POWER July 2020 - 24

POWER TRANSITIONS
Another
example of an emerging
model that leverages digitalization and
decentralization is peer-to-peer (P2P)
trading. The model is rooted in the rapid
development of the " sharing
economy " -such
as is exemplified by Airbnb
and Uber-and in the power space it is
being viewed as a practical solution for
how intermittent small-scale generation
can be integrated into a system at a low
intermediary cost. It essentially involves
the direct buying and selling of energy
between two or more grid-connected
parties through a secure platform, via a
technology like blockchain.
The first recorded peer-to-peer energy
trade occurred in Brooklyn, New York, in
2016, when a resident with solar panels
sold a few kilowatt-hours to his neighbor
via the Ethereum blockchain. A more recent
example is Australian energy blockchain
firm Power Ledger's collaboration
with PV installer EPC Solar to allow a
commercial site owner in Canberra to
trade solar energy with its tenant. But
though experts laud P2P for its potential
to leverage the diversity of generation
and demand profiles of different customers,
they caution it remains challenging
in practice because it can be administratively
difficult to execute.
Taking Charge of the
Carbon Footprint
As Chip Cannon, head of Akin Gump's
energy regulation, markets, and enforcement
practice, told POWER, perhaps the
biggest influence on future business models
over the near-term, at least, will be
" carbon, carbon, carbon. " He explained:
" It's only a matter of time before the price
of wholesale power reflects the cost of
carbon. While it seems unlikely that Congress
would pass that now, that could
change quickly depending on the upcoming
elections. And even in the absence of
Congressional action, the administrators
of the regional wholesale power markets
(ISOs/RTOs) are likely to implement rules
to accommodate carbon pricing mechanisms
implemented by the states within
their regional footprints. "
Climate change concerns, which rattled
the power sector a decade ago, have
spurred remarkable cultural change in the
industry. As well as propelling energy
transformations across the world, resulting
in a clear shift in power portfolios away
from coal and toward low- or zero-carbon
resources, the decarbonization movement
is being championed by power company
shareholders and customers.
Especially notable in this context are
business models that relate to sector
coupling-the integration of new revenue
streams through the production of
salable energy, gas, or chemicals. Interest
is surging in power-to-x, an umbrella
term for various emerging processes
that convert generated power to different
types of energy carriers-such
as " green hydrogen, " a decarbonized
gas-for use across multiple sectors, or
to be reconverted back into power. For
example, at least four nuclear generators
in the U.S. are exploring hydrogen
production to cement new sources of
revenue and establish a foothold in burgeoning
green hydrogen markets for use
in chemicals and fuels synthesis, steel
manufacturing, ammonia-based fertilizers,
and transportation (Figure 2). Other
companies are looking at integrating
heating and cooling, as well as mobility.
Ross Baldick, a professor emeritus in
the Department of Electrical and Computer
Engineering at the University of
Texas at Austin pointed in another, potentially
lucrative direction for sector
coupling-linking demand to supply.
" The demand side has historically been
basically decoupled from production
from a price responsiveness perspective
by design. Even in a restructured wholesale
and retail electric industry in ERCOT,
most retail customers still see pretty flat
rates, " he said. Baldick suggested that
coupling at least some consumption decisions
with time-varying production of
renewables through demand response-
what he calls " temporal endowment " -
could better match, for example, PV
production to electric load and help flatten
out " duck curves. "
At least one company, Griddy, has so
far leveraged the demand-supply link by
offering retail customers in ERCOT, the
most deregulated market in the nation,
an intuitive platform to monitor and buy
wholesale power. As Griddy CEO Greg
Craig told POWER, the company was
founded to free retail customers from the
standard fixed prices offered by nearly all
144 competitors through their plans. " And
we just thought, look, there's 100% smart
meter penetration in Texas and in many
other states, and how much smarter has
that made the consumer? Well it hasn't. "
Griddy's model is essentially a " simple
pass-through, like Costco, of the wholesale
real-time price, " from ERCOT to consumers
under a $9.99 membership cost
per month plus the real-time wholesale
price. But Griddy also provides price and
weather analysis on its app, so consumers
can make decisions about shifting usage
to cheaper times. " It's really a big deal
for the grid, because it can help the whole
system reduce consumption during
stressful high-price times, " such as the
unprecedented spike consumers saw last
August, or ramp up usage, for example to
charge electric vehicles when prices fall
dramatically-or even go negative.
Shenot suggested innovations like
these are a natural evolution that is tied
deeply to competition in industry, which
has seen smaller and smaller players enter
the market since the 1970s. " It's hard
to predict where it will go, because there
are so many markets, " he said. " But if
you thinking in terms of broad strokes,
what we're seeing is more types of competition
being introduced into this old
monopoly model. And the breadth of the
monopoly is shrinking and shrinking, and
getting, in some places, closer and closer
to being the wires of the monopoly.
2. The primary uses of hydrogen today are in the oil refining and ammonia industries. Other
emerging applications include fuel cell vehicles, metals refining, and synthetic natural gas production.
Source: Department of Energy H2@Scale
24
www.powermag.com
The rest of it: competition. " ■
-Sonal Patel is a POWER senior
associate editor.
POWER | July 2020

http://www.powermag.com

POWER July 2020

Table of Contents for the Digital Edition of POWER July 2020