Video on Demand: A Bellwether for a Future with Ubiquitous, Flexible DER

In her recent white paper From Smart Grid to Neural Grid, my colleague Richelle Elberg observed that “it is 1997 in terms of maturity in the Neural Grid ecosystem and a tenfold—or better—increase in market value is up for grabs.” Elberg was referring to the level of maturity in the telecoms revolution witnessed around the turn of the century.

This quote succinctly describes just how far utilities have come, and how far they need to go before the energy transition is fully realized. It also opens the door to other analogies between the transformation of the telecoms sector and what is happening in the utilities industry.

Electricity Executives Can Learn Much from Video on Demand

While I have been an analyst for well over 20 years now, I have only focused on the energy industry for the last 10. The last detailed market report I wrote that was not focused on energy was in 2008, and was focused on video on demand (VOD). VOD adoption was incredibly rapid, catching many in the industry by surprise. Within a couple of years, streaming services replaced DVD rental as customers’ preferred choice for watching what they wanted when they wanted. What is important to note is that while streaming services such as Netflix killed Blockbuster, the telecoms industry was a culpable accomplice.

Telecoms networks were originally only designed for voice communication. It took considerable innovation from some of the finest minds to make reality VOD over existing telecoms infrastructure. The biggest problem was network capacity: how to get large media files to customers when they were required. Essentially what this boiled down to was the creation of content delivery networks that include caching. Rather than attempt to push any content to any user at any point in time from a central location, the most popular content is distributed to caches across the network. Caches could be in local data centers, serving a few thousand people, or even in individual users’ set-top boxes.

Network management software helps identify capacity constraints in the network, the most popular content, and predict the type of content individual users may request in future, ensuring customers can rapidly access the content they request and not have to wait several hours before it is downloaded.

Will Utilities Go the Way of Blockbuster?

VOD provides an indication of what lies ahead for electricity networks. The analogy is not perfect, but analogies seldom are. Media can be delivered via copper, fiber, or cellular networks. These networks are upgraded every decade or so to enable the faster delivery of much larger files. In comparison, infrastructure upgrades for electricity networks are much slower, with much smaller incremental capacity additions.

What this means is that utilities can’t rely on infrastructure investment to soak up the additional demand of EVs and PV. They must do what the telecoms engineers did when VOD was in its infancy: use smart technology to best manage capacity constraints. Utilities need to understand users’ needs of where, when, and how much demand and use available technology to manage these requirements.

Energy storage is our industry’s content caches. Applications like distributed energy resource (DER) management systems and advanced distribution management systems are the intelligence we will use to better manage DER. If VOD is an indicator of how the industry will develop, DER and storage in particular will increasingly be used to flexibly manage a more dynamic power network. Those who believe centralized generation will dominate for years to come, be warned. You don’t want to be the next Blockbuster.