The Economic Times — ET EnergyWorld, India: Cognizant’s Global Delivery Head of Energy and Utilities Says the Local Energy Marketplace (LEM) Model may be the Biggest Innovation in the History of the Utilities Industry

“Rarely a day goes by without renewable resources making news headlines,” writes Ganesh Kalyanaraman. “Over the years, utility companies have mastered integrating utility-scale renewables such as solar and wind to address the dominant challenge of variability in generation. But integrating distributed generation at scale is still a challenge. However, technology and newer business models hold the potential to change all that.” Excerpts:

“Utilities have always been guided by the principle of ‘economic dispatch’ ― the short-term determination of the optimal output of a number of electricity generation facilities in order to meet the system load at the lowest possible cost, subject to transmission and operational constraints. Rapid penetration of distributed resources and advancement in remote control/monitoring technology have brought ever more merit to the question of how distributed resources can be used in the economic dispatch equation.

Considering typical distribution networks consisting of substations and feeders, any design to integrate distributed resources to the grid will need to be ‘hyper local’, which addresses local generation and consumption characteristics. An emerging ‘hyper local’ business paradigm in electric utilities is the ‘Local Energy Marketplace’ (LEM) model that holds the potential to ease this economic dispatch of distributed resources puzzle for utilities and other stakeholders in the system.

For the LEM model to become a mainstream solution, there are three primary sub-puzzles utilities would need to solve: energy management, customer engagement, and marketplace mechanism. Experiences from across the globe all prove the exciting prospects of the LEM model. It may well be the biggest innovation in the history of this century-old industry.”

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