Unlocking our generation's greatest innovation with distributed energy resources
Voltus CEO Gregg Dixon provides data and insight into how distributed energy resources are helping to accelerate one of the greatest industry transformations in human history.
Half of the world’s $3.2 trillion annual electricity spend will be delivered by distributed energy resources (DERs) in the coming decades. That’s a bold prediction considering how little has actually changed in producing and delivering electricity since Thomas Edison’s Pearl St. Station in lower Manhattan delivered electricity to the world’s first electricity consumers in the 1880s.
The world of central power stations and “dumb loads” will transform much like mainframe computers and dumb terminals of the 1970s gave way to cloud computing and all of the economic and innovation benefits of decentralization that came with it.
Here are some facts and the types of changes that will need to happen to unlock our generation’s greatest innovation, that of decentralizing the power grid and paving the way for a grid that can be powered exclusively by renewables and the balancing and backstop benefits of distributed energy:
- The world consumes about 25 billion MWhs annually. At an average delivered cost of $130/MWh, that’s $3.2 trillion annually. As more consumed energy is electrified (e.g., vehicles moving from oil to battery), we will see the growth rate of electricity spend increase substantially. Electricity delivery is already one of the top ten industries in the world, representing about 4% of the world’s $85 trillion GDP. The transformation of the electricity grid will be one of the greatest industry transformations in human history.
- Aging central power stations (namely, coal) are retiring at an ever-increasing rate while renewable sources of electricity come on line at unprecedented speed, due to the simple fact that renewable electricity is the cheapest new source of power. It also carries with it much needed relief for a climate that is increasingly on the verge of a tipping point. Yet, renewables are intermittent and will require a massive backstop and balancing resource that DERs are uniquely positioned to deliver.
- Climate change is producing a greater number, and more impactful, disasters year after year, putting the central power station paradigm increasingly at risk. Be it Winter Storm Uri, which brought the energy hub of the world to its knees in 2021, or deadly record temperatures from heat domes in the Pacific Northwest, loss of life and property at scales never before seen will put a premium on more resilient, networked, decentralized power sources that can deliver power at or near the load, saving lives while keeping our economies humming.
- Entirely new types of distributed energy resources are coming online; an energy “Internet of Things” (EIoT) that is no longer a promise but a reality that simply needs to be turned on. Here are a few examples:
- The world’s largest virtual power plant (VPP), which lies fallow for purposes of supporting wholesale power markets, can be turned on today to deliver more than 40,000 MWs of responsive capacity, energy, and ancillary services value to every market in the U.S. and Canada, at a time when it’s needed most by wholesale market operators. This DER EIoT VPP is comprised of WiFi thermostats in our homes (40 million in the U.S. today, with an average of 1 kW of controllable load).
- By the year 2030, the combined lithium ion capacity of EVs in the world will be more than twice the combined capacity of all global central power stations (75 kW per EV and 145 million EVs). Yup, add up all the coal, nukes, gas, hydro, etc. and multiply by two. Every one of these EVs is connected to the Internet.
- Global stationary energy storage is expected to increase to more than 700 GWs by 2030.
As importantly, the technology that interconnects these millions of things behind electric meters in real-time is both ubiquitous and super cheap. In fact, the notion of “too cheap to meter” that went with the promises of nuclear power ended up characterizing the Internet and voice over IP (VOIP) … for $50 per month, you can consume as much as you like (i.e., too cheap to meter!). Internet-connected devices and real-time telemetry are so cheap that it’s a throw-away expense at Voltus (i.e., if our equipment is no longer used at a facility that, say, no longer operates, it’s more expensive to retrieve the equipment than it’s worth).
This connective tissue converges with DERs at a time when electric grids need a massive amount of power quickly and inexpensively – power that they can count on to deliver resilience and deliver it cleanly (the cleanest kWh is the one never consumed!). In fact, Wood Mackenzie estimates that by the year 2025, the US alone will reach 387,000 MWs of DERs … about 50% of peak demand in the US.
To say the least, we have our work cut out for us. Thankfully, it’s purposeful work that makes the world a better place when we need it the most.
Questions? Reach out to our team at firstname.lastname@example.org.