To much fanfare and the customary adulation, on Friday July 28th, Elon Musk handed over thirty (30) Tesla Model 3 electric vehicles (EVs). The expectation is that close to 500k of these will be delivered over the next 2 years. To make that happen, Tesla might raise $1.5Bn through bonds. While it’s a big step in bringing EVs mainstream — and the impact on the transportation industry is oft discussed- the impact on the utility industry will be almost as profound. In particular, the commoditization of electric vehicles (if you can call 500k units that) will impact the utility industry in forcing adoption of virtual power plants quicker than the traditional utilities planned to. Tesla, while still a blip on the utility radar — the sector has over 50 companies with 4Bn-60Bn in market capitalization — will become even scarier to the utilities because of a concept called Swarming.
Swarming
Every new Tesla currently driving thousands of the miles on the road is gaining knowledge of how to navigate our human infested roads. With every additional mile driven by each car, more collective knowledge is gained and dumped in a central database where it is analyzed in real-time using machine learning. We hear a lot about how the cars will be self-driving in a few years. Less discussed is the knowledge the collective system is gaining in how to manage the energy stored in the hundreds of thousands of Tesla’s. In his paper ‘Engineering Antifragile Systems: A Change In Design Philosophy’, Kennie H Jones suggests
While the swarm is useful as a tool for managing the car as a unit of autonomous vehicles, it is also quite useful for managing the distributed energy resource which is the battery in every single Tesla. The swarm gathers data about each individual battery and some of this knowledge is in the form of
- the number of optimal cycles before a battery needs to be recharged
- cost of the energy being used and
- power being discharged from the battery and how it affects the battery life.
This data, and much more, become vasts amount of knowledge through big data analysis (and even machine learning). This knowledge becomes real-time insight into how to manage a virtual power utility. Add Powerwalls and Solarcity panels and the swarm becomes a utility managing each Tesla Model 3/Solarcity panel/Powerwall as a distributed energy resource (DER) node on the grid. Add Chevy Bolts and BMW i3’s and this becomes less about one company’s disruption and more about the upending of an old outdated business model.
As I mentioned in my article about the true value of Tesla, this is the true disruption that is being unleashed with the rollout of the Model 3. And this disruption is being borrowed straight out of Nature’s playbook.
Biomimicry
My first immersion in all things Biomimicry came at SXSW Eco 2015. I listened to a few sessions and talks including one by biologist, author and innovation consultant, Janine Benyus.
Biomimicry is simply using designs inspired or copied from nature to solve human problems. According to Janine Benyus in ‘Biomimicry’, most biological systems have a communication system that enables the system to hold in check any waste and reward efficient behavior. She suggests that the most mature and efficient systems are not ones that broadcast the necessary system control messages from the top, but ones that, from the grassroots, disperse messages throughout the system to manage this structure of rewarding efficiency, preventing and punishing waste. In layman’s terms most organic systems are not centrally managed but still function efficiently. And the smartest amongst us have always borrowed from nature to build technology; While he was a student at Harvard in 1951, Marvin Minsky, who ended up at MIT and is one of the founding fathers of AI, used a simple form of reinforcement learning and mimicked a rat navigating a maze.
This mechanism of information dissemination, which is like a rich feedback system, enables the system to adapt quickly when changes happen. This mechanism also helps the system maintain its integrity despite any attacks. It’s what we see in how leaves manage to capture, utilize and resource the rest of a tree to which they are attached without becoming burdensome to the whole tree. This is why leaves shed from trees when they no longer contribute to the integrity of the tree. The shed leaf decomposes and becomes manure and nourishes the other leaves/tree .This system adaptation looks a lot like antifragility; the system gets stronger from any shock to a part of the system. It’s what a swarm enables.
By mimicking nature, a swarm of electric vehicles, solar panels, batteries and energy efficiency devices in homes can be made into a virtual power plant made up of many nodes. If a node is attacked or compromised, say a cyberattack on a home, the virtual power plant does not get compromised and just cuts off that node. But the virtual power plant learns from that node. The virtual power plant gets stronger from the real time insight it gained from the compromised, but now disabled, node. The swarm/virtual power plant benefits from antifragility.
Antifragility or ‘death by a million cuts’
When it comes to innovation and business model changes, utilities are selling a message to their shareholders that this transition to an antifragile grid will play out without too much disruption. The utility industry is failing to inform its shareholders that the future Antifragile business model owes no debts to the structures that exist today.
Don’t mistake this view for naivete about the complexity of the widespread system that is our current grid and how difficult it will be to change it. Because Tesla is selling expensive cars to a small subset of the market does not equate to disruption. The company is probably over leveraged at this point but it speaks to a possible and disruptive future. As I discuss in my book, The Antifragile Grid, while there is still a lot of work to be done to provide the infrastructure for electric vehicle mass adoption, the infrastructure is already being laid in the smart home/a node on this grid.
An example of how this disruption will happen from one single node (my home) should help here. I have a 7kw solar power system on my roof (below). I’ve had several days this summer where I used less energy than I generated from the solar panels. My Nest thermostat helps me ensure that I use energy efficiently. The Nest, Solarcity app and my own personal spreadsheets keep me well aware of all the energy I generate and use.I capture data constantly and it’s not even advanced technology at this point. With data available to me, I’m constantly learning about my home ‘system’ and I’ve realized that there are afternoons where I need someone to take electricity off my hands since I don’t have a Powerwall (yet).
Solar panels on my home and the Tesla belonging to one of my coffee shop neighbors. What if he could pay me to charge during the day? I’m planning to ask him.
Turns out I have a neighbor who drives a Tesla (image above) who might be able to take it off my hands during periods of excess generation. My neighbor also works out of our local coffee shop (where I discreetly took the picture) where he parks during the day. He can park the Tesla at mine and charge it from my solar panels. I can manage this transaction through a simple app. Or we can just use Venmo for peer payments. Or, if we really want to get fancy, we can create a blockchain and enter into smart contracts for tracking contract adherence. I have 3 neighbors in close proximity who also have solar panels on their roofs. And a couple of other neighbors with electric cars. What says we can’t start our own mini-grid system between ourselves? To ensure everyone has visibility into what’s going on, I can capture the information of all our usage and generation on a simple ledger. And, while at a very very very small level, before you can say ‘electricity’ I just became the utility for our mini-grid.
But the utilities think it will take a while before this happens. Well, I don’t think so. Considering the state of our infrastructure, generally and specifically to the utility industry, I think we are a lot closer to this reality than they realize. Paraphrasing Hemingway’s quote from ‘The Sun Also Rises’ goes
“How did the old utilities die?” Two ways. Gradually, then suddenly.”.
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