The rise of the energy cloud

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The rise of the energy cloud is creating a change in the energy and utility landscape that will result in a fundamental reimagining of how the industry and the nation generates, stores, and consumes energy in the next 20 years, according to Navigant Research.

Navigant explains that this emerging energy cloud landscape — a concept that borrows from cloud computing — represents a range of technical, commercial, environmental, and regulatory changes that challenge the traditional utility architecture.

Credit: Nastco

Driving this shift is the steady increase in distributed energy resources (DER) capacity and the continuous expansion of smart grid infrastructure.

 Utilities will need to adapt to this evolving landscape through business model transformation. At the heart of the energy cloud evolution is a shift toward a market that is more dynamic, responsive, and transparent.

Moving from a hub-and-spoke grid architecture based on large centralized generation assets toward an increasingly decentralized electrical grid that makes extensive use of distributed energy resources, the power sector is undergoing sweeping changes, according to Navigant Research. The research summarizes the transformation as the “rise of the energy cloud,” including a decentralized architecture based on intelligent network technology and two-way energy flows, encompassing a diverse suite of technologies that includes energy storage, virtual power plants, demand response, and advanced software that enables greater interoperability across heterogeneous grid elements — as well as digitalization of the electric-mechanical infrastructure, complex market structures and transactions, and liberalization of markets with regulation adapting to a shifting electricity generation mix.

“As a vehicle for advanced technologies and solution integration on the electrical grid, the energy cloud represents a far more dynamic, responsive, and democratized network than today’s hub-and-spoke architecture,” said Mackinnon Lawrence, senior research director with Navigant Research. “Although the cloud is not a complete replacement for current grid infrastructure, today’s electric utilities will need to be more flexible than current regulatory models allow and remain nimble to prosper in an increasingly competitive marketplace.”

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