Prepare For Competitive Distributed Energy
Gary Hunt | Mar 26, 2015 02:09AM ET
The big shift in energy means the Internet of Everything is creating competitive energy markets. It means new knowledge available from a tsunami of data available about our energy use. It means new choices not just in energy sources like fuels for power generation, but also new vendors, new bundles of services. It also means new connections made possible by collaboration and mutual interest both designed to help us get a better deal, optimize the performance of our business, and deliver a better value proposition to our own customers and our households.
When all this low cost energy gets put to work focused on building a better future, America will be prepared to compete anywhere in the world across every stage of the business cycle.
The big shift is low cost domestic energy growth reinventing America’s global competitive economic position. A future that makes America more secure, more technologically advanced, more globally competitive, more environmentally responsible and more self-confident than ever. We learned in the early days of competitive wholesale power generation markets that it often was better to be the third buyer of merchant generation assets as the enthusiasm of the pioneers gave way to the reality of financiers as assets were flipped to find their optimized, rationalized home in a competitive portfolio. So it is today with renewable energy, coal, and with natural gas and oil assets as the markets adapt to change.
Despite low-cost energy production the cumulative cost of our electricity bill is going up because of the piling on of regulations, renewable portfolio standards, smart meter deployment, greenhouse gas emissions reduction, power grid security and ongoing investment in maintaining, replacing and extending our energy infrastructure to meet future needs. Upward pressure on rates at a time of intensive economic uncertainty is forcing competitive balance to the equation.
Low natural gas prices are an equal opportunity competitor undermining the economics of coal-fired power generation with a ruthlessness effectiveness even the US EPA admires. But low gas prices have also stopped new nuclear power plant projects in their tracks and they are bearing down on renewable energy with the same low price efficiency.
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The Big Shift in energy is toward a competitive distributed energy future. Natural gas fired generation improves grid security allowing faster evolution to a distributed energy future in a more modular grid made up of resources that can be isolated to avoid major grid failure in a natural disaster or terrorist attack.
There is a place in the distributed energy future for every fuel type. But each must find an economic place in our modular, self-sufficient, reliable, cost competitive cleaner distributed energy future based upon the least cost, best fit principles that guided integrated resource planning for years until RPS standards, wind and solar carve-outs and other politically correct industrial policy rules hijacked the market process. That time is coming to an end as the distributed energy future is assembled microgrid by microgrid by the private sector, using competitive forces and reliability standards at least as substantial as the governments to assure continuous operation of their business.
The big shift in energy use is toward competitive performance optimization from the convergence of energy, technology, supply chain operation including distribution and the use of energy by end use consumers in the distributed energy future. The role of the utility is no longer producing energy for us but to choreograph the reliable delivery and the diverse access of various energy sources, energy products and energy management services in a perfectly choreographed dance taking place 24/7.
Competition in doing in energy markets what Apple (NASDAQ:AAPL) is trying to do to TV—break the back of the cartels and give customer choice, on demand, on the device of our own choice, anywhere. Our smart phones liberate us and so will our distributed energy future. The big shift in energy will bring more customer aggregation vendors or buying co-ops acting as purchasing agents for businesses and homeowners. We should expect bundling of energy, technology, information, security and other services designed to provide convenience and value tailored to meet our needs. Yes, there will be “apps” for that!
Technology and domestic energy production growth make this all possible. Low cost energy especially natural gas is changing everything.
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