable data at your disposal.

2. You need to re-valuate technology and resource requirements.

Centralized power plants have always had bigger budgets and access to more resources than their smaller counterparts. For these larger entities, innovation isn’t as monumental an investment as it can be for smaller utilities companies. Nevertheless, getting as much value as possible out of innovation dollars should be paramount for organizations of all sizes.

You can start by gaining a thorough understanding of your asset management challenges, available solution options and the domain knowledge and personnel required to optimize those solutions. The good news (especially for smaller utilities providers) is that there are several emerging providers of robust, cost-effective asset management technologies on the market today, making it easier for organizations to avoid “square peg, round hole” investments—if they seek out the right information.

3. You need to know what you’re looking at—today and in the future.

As I mentioned, getting optimal performance from a network that may be running on three or four different power supplies is like hitting a moving target. To hit that target, you need data and the ability to interpret it on two levels: what you should be doing today and what you need to plan for in the future. This requires domain expertise that stretches far beyond knowing how to slice and dice data in an analytics platform. You need to the ability to understand what the data is telling you about your system today and what you may need to look for going forward. Those two key pieces of the analytics puzzle help you make the best decisions and investments for both the short- and long-term.

Time will tell what long-term impact the decentralization of utilities has on the industry at large, but one thing’s for certain: The trend has gifted utilities providers the opportunity to create more efficient, cost-effective operations.

For more commentary on utilities trends, check out these articles:

photo for Paul McRoberts

Paul oversees the development and deployment of the company’s suite of software solutions powered by the ASSET360 analytics platform. Paul brings to Atonix Digital both rich software development experience and an in-depth understanding of how deep data exploration is helping transform businesses through greater insight and intelligence.

Read more blogs by Paul McRoberts