The Programmable Grid

During the Fukushima nuclear disaster of 2011, Japan was confronted with a severe energy crisis. Neighborhoods went dark and hospitals strained to keep lifesaving machines humming. They found their solution at an unlikely source. A few thousand Nissan Leafs, parked in driveways, were wired back into homes to turn these mobile machines into miniature power stations. The car, long considered the quintessential consumer of energy, had suddenly become a producer in an unlikely reversal of roles. 

This change in the energy landscape is happening against a backdrop of dramatic change across numerous industries. In our book Platform Revolution and accompanying HBR article "Pipelines, Platforms and the New Rules of Strategy,"¹ we describe how multiple industries have moved away from traditional pipeline businesses that create value by controlling a linear series of activities - the classic value-chain model. In contrast, many industries now have major platforms that match users and facilitate the exchange of goods, services, or social currency among those users to create value for all participants. Well-known examples include Salesforce, Apple iOS, Google Android, Meta, and many more. Critically, platforms such as Uber and Airbnb can deliver value for participants without having to control physical assets.

Returning to our central story, we observe that other energy assets have been reimagined in equally surprising ways. In parts of Africa and India, solar panels are being paired with modular cold storage units. The panels generate electricity, but their true value lies in how that power is orchestrated into the food system to preserve perishable produce, extend shelf life, and stabilize supply chains. Meanwhile, in Scandinavia, electric ferries demonstrate how transport can double as energy storage. These vessels charge at off-peak times, then discharge back into the grid while docked at port. A ferry might move people across a fjord, but it also functions as a mobile battery.

These stories feel counterintuitive at first. A car as a power plant? A ferry as a grid stabilizer? Yet they point to the same underlying shift. Energy assets, once locked into a single role, are being recombined into functions their designers never anticipated. In the largest industry change since electricity was widely adopted a century ago and oil replaced coal in the mid-1900s, energy is beginning to behave less like rigid infrastructure and more like a system of blocks that can be reassembled across roles, timescales, and even sectors.

The shift these examples point to is not simply about new technologies joining the grid but about the underlying structure of the energy system itself. Electricity, traditionally, resembled a pipeline: capital-intensive central plants generated power, transmission lines carried it in one direction, and utilities delivered it to passive consumers. Control rested with those who owned and operated the largest assets, and advantage was defined by scale and stability. What is emerging now looks less like a pipeline and more like a modular set of building blocks, in which assets can be deployed, withdrawn, or recombined as needed. One of the key features of this new paradigm is that many small assets, with the right information and governance, can coordinate to behave like large assets.

This change is important because highly variable sources of supply, such as wind and solar, are becoming critical parts of the energy mix. Adapting to increased supply variability requires a far more responsive demand and supply system to coordinate complex interactions across time and space. In the past, variable demand required controllable supply. Now, randomness and controllability are characteristics of both supply and demand. This change alters where value is created and who captures it. In a pipeline model, ownership of generation assets and transmission infrastructure provided predictable, even government-mandated, returns. In a modular system, the ability to orchestrate flows and reassign roles in response to market needs becomes more important than physical ownership alone. Cars can behave like power plants, wind farms can double as inputs to hydrogen production, and storage can be embedded in everything from dams to buildings to data centers. Each of these transformations reduces the dominance of traditional utilities and increases the importance of coordination layers that determine how and when assets are used.

Energy assets are increasingly modular and programmable. Once-rigid assets can now be controlled through digital signals, dispatched on-demand, or repurposed into different market functions. They can switch roles, change functions, and be redeployed to transform the economics of entire industries dependent on them as input. Consider the example of cold storage units above. For agriculture in India or Africa, where post-harvest losses can exceed 30 percent, modular cold storage powered by renewables increases farmer incomes, reduces waste, and integrates perishable goods into broader markets. For pharmaceuticals, programmable cold assets can be dynamically redeployed to vaccination drives or emergency hotspots. Instead of building vast, sunk-cost facilities, companies orchestrate a portfolio of mobile, multi-purpose assets that can be reassembled as demand changes.

Several forces are converging to drive this shift. The first is decarbonization. As governments² and multi-national firms commit to climate targets, the energy mix diversifies away from large fossil-fuel plants toward distributed energy resources. Solar panels, wind turbines, and storage systems are inherently more modular, composed of smaller units that can be added incrementally rather than built as monolithic plants.

Alongside decarbonization, advances in sensors and control systems make it possible to monitor and dispatch assets with a level of precision that was previously inconceivable. A car battery can now be aggregated into a fleet service, while demand can be managed in real time through automated pricing. Without such digital controls, modularity would remain theoretical. 

Electrification further drives this shift. Every EV, heat pump, or industrial load moves from being a demand point to becoming a potential source of flexibility when properly integrated. The very act of electrifying demand creates new Lego blocks that can be repurposed beyond their primary use.

Finally, decentralization changes the boundaries of the ecosystem. Rooftop solar, community storage, and microgrids allow households and firms to act as both producers and consumers.³ These players blur the once-clear line between supply and demand. They also introduce variability, which increases the need for coordination and creates opportunities for those who can orchestrate these rapidly expanding diverse assets. 

Value shifts from production to recombination and coordination. We see this take different shapes across industries. In the offshore wind farms in the North Sea, turbines are connected to electrolyzers, to use surplus energy to produce hydrogen that can then be converted into ammonia for fertilizer. An electricity generator has become a link in the agricultural supply chain, crossing industry boundaries in ways unimaginable a generation ago.

Hydropower reservoirs now operate as giant batteries for intermittent renewables. Norway, for instance, imports cheap wind and solar power from continental Europe, conserves water in its reservoirs, and exports hydroelectricity when demand spikes. Gas peaker plants, once derided as inefficient and expensive, are being paired with batteries to handle different timescales of demand. The battery addresses short-term fluctuations, while the plant covers longer imbalances. 

What matters is less the physical form of an asset than the system architecture that enables its redeployment. Recombination is what makes energy programmable. A single unit of capacity can be deployed across different uses at different times. An EV battery can move a vehicle during the day, support the grid at night, and provide emergency power when infrastructure fails. A hydro reservoir can generate electricity during peak hours, act as storage when renewables are abundant, and serve as insurance against drought. Each function is a different assembly of the same underlying block. With recombination, value migrates to those who design and govern the rules by which assets are assembled. 

Recombination does not happen in an unstructured way. It follows a set of archetypes that help explain how assets are being redeployed. One way to see this is along two axes: time and domain. On one axis, recombinations can be short-cycle, shifting roles in hours or days, or long-cycle, reshaping the function of assets over decades. On the other axis, recombinations can remain within the energy system or leap into other sectors. Together, these axes create four distinct patterns of recombination.
 

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First, some assets shift functions within the energy system itself. Electric vehicles are the clearest example, toggling between mobility and grid storage. This form of intra-system role switching shows how obsolete assets can be reassigned to new roles inside the grid.

A second mode of recombination may involve no change in the asset's role, but the timing of its deployment creates value. Hydropower reservoirs in Norway, acting as Europe's battery, are an example of such intra-system temporal arbitrage. Bitcoin mining rigs in Texas, which absorb excess power when the wind is strong and vanish from the system the moment demand rises, are another example that frequently dominate the news. Both examples monetize volatility by shifting energy value across time.

Third, assets may be recombined across sectoral boundaries, creating new value chains. Offshore wind farms in the North Sea supply electrolyzers that produce hydrogen, which then feeds fertilizer production. This is a case of cross-system integration. Solar panels paired with modular cold storage units provide not only electricity but also resilience in agricultural supply chains. In each case, electricity is routed into once separate systems, blurring the distinction between energy and other industries.

Finally, lifecycle repurposing is a longer-cycle phenomenon in which stranded or aging assets are reassigned into entirely new structural roles. Oil rigs in the North Sea, once platforms for fossil extraction, are being converted into anchor points for offshore wind or hydrogen production. Research and trials are underway to repurpose gas pipelines for hydrogen transport. These examples extend asset life by reconfiguring infrastructure rather than abandoning it.

Together, these four archetypes provide a map of how modular energy assets are recombined. They are distinct enough to cover the main pathways yet interconnected in ways that reinforce the same structural conclusion: energy assets are no longer single-purpose. They are becoming Lego blocks, and the contest now is over who orchestrates the most valuable assemblies.

In a pipeline system, scale and capital intensity acted as barriers to entry. In a modular system, value moves away from fixed production and toward the orchestration of flows. The scarce resource is no longer the kilowatt-hour itself but the ability to decide when, where, and how that kilowatt-hour is deployed.

This value migration restructures incentives. Owners of heavy assets once assumed they would earn steady returns simply by being energy providers. Now, without the capacity to reconfigure, they risk becoming commoditized. A wind farm producing electrons indistinguishable from its neighbor has little bargaining power; a platform that routes surplus wind into hydrogen, grid balancing, or cross-border trade has much more. A utility that clings to centralized assets may find its margins collapse, while a charging network that coordinates EV fleets or household batteries can capture value without owning the underlying equipment. 

The utility business model needs to change in order to participate in this new energy industry structure. Currently, regulated utilities earn the majority of their revenue by earning a rate of return on deployed capital. Shifting incentives toward rewarding waste reduction, cost savings, and new efficiencies would motivate utilities to adopt the very technologies that are reshaping the energy landscape. 

Former Department of Energy Secretary Jennifer Granholm recently highlighted that "universities can accelerate grid modernization by crafting model legislation that encourages utilities to adopt grid-enhancing technologies and optimize existing grid assets as virtual power plants. Currently, the incentive structure for utilities prioritizes building new infrastructure over improving and optimizing the assets already in place."

The entities that define the interfaces through which assets plug into the grid and determine how flexibility is priced write the rules of the game. Just as container standards redefined global trade and internet protocols reshaped communication, the governance of modular energy will determine who wins and who is sidelined.

The future of energy systems will be defined by this shift from production to coordination. Energy will still be generated, transmitted, and consumed, but the economic rents will flow to those who understand, design, and manage the architecture that allows them to assemble Lego blocks into structures that others cannot easily replicate. The necessary capabilities for this future include data collection and analysis, incentive and market design, and the orchestration of loosely affiliated agents who can play the role of consumer at one moment and producer at another.

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Sangeet Paul Choudary is a Non-resident Scholar with the Irving Institute for Energy and Society. He is the co-author of Platform Revolution and the author of Reshuffle.

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Geoff Parker is the Faculty Director of the Irving Institute for Energy and Society and the Charles E. Hutchinson '68A Professor of Engineering Innovation at the Thayer School of Engineering. He is the co-author of Platform Revolution. 

Footnotes

1. https://hbr.org/2016/04/pipelines-platforms-and-the-new-rules-of-strategy 
2. Despite U.S. federal policy fluctuation, state and international commitments continue to provide support for multi-national firms to establish and meet decarbonization goals. 
3. Sometimes also referred to as prosumers