About 18 months ago, Greentech Media, a lead research firm for environmental technology, saw two worlds colliding together: the rapidly growing solar industry and the smart grid. Rick Thompson, co-founder of GTM, decided to leave behind the idea of just a smart grid and coined a new term to describe the entire system that must function cohesively to grow and sustain renewable energy industries. He called it the “grid edge.”

A panel of experts from various verticals of the energy industry discussed the future of the grid edge and specifically, what the biggest challenges will be to successfully maintain these projects at SXSW Eco on Tuesday, October 7.

The consensus? The smart grid is only one piece of the pie, and only the beginning of what we need to drive progress for clean energy to become our future.

“A smart home, energy efficiency, storage systems — all these things are creating [an] energy system that is both in part related to the utility [industry] and somewhat adjunct to them,” Thompson said.

Perhaps the most important aspect of the grid edge is the utility revenue system we are working under, the panel agreed. The current system is not sustainable.

For the first time in the grid’s history, the patterns are changing, said Naimish Patel, CEO of Gridco Systems. What was before a one way power stream has now become two ways — customers are suppliers because of their photovoltaic systems, and efficiency measures. Throughout its history, the utility industry has been exceptional at predicting the load of electricity used and setting rates based on that. Now, that’s becoming more difficult.

Utilities turn a dial to increase or decrease electricity when consumers need it most, and that just won’t work anymore. In part because we are still trying to function with that model, rates of solar power are exceptionally high.

Despite the fact solar power only accounts for 1-2% of total electricity generation in the US, it’s clustered geographically, which means high penetration of PV in small areas. So, Patel said, this leads to problems with pricing and other things in those areas.

For instance, the rise of solar power generation in one neighborhood may cause equipment to fail, because it’s generating more voltage than it’s designed to handle. Consequently, the bills in the neighborhood — even for those people who have not adopted solar — go up. They pay more for no reason. And third, the voltage rises to such a high point where the solar panels themselves shut off because they’re designed to work within a specific voltage range.

“There needs to be a dynamic value to a distributed energy resource,” Patel said. “But it has to be a function of a local scenario.”

Then there’s the actual technology challenges. Often, said panelist Andy Tang of Greensmith Energy Management, we talk about the chemical properties of energy storage batteries. And storage is “the silver bullet,” he said. But the future will hold a lot of leapfrogging — different types of batteries will work for various situations. His company is battery agnostic and instead focuses on the software behind the system.

“It’s great you have a battery, but you need the software that tells the battery what to do,” he said.

On the consumer side, leaving behind the idea of a “smart home,” which has become antiquated and abstract, will be key, according to Brian Farhi of Nest Labs. That’s why the company started with a simple thermostat.

“They’re earning something out of it,” he said. “They’re doing it because they’re still comfortable and not feeling impacted and always in control.”

Once they feel comfortable with that, consumers can adopt other aspects of renewable energy technology — be it EVs, PV solar panels, etc.

But all of these pieces have to work together for the grid edge system to work. Going forward, there will be five main drivers of the grid edge research and deployment, according to Thompson:

1. Distributed generation and decentralization: The physical layer of voltages and the communications intelligence layer have to work together. That fundamental shift to a decentralized system is hopefully more of a driver that will create opportunity rather than relying on a regulatory system to make change.

2. Intermittency and unpredictability: The utilities have had a constant and predictable power generation scheme to work under. With solar and wind, that’s not the case anymore.

3. Resiliency in the face of emergency: These are the primary goals of the electric utility and the consumer as well. When you decentralize things, there’s not as much risk of losing complete control. Compare it to the internet. We are never going to have a situation where the entirety of New York has no access, like we did with electricity during Hurricane Sandy, for instance.

4. Availability of energy-centric IT: Utilities have been using IT and software for many years, but now there is the availability and focus on energy-specific tech, particularly smart meters connecting with other devices in the network. The application of these technologies is helping to create a smart network.

5. Utility business model transformation: There is definitely a transformation occurring and these discussions are just now coming to light. Since customers are creating their own energy with PV systems and contributing to the grid, the business model has to change.

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