What on earth is “transactive energy” and is it a good economic development idea for Oregon? Karl Mundorff of Oregon BEST invited us to participate in an initial conversation about it with many others this week. James Mater of QualityLogic, who is also Chair of Smart Grid Oregon, introduced this very technical topic.
What is a smart grid? It is modern electricity delivery that allows two-way energy demand management between customers and electricity generators or utilities. It makes our grid more efficient, more reliable, more able to support distributed renewable energy sources. The smart grid will allow the integration of electric vehicles, electricity storage, and smart appliances, all decentralized conservation systems in a way.
Transactive energy is a phrase that describes the energy system of the future where dynamic pricing, which reflects the supply-demand equation of the moment, will help smooth out peak demand. It is a marriage of high-tech meters and new energy business models, if you will. This will help us avoid the extreme capital expense of constructing mostly idle, and thus wasteful, peaking plants designed to deliver electricity at times of highest demand.
This is almost opposite of our current centralized utility business model, where big companies are independent, yet heavily regulated. Financial transactions for energy in this traditional model are simple: the customer pays the price for a kWh set by the generator or distributor. However, spot wholesale markets do underpin this system, so utilities are not without experience in dynamic pricing.
The Pacific Northwest Smart Grid Demonstration Project can already claim leadership in smart grid/transactive energy research, “contributing technology, utility applications, customer engagement strategies and policy”. For more than a decade, five states (Idaho, Montana, Oregon, Washington, and Wyoming) have worked together to experiment and demonstrate exactly how smart grid infrastructure can actually work, on many levels. Now is the time to put this new technology together with good regulatory policy and good business models. Exciting new work for our sustainable business graduates!