The new energy revolution: disruptive technologies--from micro-grids to solar panels and energy storage--are transforming the electric system.

• Author: Andersen, Glen
• Position: ENERGY

The nation's electricity system is entering a new era. Technology has fueled dramatic strides in efficiency, natural gas extraction, locally generated energy and smart grid technologies. These advances stand to fundamentally alter how policymakers, utilities and energy businesses approach all aspects of the industry, from production and delivery to regulation.

Consumers and businesses have a growing array of choices to help them manage their energy needs. Some are choosing to install rooftop solar panels or combined heat and power units. Others are investing in vastly more efficient building technologies and appliances to lower their monthly utility bills, while the smart grid is enabling them to monitor and optimize their electricity use, an innovation that has huge potential to change the energy landscape.

Energy users are increasingly interested in emissions, sustainability and control over electricity sources, and they're pushing policies to improve efficiency, localized electricity generation and renewable energy. Policymakers are working to ensure access to these new resources and technologies, many of which reduce utility electricity sales and revenues.

Ultimately, the traditional model of the centrally managed and controlled utility, in which its profits are largely based on how much energy it sells, may need to be altered to address the growth of these technologies. "The utility model does need to change to reflect the realities of distributive generation and people wholly or partially leaving the grid (unless they need back-up power)," says Kansas Representative Tom Sloan (R), who serves on two U.S. Department of Energy advisory committees and has been active in grid technology issues.

Do-It-Yourself-Electricity

An overview of some of the developments that are driving the electricity revolution follows.

Energy Efficiency has continued to improve in televisions, refrigerators, air conditioners and other devices. The Energy Information Administration reports that household energy use has fallen for the past three years, and usage in 2013 fell to a level not seen since 2001--a remarkable figure considering the dramatic increase in home computers, large screen TVs, game consoles and other electronics. A 2014 refrigerator will use about half the electricity of a 2001 model, while a new 50-inch LED television consumes just one-quarter the power of a 46-inch LCD from 2008. LED lighting, which uses 75 percent less energy than incandescent, is likely to play a major role in further lowering electricity consumption.

Such technologies are helping business and industry cut operating costs and become more competitive. Efficiency is essential to making distributed resources cost-competitive, since it reduces the size and cost of the power system. Twenty-five states have binding energy efficiency targets for utilities.

Combined Heat and Power (CHP) systems, which create their own heat and electricity, are used in a growing number of industrial buildings because they are reliable and cost effective. Heat produced during electricity generation is usually wasted, but CHP systems capture and use it, resulting in dramatically increased efficiency. CHP systems, which can run on natural gas micro-turbines, fuel cells or other technologies, gained visibility during Hurricane Sandy, when hospitals and other buildings with CHP maintained operations despite extended power outages. Smaller, residential versions are also being introduced.

Most CHP systems use low cost natural gas, which can make them very competitive with utility electricity rates. About 12 percent of U.S. electricity comes from combined heat and power systems, but the potential is much higher--more...