Energy Management

Smart energy networks are increasingly driving regional and community energy conversation

Peter Garforth explores New York’s strategy to shift from the traditional centralized electricity system, to one that has highly distributed generation from fossil, nuclear and renewable sources.

By Peter Garforth

The New York Independent System Operator recently announced the opening of its new Power Control Center. This impressive $38 million facility will greatly improve the ISO’s ability to actively manage the supply and distribution of power to the 20 million residents of New York State. The Center allows tracking and management of demand in real-time, greatly enhancing the ISO’s ability to include distributed and renewable supplies in the generating mix. Weather forecasting and actual weather patterns are incorporated to minimize grid failures and to prepare for emergencies.

The Center is the physical embodiment of New York’s highly-publicized overall long-term strategy to shift from the traditional centralized electricity system, to one that has highly distributed generation from fossil, nuclear and renewable sources. It is only one piece of the transformation of the system, which will require years of enhanced investments along with many changes in policy and regulatory frameworks.

Facilities like this are of great importance for industry and other large power users. They represent a policy that embraces, and can manage, distributed generation. As technical control improves, this will help clear away historic barriers to on-site renewable and clean power generation. With the low prices of natural gas, the cost advantages of on-site power could be very real as long as regulation is not too complex.

Industry is also likely to benefit from the possibility of a smarter grid to manage demand side management (DSM) agreements. Improved real-time information and control will allow both-sides of a DSM agreement to optimize their mutual needs, thereby enhancing the overall quality of the grid, and reducing cost and improving reliability for the consumer.

The strategy being followed by New York reminded me of another region making similar long-term investments to enhance utility services in the Ruhr Valley in Germany. Thirteen cities are cooperating to create one of the most modern and largest thermal utilities in the world, in order to supply clean and cost-effective heating services to more than 5 million consumers. The existing heating networks in each city are run by local municipal utilities, many of which are also responsible for local or regional electricity delivery. These networks are being systematically connected with heat transmission links along with a unified control and dispatching system, which creates a single market for heat for the whole region.

Peter Garforth heads a specialist consultancy based in Toledo, Ohio and Brussels, Belgium.Peter Garforth heads a specialist consultancy based in Toledo, Ohio and Brussels, Belgium. He advises major companies, cities, communities, property developers and policy makers on developing competitive approaches that reduce the economic and environmental impact of energy use. Peter has long been interested in energy productivity as a profitable business opportunity and has a considerable track record establishing successful businesses and programs in the US, Canada, Western and Eastern Europe, Indonesia, India, Brazil and China. Peter is a published author, has been a traveling professor at the University of Indiana at Purdue, and is well connected in the energy productivity business sector and regulatory community around the world. He can be reached at peter@garforthint.com.

Importantly, this approach creates a large market for large scale power plants to sell their heat. For example, the metals and chemical industries can sell their waste heat to a market of millions of consumers. Cities can similarly sell both the heat and power from their waste-to-energy plants to the region as a valuable utility. The network operator can optimize the supply portfolio based on demand, costs of sources, and environmental requirements.

As a result, in the middle of winter, when heating demand is highest, more than 80% of all heat is from either combined heat and power (CHP) or waste sources. In the middle of summer, when cooling needs are highest, the availability of a reliable high-capacity heat network and low-cost heat sources will allow absorption cooling to be economically included in the cooling supply mix, and relieve some of the peak loads from the power grid.

The New York State ISO and the coalition of municipal utilities in the Ruhr should be applauded for having the courage to step out into a new playing field with such confidence. As important, they can learn from each other. An efficient regional thermal market can help the region’s electricity system be more efficient, cheaper and cleaner. In the same way, a flexible, optimized regional power system is a good basis to develop competitive thermal markets.

Industries located where both utilities exist have potential operating efficiencies not possible elsewhere. Increasingly, it is time for industry to come to the table and be part of the regional and community energy conversation. This is as much in their own business interest as it is in the interest of the wider community.

Read Peter Garforth's monthly column, Energy Expert.