By Dan Arvizu, Director, National Renewable Energy Laboratory

To get to a cleaner, more secure, more energy-efficient future, all of us – consumers, regulators, investors, and utilities — must adjust our notions of how energy is to be generated, shared and transmitted.

Technology alone can’t get us there. The United States will achieve the goal of slashing —carbon emissions from the nation’s power plants roughly 30 percent below 2005 levels if investors can make money fueling a new energy paradigm, and if regulators can overcome thinking of only a one-way flow of power from central stations.

The shift to two-way transmission of energy – households as both users and producers of energy, for example – will be a challenge, but one rich with opportunities. As more solar and wind power are loaded onto the grid, as electric cars both download and upload electricity in garages at night, as smart appliances react to the minute-by-minute mix of energy and cost, entirely new ways of providing services and making money will emerge. What is the value of distributed energy — today, tonight, during a thunderstorm or a blackout?

It’s vital that stakeholders race to the future in tandem, so investors see the opportunities that emerging technology can provide and consumers feel empowered by the new energy paradigm.

The future, of course, is now, and those most ready for the change will prosper. The old relationship between utilities and their customers already is changing and will continue to evolve. Customers will become more autonomous, with their own ways of producing energy or downloading it from neighborhood stations. In the new energy model, consumers whose roofs are too small or shady for solar panels can buy into a solar garden built nearby, receiving credit on their utility bills for the power the panels produce. But they still will need a relationship with the central grid.

I don’t suggest that we know the answers, or even all the questions. But we need to be thinking hard about it now. Distributed generation will play an ever increasing role, as the old one-way flow from central station power plant to businesses, industry, and households diminishes.

The new system will also be data-intensive, extracting information to control services and extract the value that distributed generation offers to the grid. Communication between devices – and between devices and humans – will be paramount.

Central-station power isn’t going away. Even as more households upload power onto the grid, they’ll need to bring power from that central grid back into their homes when the sun isn’t shining, when the wind isn’t blowing, when distributed generation is needed elsewhere. Industrial buildings may always need more power flowing in than they’ll ever produce. Yet, everything will be more flexible and more integrated.

Those of us in the energy world need to think in this direction now. Americans want clean, reliable and affordable energy – that’s a huge plus at the starting gate. How do we get there? What does such a system look like?

The devices –rooftop solar, wind turbines, concentrating solar power, hydrogen, heat pumps, diesel generators, electric vehicles – will need to communicate with the local controls, such as thermostats, smart home monitoring systems and plug-in boxes with intelligent dispatch capacity. And, the devices and monitors will have to communicate with the utilities and systems operators upstream.

Energy forecasting will emerge as an essential element. It starts with accurate data on voltage, line frequency, power flows, kilowatt-hour rates, temperature, humidity, wind speed, cloud cover, and a host of other variables. The control desk at the utility knows from the weather forecast that, say, a cold front is moving through that will bring higher wind speeds. That means more power from wind turbines at no extra cost for the next few hours. The electric markets drop their marginal prices for a few hours, and that information is sent to the consumers – perhaps to a smart phone, perhaps to a smart device mounted on a wall.

Meanwhile, the consumer finishes a cup of coffee, puts the mug in the dishwasher, notices it is full, and pushes “START.” Except, in the new energy world, with all parts of the system integrated and talking to each other, the home energy management system knows this isn’t the best time to start the dishwasher. The cold front that is going to bring cheaper electricity is still hours away. The device sets the dishwasher to start at 4 pm, still plenty of time to wash, rinse and dry before dinner.. The utility delivers the same service – clean dishes – but at half the cost.

When a system operator notices that seven megawatts of ramp-up are needed in the next seven hours, a signal can go out to all the customers with rooftop solar. Who is willing to donate some solar power to the grid, perhaps forsaking air conditioning for a couple of hours, but being rewarded with a rebate at the end of the month?

When those kinds of rewards start flowing, it’s easy to make a case for uploading and storing wind and solar energy and the two-way energy grid. The opportunities to save energy and money multiply, and when you do that a billion times you’re making a huge dent in our carbon footprint.

At the Energy Department’s National Renewable Energy Laboratory, we are finding the answers to make these scenarios a reality. We like to say that NREL’s Energy Systems Integration Facility is where utilities and vendors go to test-drive the future of energy. This new facility is the first place where vendors, utilities and equipment manufacturers can observe how their new products operate at megawatt scale – enough power to serve 1,000 homes. And it’s where experiments are being run to determine how well devices work and communicate with each other at megawatt scale. Inverters, microgrids and other devices will ease the flow of wind and solar, store energy in batteries for later use, juice-up electric vehicles, and upload electricity from consumers.

As a smart energy system mushrooms in intelligence, as it integrates sources of power with devices that signal the best time to use that power, confidence and investments will flow when it is demonstrated that, say, 200-kilowatt microgrids incorporating large amounts of renewables in the mix can operate smoothly 24 hours a day, seven days a week.

The fast track toward a nation and world that uses 80 percent less carbon begins with a fundamental shift for utilities: a shift from commodities to services. Utilities cannot for much longer make money merely by selling kilowatt hours, not when there’s a domestic flattening of demand, thanks largely to greater energy efficiency. Instead, we may see utilities linking with manufacturers of monitoring devices, or solar leasers linking with appliance manufacturers in a race toward providing consumers with a wide range of services to make their lives more comfortable and easier.

The framework may be dramatically different, and the key will be integration, the ability for all parts of the system to communicate.

Converting to a slim-carbon world is necessary and inevitable. The challenge is to keep focused on that goal even as short-term decisions need to be made, decisions about how to use transitional fuels such as shale and natural gas on the way to a renewable future.

This conversion will be a challenge, and could bring with it the discomfort of change. I prefer to see it as an opportunity for new services, new businesses and new jobs on the way toward creating a safer, cleaner, and more sustainable world.

Dr. Dan Arvizu has been the Director and Chief Executive of the U.S. Department of Energy’s (DOE) National Renewable Energy Laboratory (NREL) since January 15, 2005.  NREL, in Golden, Colo., is the DOE’s primary laboratory for energy efficiency and renewable energy research and development.  NREL is operated for DOE by the Alliance for Sustainable Energy, LLC (Alliance). Dr. Arvizu is President of the Alliance.