The electricity sector has traditionally taken good care of getting energy from power plants to customer premises. But with the arrival of distributed generation and storage, there is a universe of possibilities on the other side of the meter, writes independent energy expert Fereidoon Sioshansi. “While the industry counts the billions it has invested in assets upstream of the meter, there is probably as much if not more on the customer side.” Courtesy of EEinformer.

Ever since Thomas Edison and his contemporaries ushered in electricity as a useful and consumer-friendly form of energy, the industry has been almost exclusively preoccupied with the supply side and the infrastructure that resides upstream of the customer meter. In fact, up until recently that is where the industry’s reach ended.

There was little interest, or a compelling motivation, to go behind or beyond the meter. This mental cul-de-sac can be seen in virtually all illustrations of how the industry typically depicts its business, stopping at the customer’s electric meter. The train stops there and goes no further.

distributed generation storage behind the meter

What customers do with the power once it reaches the terminus was their business. So long as the customers paid for what the meter said they consumed, that was the end of the business transaction.

This had two important consequences. First, it resulted in an upside-of-the-meter mentality not just for those within the industry but also regulators and policy makers who were responsible for setting tariffs and providing direction but also for innovators, service providers and investors who did not typically think beyond the meter.

Second – and more important – it kept consumers passive, totally disengaged and divorced from what was happening upside of the meter and with limited options behind the meter (BTM).

Next chapter

In retrospect, this explains many of the challenges facing the industry today as it suddenly confronts the reality of consumers becoming more engaged and more proactive – for example, by becoming ‘prosumers’ in large numbers in many parts of the world.

As the cost of storage continues to fall, some prosumers can go a step further and become ‘prosumagers’ (i.e. producing, consuming and managing their energy) by investing in storage. The implications associated with the rise of distributed energy resources (DERs) are profound.

That, however, is only the beginning of the story of consumer awakening and empowerment. The next chapter is about the emergence of new technologies and service options offered by intermediaries and aggregators who will enable consumers, prosumers and prosumagers to engage in peer-to-peer trading.

One prosumer’s excess generation, for example during sunny hours of the day, can charge the batteries in the electric vehicle (EV) of a neighbor across the street, or across the city.

A myriad of far more exciting and potentially consequential possibilities lies in the power of aggregation. By combining the load, distributed generation and storage capacities of large numbers of participants, an aggregator can optimise the performance of the entire portfolio of behind-the-meter assets in ways that is not practical or cost-effective for individuals to do on their own – which explains why there has been so little practical and profitable demand response (DR) to date.

The final frontier, which currently may seem a bit farfetched, will be the emergence of blockchain technology allowing peer-to-peer transactions

What has changed? Rapid advancements in technology and the spread of ubiquitous wireless communications at virtually zero marginal cost make it possible not only to communicate with thousands of consumers in real-time but to monitor and remotely adjust individual BTM devices on their premises.

Moreover, consumers – or most likely their designated agents – can increasingly transact on platforms or electronic marketplaces where all types of products and services could be bought and sold, with relative ease and at virtually zero cost.

The final frontier, which currently may seem a bit farfetched, will be the emergence of blockchain technology allowing peer-to-peer transactions to take place with speed, ease, high levels of security and – most important – without the costs or involvement of an intermediary or a gatekeeper.

Thus, the much talked-about transition of the electric power system is not limited to the rapid shift towards renewables and low-carbon fuels, or more decentralised and flexible sources of generation, or digitalisation, but includes a new focus towards BTM.

BTM investments

What does this mean for the industry? While the traditional industry’s definition of its business domain typically stopped at the customer meter, there is a universe of possibilities on the other side of the meter. While the industry counts the billions it has invested in assets upstream of the meter, there is probably as much, if not more, on the customer side of the meter if one counts all the devices that use electricity.

Few studies exist on how much may lie BTM, but it is not hard to find anecdotal evidence. Consider, for example, an affluent prosumager who has invested $40,000 in rooftop solar PV, another $30,000 on a battery storage system and owns an $80,000 Tesla, not an uncommon thing in many upscale communities around the world. That is $150,000 of BTM investments even before counting all the electric and electronic devices in the house – which could easily be another $100,000 for an affluent household.

distributed generation and storage behind the meter

Large distribution utilities such as the Pacific Gas & Electric Company in California probably already have thousands of such prosumagers among their customers. Needless to say, such prosumagers will be a gold mine to new aggregators as soon as they develop business models to serve them.

Bloomberg New Energy Finance projects that in the case of Australia – among the most decentralised markets in the world – over 40% of the generation capacity may reside BTM by 2030. While Australia, Germany, Hawaii or California may be distinct outliers today, the trend towards self-generation, most likely to be followed by distributed storage, is likely to become not only feasible but profitable in other parts of the world.

At the other end of the spectrum, for roughly 1 billion people living in developing parts of the world without reliable access to the electricity grid, the standalone solar-plus-storage pay-as-you-go model offers a viable option. For these customers, virtually all electrical investments are BTM – since there is no existing grid or upstream infrastructure to speak of.

As the transition to decentralisation gains speed and with the advent of digitalisation and virtually universal wireless communications, the opportunities to aggregate and manage BTM assets become not just feasible but increasingly compelling. In this context, the key questions include:

  • What actually lies BTM, today and in the future?
  • What can be done with these assets?
  • How can individuals, groups or communities of consumers be aggregated so that their portfolio of BTM assets can be better utilised?
  • How can the synergies associated with large pools of BTM assets be optimally utilised to balance load and demand, especially in a future increasingly supplied by variable renewable generation resources?

The balance of power in the power sector is gradually shifting towards behind the meter. How big or important can this be? As Jan Vrins, managing director at energy consultancy Navigant said in an interviewwith Energy Post in September, “This development will change our entire energy system, how it’s operated, who are the producers, who are the consumers – the whole dynamics. We project that it will create an additional $1.1 trillion in value by 2030 globally. Over the next ten years, distributed energy resources will grow 8 times faster than net central station generation globally. In North America and Europe growth may be even higher.”

Article sourced from: www.energypost.eu/electricitys-future-behind-the-meter-distributed-generation/