The U.S. power grid is a modern engineering marvel, but it’s overdue for an overhaul. Participants at the recent Transactive Energy Conference in Portland, Oregon, came together to discuss the changing system and to develop the concept of transactive energy as the future of the grid.
Transactive Energy seeks to engage all devices and resources in the electrical grid in a market-based system. (Source: Edward Cazalet, "Transactive Energy: Public Policy and Market Design." May 2013)
As the first such conference of its kind, the gathering was initiated by defining exactly what transactive energy is. In an interview with Sustainable Business Oregon, Carl Imhoff, manager of the electricity infrastructure sector for Pacific Northwest National Laboratory and a moderator at the conference, provided a succinct definition: “Transactive energy is a means of using economic signals or incentives to engage all the intelligent devices in the power grid—from the consumer to the transmission system—to get a more optimal allocation of resources and engage demand in ways we haven’t been able to before.”
If consumers need proof of what a smarter grid could do for them, transactive energy is a concept that can provide it. Transactive energy systems integrate both utility-owned and third-party-owned resources—including power generation, ancillary services, and load management services, among others—in order to utilize the lowest-cost electricity in real time. The key driver of transactive energy systems is the market-based approach, which allows every service provided to the grid, even those by consumers, to be valued.
This way, those providing the services, whether they are generating power or providing load reduction services or something else, can be compensated, thus splitting the benefits and savings of the increased efficiency of the electricity system between the customer and the utility. This system is a long way from the traditional unidirectional flow of power (from utility companies to consumers) and supply side-focused mindset of the historical electricity sector.
Employing the increasingly prevalent two-way information and communications technology deployed as part of smart grid development efforts, consumers can begin to interact within the electricity system in ways that were not possible in the past. A transactive energy system utilizes smart grid infrastructure to send signals back and forth between utilities, grid operators, and individual assets in the grid system, communicating the real-time flow and cost of power.
These assets can include everything from large centralized power plants to residential solar photovoltaic arrays to demand-response programs. Signals can even be sent to and from electric vehicles (EV), integrating EVs into the electrical grid. In a transactive energy system, instead of being passive energy consumers, you and I could become what are being referred to as “prosumers,” not only receiving electricity from the grid, but providing our own services to the grid system and getting paid for it.
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