Will the Energy Cloud Be Realized by 2040?

In a new white paper commissioned by CPower Energy Management, Guidehouse Insights, examines how decisions regarding the North American grid today will shape the future of energy transmission and distribution tomorrow. To understand how Guidehouse's Energy Cloud vision will be achieved, the white paper examines impactful actions by the US federal government in 2019, wholesale energy markets, and select states. The white paper provides recommendations for how distributed energy resource (DER) solutions providers and utilities should approach grid modernization in 2020.

The US Federal Energy Landscape

The US federal government plays a critical role in shaping the grid of 2040. Federal laws and policies serve as bedrock energy legislation. Guidehouse Insights finds that:

• Renewables penetration continues to grow, driven largely by tax incentives, broadly supportive federal policies, and falling costs (specifically the cost of constructing solar PV systems). 
  

• The Federal Energy Regulatory Commission Order 841 is a key development in storage entering US wholesale markets. However, delays by request of regional transmission organizations (RTOs) and independent system operators (ISOs) make it unclear as to when storage might join wholesale markets at scale.
  

• Congressional lawmakers continue to push grid modernization through legislation, including the Grid Modernization Act, Better Energy Storage Technology Act, and Next Generation Electric Systems Act, to name a few.  
  

North American Regional Energy Landscape

North America is moving toward the integration of DER into wholesale markets, as these resources can provide capacity and ancillary services. The inclusion of DER in wholesale markets will result in:

• New rules specific to DER technology types, especially when compared to the sale of centralized generation into wholesale markets. 
  

• Regional geography and distinct market structures mean that each RTO/ISO will experience unique benefits and burdens when integrating DER. 
  

• The lines between wholesale and state-level retail markets will blur, meaning that DER technology owners may receive stacked value for participating in both markets where rules permit such action. 
  

State-Level Energy Landscapes

Distinctions at the regional level may be magnified in state-by-state retail electricity markets. However, some trends will carry beyond 2020:

• Clean or renewable energy targets are becoming more popular: As states set 100% and corresponding interim targets, regulators will need to work with utilities and solutions providers to bolster the penetration of distributed energy. 
  

• Centralized generation is not going away in its entirety: This has been demonstrated by nuclear subsidies in states including (but not limited to) Illinois, New York, and Ohio. 
  

• Energy efficiency serves to reduce negative climate impacts now: States such as New York and Pennsylvania actively rely on increasingly stringent efficiency and energy savings targets to reduce their states’ greenhouse gas emissions. 
  

What Does This Mean for the Energy Cloud Vision?

Are we on track to achieve Guidehouse’s Energy Cloud vision by 2040? I am optimistic. The white paper from CPower Energy Management and Guidehouse Insights demonstrates that trends remain strong toward clean, distributed, intelligent, and mobile energy. The impacts of these developments span across policies and regulation, technology, business models, and end customers. Such an overhaul means that there is still much work to be done. The white paper concludes with recommendations for energy suppliers and their customers. Contingency plans will be necessary, new and existing technologies must work seamlessly, and we must take advantage of the growing understanding of energy consumption habits. We’ll be better off if we prepare for the grid of the future today; 2040 will be here before we know it.