''Microgrids'' the future for pressured power companies

Electricity companies will be encouraging people to generate their own power in future to help reduce expensive network upgrades, an international technology consultancy says.

Solar power, better batteries and electric cars are changing the landscape for power distribution companies, which are under pressure to service growing populations.

Accenture's US-based smart grid expert Dave Shepard said on a recent visit that many power networks were nearing capacity and facing heavy investment.

Five per cent of utilities in a global survey by Accenture had already reached their limit, and another 54 per cent expected to be at that point in the next decade. 

However, with improved battery storage and cheaper solar technology, power companies were finding some relief in people feeding back into the grid.

Accenture found 57 per cent of consumers surveyed were considering becoming power self-sufficient, and lines companies did not want to be turning those sorts of customers away, Shepard said.

"Especially when your revenues are declining and your costs are increasing."

Shepard said clusters of consumers generating and sharing power were called "distributed generation" or "microgrids".

They were often found in technology or manufacturing areas which could not afford to have outages. 

"You'll see it sometimes in college campus environments, where you've got a campus and research companies that congregated around that area.

"We're also seeing in remote locations where it's very expensive to deliver energy from central resources."  

Grant Turvey, Shepard's New Zealand and Australia colleague, said similar dynamics were present here with New Zealand's widespread population.

"You have three or four reasonable population centres, but you also have a lot of more dispersed communities at the end of distribution that are fair way away from where the generation's occurring." 

The microgrid concept is already being trialled in New Zealand by Contact Energy, which is using five homes in Wellington's Wadestown and a further 25 in the city's south. 

Wadestown participant Craig Burt said the two-year trial was not only reducing his energy bill but made his cluster more resilient in the event of a disaster. 

"It's great to know that when there is a sunny day, the house has been running off the panels and we have power stored in the battery for use overnight. It often provides enough energy to still have energy in the battery in the morning."

Crucial to the take-off of microgrids has been the falling price of energy storage batteries. In 2013 Accenture forecast the cost to halve by 2018. That had happened in 2016 and it was expected to halve again by 2020.

However, a future in which consumers were "buying and selling energy every day" would require "some pretty sophisticated changes," Shepard said.

Utilities were looking at using public ledger systems like "blockchain," a system commonly associated with digital money. It would track excess energy, monitor the people that needed it, and then arrange the transactions.

The biggest problem was a global decline in electricity use, but utilities' costs were not decreasing because peak time demand was largely the same, Shepard said.

"The challenge that has been looming in the industry is, if you continue to compress and reduce energy consumption while increasing the demand on networks, regulated utilities are going to be caught in an earnings squeeze.

"And what the research really points to is pathways for those utilities to create new services, new business models in this distributed future that allows them to offset that loss of earning potential."

While power companies were bracing for a fall in revenue as distributed generation gathered steam, most were hoping to benefit from the take-up of electric vehicles and charging stations.

Greg Skelton, chief executive of Wellington lines company Wellington Electricity, said the trial with Contact and the Wellington City Council was providing a glimpse into the future.

"It is an opportunity to evaluate new technology solutions to support peak demand rather than the traditional investment of providing bigger infrastructure."