Nature Gives Us Renewable Energy. Software Enables Smart Renewable Energy

Not that we need experts at MIT to tell us something so obvious, but a May 2015 MIT report confirms, “Solar energy is a particularly important tool for addressing the global climate challenge, while helping to meet a massive increase in future electricity demand.” Yes, solar energy is good. And so are other renewable energy sources, such as wind. But until now, distributed renewable energy hasn’t been used in the best possible ways to benefit home energy customers, the utilities that connect them to the grid and the grid itself. The next great leap forward in renewable energy is now at hand, thanks to software that’s making renewable energy smart. The renewable energy we’ve known for years is a simple two-way street. Solar and wind installations generate power when the sun is shining or the wind is blowing. If the home or business running renewables doesn’t need all that power, it’s fed back into the local grid and the customer’s electric meter, in effect, runs backward. At night or when there’s no wind, homes still need power – quite a lot, in fact, for everything from water-heating to recharging electric vehicles (EVs). In the absence of sun or wind, that power must be purchased from the grid. This constant story of peaks and valleys, buying and selling, makes no sense. Now there’s a better way. A new generation of software-controlled, storage-based renewable energy systems installed in homes and connected to the grid capture power when the sun shines or the wind blows, stores that power in batteries and delivers it at precisely the right time to meet the home’s energy needs at the lowest possible price. These smart renewable energy systems benefit homeowners and utilities by, among other things, lowering energy bills, improving reliability, increasing consumer-utility engagement and protecting the grid. The key element that makes smart renewable systems smart is software that dynamically optimizes how the system’s storage battery interacts with the homeowner’s overall energy management method – say a Nest connected-home thermostat – as well as the grid. The software monitors renewables generation, electricity demand, utility price signals and battery capacity in real-time, prioritizing operations in response to what is happening in the home and on the grid. As conditions change over time, the smart system automatically adapts, making smooth, agile transitions from one demand-supply situation to the next without customers needing to get involved. Software-driven smart renewable home energy systems deliver benefits for consumers and utilities. They decrease energy costs and improve dependability for the homeowner, while giving utilities a dependable asset that can mitigate grid stress caused by swings in demand or failures in other grid assets. Software’s fundamental role in these systems is to maximize opportunities and minimize threats at all points along the energy supply chain at any given time. Some examples:

• When the grid faces peak demand strain, utilities can direct smart renewable energy systems to reserve power and/or act as the primary source of power for demand management and peak shaving.

This demand-side management (DSM) capability is an enormous potential benefit. Over the next 25 years, U.S. utilities will spend an estimated $75 billion on so-called “peaker plants” – peaking power plants, usually driven by gas-fired turbines – to meet occasional peak energy demands, according to U.S. Energy Information Administration data. Rather amazingly, those plants will sit idle 94 percent of the time: utilization of those peaker plants is expected to average just 6 percent. It’s quite possible that DSM strategies enabled by software-driven smart renewable energy systems could easily reduce or even eliminate the need for those peaker plants.

• In a case where there is a large installed base of smart renewable energy systems within one utility’s territory, during a potential outage the grid operator may want to link all the systems on a network into a “virtual power plant” that can act as one large generation source so consumers won’t even know there’s been a disruption.

At the very least, homeowners with smart renewable systems can avoid all the pains of outages, as recently happened in New Zealand, where homeowners with smart renewable systems rather generously ran extension cords to power neighbors without such systems. Among other consumer benefits smart renewable energy software delivers:

• Ensuring storage batteries last as long as possible while operating at top efficiency by choosing the best duration and timing of charging cycles.
• Choosing the most economical time to run such processes as heating hot water and swimming pools.
• Making “smart” thermostats, such as the Nest system, truly smart by directing energy management systems to pull power from the storage battery or, alternatively, from the grid when most economical.
• Giving homeowners an accurate way to assess the quality and efficiency of their solar or other renewable-energy installation.

For utilities, smart renewable energy systems increase customer engagement with and awareness of utilities as an interactive energy partner. The systems potentially enable a wide array of data-driven value added services. Information on customers’ energy use could be used to design marketing and demand response programs, as well as programs to maximize the benefits of “connected” homes. As noted above, smart renewables software can also help utilities smooth out spikes in demand and reduce the costs of meeting peak demand. Importantly, smart renewable energy systems, with their Goldilocks approach to storing and using energy at just the right times, promise to speed the broader adoption of all renewable energy sources by creating a new equilibrium of shared benefits for home energy customers, on one hand, and utilities, on the other. Smart renewable energy systems are win-wins, generating benefits for homeowners and utilities, not solely one side or the other. Rich in potential as it is, renewable energy will successfully gain critical mass in the market only if meets – or exceeds – the expectations of both homeowners and utilities. Consumers will adopt smart renewable energy because its extensive financial, lifestyle and social-good benefits are clear. Utilities, for their part, will support the installation of smart home renewable energy systems through financial incentives to homeowners when those systems are net-benefits to the grid. Smart renewable energy systems deliver on both sides of the equation. Because software turns renewable energy into smart renewable energy, software is the key that unlocks the true value of renewable energy. Ken Munson is CEO of Sunverge Energy.