Reducing Barriers to Entry and Hedging Against Obsolescence with Smart Grid Interoperability

Interoperability is the last significant barrier to the full participation of distributed energy resources in electricity markets and operations. The opportunities for diverse and unconventional system participants to create value will continue to grow as the challenges of systems and market integration are mitigated. Enhancing interoperability to ease energy systems integration opens opportunities for operational improvements and value creation that exceed the horizons of any single installation or project. Today, interoperability can help lower barriers to initial market entry that arise from informational asymmetry. For potential market participants to design solutions they must have information about the value space and opportunities for improvement that exist in the system. Interoperability is a countervailing force against market fragmentation that divides and devalues critical network infrastructure according to these historical informational asymmetries. Interoperability can also ensure the ability to stack value streams associated with grid technologies, hedging against obsolescence as today’s innovations age into tomorrow’s legacy equipment. Going forward, interoperability can enable legacy assets to enter subsequent markets by equipping technical solutions purchased to meet present needs to continue delivering value even as public policy, operations, and market paradigms evolve.

By Cheyney O’Fallon & Avi Gopstein^[1]

Interoperability is the last