At Distributech 2016 Zarko Sumic, Distinguished Analyst at Gartner, predicted that by 2020, the largest energy company in the world (by market cap) will not own any network (grid) or generation assets. By analogy with Uber it would simply manage information about energy sources and consumers. 2020 is not that far away. MGM and other casinos have already smelled the coffee and opted to go off grid to buy their energy from whom they choose. The light at the end of the tunnel is looking increasingly like a train.
Yesterday at Distributech 2018 in San Antonio I attended a demonstration of transactive load management signals and systems by a number of folks involved in the California electric power sector that suggest transactive energy may be closer than we think. The key question the session addressed was how the design and operation of transactive signals and systems can integrate supply- and demand-side markets in California. The overarching goal is the development of new practices for widespread adoption of economics-driven transactive technologies and systems for an integrated electric grid.
In his talk in 2016 Zarko pointed out the extraordinary coincidence that Facebook (market cap $230b), Uber (est value $50 B), and Airbnb (est value $24 B) are the largest (or the second largest in the case of Airbnb) companies in their lines of business, but, significantly, none of them own content, cars or rooms. Gartner calls this phenomenon the sharing economy. A sharing economy uses IT to distribute, share and reuse excess capacity in goods and services. Information is the fuel and the digital platform is the engine. The sharing economy operates in a market with customers and sellers and the value of the goods and services shared is determined by the network effect (Metcalfe’s law) and increases as the square of the number of nodes (customers and sellers). Zarko saw an analogy with the electric power industry. We are moving toward a world where energy flows are increasingly determined by market forces (referred to as transactive energy). Based on the analogy with Facebook, Uber, and Airbnb Zarko predicted that by 2020, the largest energy company in the world (by market cap) will not own any network (grid) or generation assets. It will simply manage information about energy sources and consumers. There are no technical barriers to this vision and the only thing standing in the way at the moment is current regulation,
Over the past few years the New York Public Service Commission (NYPSC) has taken a major step toward a future of transactive energy. New York’s “Reforming the Energy Vision” (REV) is moving the New York state electric utility industry toward a radical redefinition of utilities as we have known them over the past hundred years since Tesla and Edison created the electric power industry. Based on the progress in changing regulation in New York, California, the UK, and other jurisdictions, transactive energy is coming at an accelerating pace and Zarko’s vision is increasingly a real possibility.
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