In a previous post , I mentioned Tesla as one company driven by a quest to profoundly transform the transportation and utility industries for the betterment of society. Elon Musk took a mammoth step in that direction earlier this week, as the $2.6 billion merger with Solar City was announced. He probably sees himself pointing at the moon, when some critics are looking at current losses of both Tesla and Solar City as individual companies.
Of the two companies, Elon Musk wrote in his Master Plan blog : “That they are separate at all, despite similar origins and pursuit of the same overarching goal of sustainable energy, is largely an accident of history. Now that Tesla is ready to scale Powerwall and SolarCity is ready to provide highly differentiated solar, the time has come to bring them together.” He goes on to explain that there are obvious synergies in technology and go-to-market between the two entities.
Interestingly, and on a much humbler scale, ng Connect also brought the automotive and energy worlds together during its last member meeting two weeks ago, when Mike Bourton, vice-president of business development at Kitu Systems , took the floor to talk about electric vehicle charging.
He started his presentation by stating that in some cases, charging an electric vehicle can be the equivalent of adding one or more houses to the grid. This is true when owners install dedicated electric vehicle charging circuits (like the Tesla Supercharger that can draw 20 kilowatts), rather than slowly charging at conventional 110V outlets. It can become a significant issue, when most neighborhood circuits are designed for five to ten houses. As the share of electric vehicles increases, power utilities need to plan and implement changes to their distribution infrastructure, keeping in mind that the penetration of electric cars at the local level will be uneven.
He went on to say that, naturally, most electric car owners recharge their vehicles when they come home from work, right during peak hours! And, to make matter worse, in sunny states like California, this is precisely the time where all production from solar stops and needs to be compensated for with more expensive sources. Power utilities in these states face serious grid stability issues due to this increased uncertainty of demand and production, and steep costs during peak hours ramp-up to procure the needed power. Incidentally, California has both the highest penetration of electric vehicles and home solar installations. It would be a mistake however to consider the above issues to be limited to a few states. The amount of electric cars will continue to grow as every major car manufacturer is investing further in electric vehicles. Similarly, the penetration of solar or other renewable and highly distributed sources of energy will continue to be encouraged in global efforts to contain green house gas emissions.
Power utilities have a few options to deal with the above issues. The first one is to setup incentives for their customers to consume power when it is abundantly available, during the day. This means encouraging customers to charge their electric vehicles at their business location or in public parking, as well as to run “heavy duty” appliances (e.g. a pool pump) outside of critical hours (ramp up, ramp down, peak hours). This can be done through marketing programs, time-of-use pricing schemes or even energy management appliances. The second option is to exert a certain level of control over residential energy production and consumption, in particular managing more finely distributed energy resources such as PV (photovoltaics) installations or batteries, to avoid over-generation and/or shift the load on the grid.
In California, the CPUC (California Public Utilities Commission) is mandating all the options above to be implemented according to an aggressive schedule. The Residential Rate Reform aims to align the cost paid by a customer with the cost to serve that customer. By 2019, all residential customers will be switched to time-of-use rates. Similarly, its Rule 21 mandates that any and all power generation behind the meter (solar, batteries, electric vehicles with reverse function) include control and communication functions with the utility. Rule 21 goes so far as to specify the protocol to be used: IEEE2030.5.
At ng Connect and within the IoT Community, we have considered for some time the changes to power generation and consumption to be a major disruptor in the utility industry, similar to how web 2.0 reshaped the Internet industry, leading to new applications, new players and the social media era. Very quickly, from being highly centralized, power generation is becoming highly distributed. The power demand had been fairly predictable for decades, and matching demand and generation had been achieved equally well. Electric vehicles and new customer behaviors and applications are challenging that, rapidly.
Utilities need to adapt to the changing environment and the Internet of Things gives them the technologies to do so. To prove this point, members of the IoT Community have designed a prototype of a smart energy gateway. It is a broadband access gateway, featuring all the provisioning, configuration and management functions of ‘traditional telecom gateways’ that include many communication protocols (WiFi, Z-wave, Zigbee, Bluetooth) as well as IEEE2030.5 for connectivity to various home equipment (thermostat, water pump, electric vehicle charger, photovoltaic inverter, etc.). Running on this gateway is an autonomous energy management module that is able to adjust the power consumption based on the context (time-of-use, user preferences, utility curtailment signal, or even drop of solar output due to clouds or brief rain showers). For example, the module can reduce the speed of a variable pump, adjust the temperature to a few degrees higher or lower, interrupt car charging and much more, to optimize energy consumption and cost.
Each gateway taken individually provides a lot of value for residential customers. However, when combined across a large installed base, which can be achieved with the Nokia IMPACT platform, they become a formidable tool for power utilities to improve grid stability and shift loads. Broadband service providers can monetize their expertise and assets in broadband access to offer energy management services to utilities.
A second concept the IoT Community is currently working on is that of Distributed Energy Resources Management System (DERMS) aggregation. Today, where available, the solar installed base is heavily fragmented. A few companies, such as Solar City, do have a sizable customer base, but a majority of the residential installations in the U.S. have been performed by one of the thousands of local companies. How do you ensure connectivity of this fragmented landscape (existing base and new installations) to a few power utilities, who have no interest in managing power generation at this level of granularity? The solution consists of building a multi-tenant aggregation platform which connects to and manages these inverters (regardless of the type of connectivity, microwave, 3G, LTE, NB-IOT etc.) and offers a portal to utility customers for them to collect data from and/or send commands to their customer base. The aggregation platform would be seen by the utility as another large production plant (1 megawatt or more). Such a platform would require management of inverters and other DER equipments from multiple vendors, installed and maintained by many different providers. The Connected Device Platform of the Nokia IMPACT platform, with already over 15,000 devices certified, would fulfill this function. The Application Development and Execution Platform would exchange data to and from this devices with the DER management application, allowing fine control over various subsets of devices as required, as well as providing a data visualization and management interface for both power utilities and PV companies to manage their respective customer base.
At this point, it is not yet clear whether one or both of these concepts will make it to the market trial stage in the coming months. What is clear is that our future will depend on our ability to provide and transport the two things we really need: energy and information. At least that’s what the laws of physics say. In a few decades – who knows?– maybe we’ll be 3D-printing our food using algorithmic menus. The companies that understand (and demonstrate!) how to safely, rapidly deliver power and information, and at scales of billions of users, wherever they are and whenever they need them, are poised for longevity and success.
We believe that ng Connect and its IoT Community count a few of these on their rosters.