The digital nervous system enabling energy’s zero-carbon future
How buying ‘green’ electrons moved from science fiction to reality.
Cheap and reliable power is one of the pillars of modern society, and we consume it on a gargantuan scale. Last year humanity used more than 20,000 TWh of electricity — twice as much as in 1990.
We need it. And the global economy demands it. Yet most of our power still comes from fossil fuels. With the ongoing electrification of everything, the world needs clean electricity that doesn’t contribute to global warming. Bringing more renewable generation onto the grid has never been more urgent.
Until now, cost and complexity have held that process back. But as prices for wind and solar approach parity with traditional sources, new digital platforms are making it easier to access and manage all the turbines, PV panels and storage systems dispersed across the planet.
The Fourth Industrial Revolution has finally arrived in energy.
Clean energy’s new digital nervous system
Getting renewable sources onto the grid hasn't been easy. Clean generation is inherently intermittent — if the wind stops blowing, the sun sets or hides behind a cloud, production stops. Intermittent generation is hard to synchronise with times of peak load on the grid. And renewables projects are often separated by long distances from the loads they’re designed to serve.
While grid penetration of ca. 10 percent has been manageable, moving to targets of 50 and 60 percent will compound the difficulty.
Along with the operational challenges of integration, more straightforward business issues need to be overcome. Rising corporate demand for renewable energy is often frustrated by the limited options provided by utilities. Energy buyers are looking to shortcut the process by purchasing directly from clean energy producers, but finding appropriate and reliable projects is difficult and time-consuming.
Built on innovations in AI, IoT, blockchain and online platforms, the sector’s new digital backbone is beginning to address these challenges with data. Reams of info from smart devices at both ends of the grid are enabling better orchestration of supply and demand, while energy-intensive businesses are using digital to find suitable projects and buy their clean power directly, using Power Purchase Agreements (PPAs).
That’s paving the way for a smarter combination of energy supply sources, real-time demand adjustment, the ability to optimise the electricity output derived from existing assets, and closer relationships between consumers and producers.
The Fourth Industrial Revolution of AI, IoT, and data-driven decision making has arrived in energy. It’s four key components are re-shaping the sector for the better.
1. Smart devices for a smarter grid
One of the most overlooked developments in energy has been the attachment of intelligent sensors to almost every piece of equipment that produces energy. They capture and upload information to a central database, part of the wider internet of things (IoT) that gives operators a real-time view into the performance of individual pieces of equipment, and measure the operational efficiency of entire projects.
Sensors alert managers to equipment in need of maintenance — allowing problems to be fixed before they happen. But at a larger scale, they help grid operators optimise the performance of the entire network. With increased control and granular visibility of output and efficiency, the vast amount of data IoT delivers makes it easier to integrate more distributed and decentralised energy sources. Coupled with advances in energy storage technologies, the intermittence of wind and solar production becomes less of an issue.
While the ability to collect massive amounts of production data has been with us for years, the advent of big data analysis based on artificial intelligence and machine learning, allows raw information to be turned into insights, driving efficiency across the entire grid.
2. AI in action
From energy trading to weather forecasting, Artifical Intelligence (AI) is helping the energy sector operate more efficiently and minimise costs.
Its already being used to monitor power consumption, decide when to store electricity, and improve overall grid stability. AI is also driving advances in smart grid technology, allowing new sources of energy to be integrated into the wider grid, from rooftop PV panels to giant offshore wind farms.
While storage shifts toward becoming a core element of the energy system, digital technology is also enabling the creation of ‘virtual’ power plants’, where groups of electricity users can turn machinery on or off in response to changing demand. That’s giving utilities the intelligence the need to make accurate load reduction forecasts and improve demand response.
3. Blockchain and P2P Energy
Blockchain is still an emerging part the backbone but it holds huge promise for further harnessing generation at the micro end of the grid. The technology behind cryptocurrencies like Bitcoin could enable digital peer-to-peer platforms to emerge, where individual customers buy and sell energy from their neighbours — marking the beginning of an energy sharing economy.
Other potential Blockchain applications include recording emissions’ permits and authenticating renewables at the point of origin. A raft of start-ups are looking at blockchain as a grid management tool that can record energy flows and point out network anomalies.
4. Platforms that simplify
Connecting all the disparate stakeholders in renewable energy has been another challenge. While energy trading platforms and algorithmic trades comprise a larger and larger share of traded volume — nearly 60% of the traded volume on just the CME energy product group according to the Financial Times — other kinds of counterparty exchange are also being simplified by digital.
Commercial and industrial energy buyers are increasingly under mandate to procure electricity from renewable sources. Buying directly from clean energy projects is becoming a preferred way to achieve this but identifying and shortlisting appropriate providers is complex and time consuming. Online portals like Zeigo are helping buyers and producers find one another, and facilitate the development of direct power purchase agreements between them.
The final piece of the green energy puzzle
Digital transformation is bringing data-driven efficiency, insight and predictability to businesses in every sector. In power markets it may prove to be the final piece of the green energy puzzle.
Energy’s digital nervous system is already driving new business models; improving network management by shifting peak demand from one time of day to another, or offering better ways to connect corporate energy buyers directly to renewables projects.
At the cutting edge the technical innovations underlying those models can be breath-taking: measuring energy consumption then managing connections and exchange between household users, steering the flow of energy from (and back to) household batteries, or crowdsourcing investment into small-scale renewable energy production.
There will be challenges in harnessing the rollout and full potential of these developments. But the backbone is already shaping up to be the crucial component of the carbon-free grid of the future, enabling more and more clean energy projects to be integrated and optimised.
That could finally unlock the promise of renewables — enabling producers, consumers and investors to see its full benefit.
Ghost-written piece for my client Zeigo Energy. This post first appeared on https://zeigo.com/.