The Future is Local

I read some news recently about a company called Faire that just completed a $170M Series E funding round led by Sequoia Capital. Jeffrey Kolovson, the COO, shared it on LinkedIn and stated their belief that the future of retail is local. It made me think about energy and how the future of energy is local too.

The grid is no longer the top down, one-way, centralized system it used to be. What happens at the grid edge, how energy is used and procured locally in communities, and how it’s managed in people’s homes, matters more than ever. It can’t be ignored. It is actually affecting how the grid operates now.

You can see this if you look at what’s been happening in California this year. Blackouts and wild fires have shown the weaknesses of a grid that doesn’t have the tools it needs to be nimble and responsive to unexpected conditions. Though some of the reports about the August 2020 California blackout blamed renewables, it now seems clear that CAISO just didn’t have the tools it needed on hand to fix the mistakes that were made. Had CAISO been able to procure last minute flexibility from local resources, it could have avoided rolling blackouts. (See more analysis here on the mistakes and issues that contributed to the grid issues and blackout.)

There are a lot of different options for tools that could provide solutions going forward. Certainly, next generation demand response will be key, as will a well designed system with real time markets that include flexible resources. FERC 2222 may hasten some of this. ISOs and RTOs will need to improve balancing capabilities at the system level, as California is working on with the EIM, and utilities and grid operators will need to create new balancing mechanisms at the local level. With these multi-layer solutions in place, the grid will be a much more resilient and sustainable system with many more flexible resources participating.