War of Currents
Someone said: “If Alexandar Graham Bell were to be alive today he would not understand what a “smartphone” is but if Thomas Edison were to be here, he would understand the today’s utility industry value chain”. In fact, notwithstanding all the innovation noise in energy industry such is renewable energy, energy storage, distributed energy resources (DERs) etc., the core player of the industry remains the Electric Utility.
Whether a retailer or vertically integrated entity, the electric utilities hold much of the space between power consumption and generation. Thomas Edison would understand the landscape as in many ways it resembles the time of when he opened the very first commercial power plant Pearl Street Station. The “War of Currents” that soon followed between Thomas Edison’s Direct Current (DC) and Nikola Tesla’s Alternating Current (AC) also in some way resembles the current status of the utility industry.
The DC system generated and distributed power at the same voltage which meant that generation had to be located near load. AC system on the other hand allowed for alternating voltage so generation and load could be separated by transmission lines. Ironically, today we have a similar but twisted “war” between those that believe that generation can be fully based by the load and those who believe that generation must be centralized.
In today’s “war” there is also debate around costs, reliability and safety. However, what is different in today’s utility industry is that renewable energy generation costs are “closing in” to traditional fuel sources. It is not clear however, how and whether the lower cost renewables will accelerate the transition to a more decentralized power system. In particular, there seems to be a problem of defining the locational value of the DERs.
Nikola Tesla’s AC won the “war” and Thomas Edison’s was eventually forced out of controlling his DC company. J.P. Morgan soon engineered a merger of Edison General Electric and Thomson-Houston into a AC market competing company named General Electric. The “zero sum” game as it was at the time does not necessarily have to be the case for today’s decentralized vs. centralized power system “War of Currents”.
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