Electricity is a vital part of society. For many years, the typical model of ensuring citizens have access to it during peak times has been to overbuild for the worst-case scenario. While peak usage may only come around during a particularly brutal weather event, jurisdictions still have to be prepared for these spikes. After all, if people cannot get electricity, they certainly won’t be happy.

The Problem With Today’s Model

Still, there has to be some balance. Citizens demand to have electricity whenever they want it at a reasonable price. Unfortunately, this causes a serious dilemma for grid builders who have created the entire system to function at peak capacity. 

Storing, generating, and balancing the energy load for such a massive system is expensive, and someone has to pay for it. Even those who don’t use it as much still have to absorb the cost.

This model, while historically effective, likely won’t work as well in the future. Thanks to hyper-scale data centers and electric vehicles, the average load is growing. As municipalities make moves to accommodate these increases, electricity prices are going up.

Why Electricity Should Be Like Uber

If planning and building for peak capacity is getting too expensive, where can governments go from here? Having used this model for so long, many are at a loss about how to solve the problem. Fortunately, Uber gives them some clues.

In times past, taxi drivers would sit around in their cars for hours waiting for the evening rush. This way of doing things can obviously get expensive, and standard fares reflect this fact. Everyone who used the service had to pay for that wasted gas and time.

When Uber arrived on the scene, the company implemented a pricing model that charged less during slow times and more during peak hours. Moreover, Uber provides unprecedented levels of transparency, allowing riders to see their ride length, route, and cost before they book the car. Who says energy can’t function the same way? 

Distributed Energy Resources (DERs): A New Solution to an Old Problem?

One suggestion for an Uber-like fix to the cost of perpetual overbuilding is to rely on distributed energy devices. These smart devices can change the energy load in a particular location based on a specific control signal and reduce energy loads during times of high demand. 

This way of doing things has seen some success in the past when utility companies offered homeowners financial incentives in exchange for the ability to control their air conditioner usage during peak times. Additionally, it may be possible to use batteries to power some activities in a home or business. 

Is Now the Time to Bring Back Demand Reduction Efforts?

While programs from the ’70s and ’80s that incentivized people to reduce energy consumption showed that this model could be successful, it never caught on for widespread usage the way utility companies and governments had hoped. So why do distributed energy resource advocates believe now is the time to push for more demand reduction techniques? There are a few reasons:

• There are currently 30 to 60 GW of distributed energy resources already circulating, and another 50 to 150 GW are expected every year until 2030
• Computing power has also grown rapidly, making it easier than ever to control these DERs
• DER capacity is higher than ever, and these devices can power homes to help reduce reliance on the grid when necessary

Distributed energy resources are more accessible than ever, and this has the potential to drive adoption at unprecedented rates.

[Placeholder for client quote]

DERs and the Future of the Energy Market

In Texas, businesses are buying energy wholesale, selling it to their customers, and using DER control to lower costs and avoid high tolls on energy grids. In California, some companies are offering fixed-rate energy subscriptions in exchange for DER control and microgrids that provide power when the broader grid cannot.

Still, not everyone agrees this is the way to go. Plants that provide supplemental energy to grids during peak times are already trying to convince governments that investing in or even allowing DER usage is a mistake. There are also questions about the accessibility of power for neighborhoods in which residents can’t afford quick DER adoption. 

Finally, there will be a need for more regulation around surge pricing and operations. Though there will likely be a showdown between the grid and distributed energy, the DER market will no doubt bring lower prices, better load management, and energy that’s more accessible than ever. To learn more about this topic, check out the original article by Sean Fleming.