Dramatic and radical change is coming to the electric utility industry as the utility itself evolves to the smart transportation grid, under a complete rethinking of the electric industry. Front and back office generation and customer facing activities become free market activities under prudential regulations.
The Smart Grid Transportation Utility
By José Antonio Vanderhorst-Silverio, Ph.D.
Systemic Consultant: Electricity
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Dear Mr. Shargal,
So far, you have done a great contribution to the understanding of the smart grid.
The first part of the article has kept transmission and distribution as a uniform transportation function which is very important. In fact, “Rebuilding the grid to support bi-directional power flow and transfer of power from substation to substation” means that distribution becomes indistinct from transmission.
Every one should agree that “It is clear that dramatic change is coming in the future for the electric utility industry and the way energy is generated, delivered and consumed substantially changing the whole business model. This change is coming to a piece of the industry that hasn’t been known for radical change over its 120 plus year history… Implementation of the Smart Grid will require a complete rethinking of the utility business model and business processes.”
Such dramatic and radical change is leading to an emergent smart grid transportation utility to replace today’s utilities, with customer oriented front office and back office activity done today by the enterprise side of the utility and power generation front office and back office activity becoming competitive activities at the federal level.
A complete rethinking of the industry structure has already been done during the past two years in the Energy Central Network and what has emerged is the Electricity Without Price Controls (EWPC) market architecture and paradigm shift. As a result there is a grand vision as can be seen in the EWPC article Value Creation for the Customers to shift from the “compliance-based industry in which utilities operate,” to one that “offer enough incentive for consumers, [generators and retailers] to take the difficult steps necessary to make electrical energy markets operate efficiently.”
In sum, the utility as we know it evolves as the smart grid becomes the transportation utility under central planning. Shifting from price controls to prudential regulation, generation and customer facing front and back office activities will become free market activities as can be seen in the EWPC article Free Market and Central Planning, Under R1E2. R1E2 is the policy system reliability first, economy second, that gives priority to “real-time/near real-time” generation, transportation and demand power system smart grid activities with respect to economic free market activities.
Reference and context: Smart Grid: Leveraging Technology to Transform T&D Operating Models, by Meir Shargal, Principal, Capgemini