Centralized, Meet Decentralized, Your New Roommate
This chart came together several years ago, as we realized how different these two approaches to energy are. As you can see, Decentralization really is a distinctly different approach to energy than what we have grown up with. The key reason we are in transition now is that decentralized energy (the right side of this chart) is coming of age, and its radically different.
Historically, we’ve received our electricity from power plants via the grid and a utility connection. That’s Centralized Energy, the left side of this chart. While we will continue to get much of our electricity through the grid and utilities, there are now more and more competitive options in the Decentralized sphere. That means that we are all adjusting to this change, some better than others…. some willingly, others less so.
So let’s walk through this chart to better understand this broad category of Transitional Energy – the Era we are coming into, today, as this is written.
The Elements of Transitional Electricity
Primary Actor. Who are we focused on when we want energy?
Primary Assets. How do we get our electricity?
Strategy. What is the primary strategy employed by energy providers?
Operations. How does the system work?
Economics. How do companies make money?
Resource. What are the underlying drivers to the energy economy?
Energy. What do consumers want most out of energy?
Value. How does the market measure value?
Prices. What about affordability and pricing?
Supply Chain. What does it take to get energy to the consumer?
Information. What is the relationship between energy and information?
Outages. What happens when electric service gets interrupted?
Management. What keeps all this complexity going?
The Bottom Line on Transitional Energy
We are steadily moving away from the old centralized system and into a new hybrid system, where decentralized components find ways to fit into the status quo, and utilities figure out how to accommodate such change. In time, with enough market adoption and enough creativity, the decentralized system matures and becomes predominate, and the old centralized system adjusts and takes on new roles – we saw it with railroads and cars, and with telcos and the internet. The old infrastructure doesn’t always disappear, more generally it is adapted to new purposes when alternatives arise.
We are still decades away from replacing the utility and the grid, indeed, that may never be the case – so don’t get ahead of yourself. The excitement of the new must be matched with the preservation of the old – just as we need more and more clean energy, we also need to maintain healthy utilities and a robust grid. Transitional Energy represents the challenge to find balance: to preserve the old, even as we feed and nurture the new.
This set of web pages listed below will showcase the issues associated with managing this exciting transitional period.