The energy system of the future won’t look like today’s. The scale of change over the next 10 to 20 years will be considerable and, while we don’t know exactly what this change will look like, we do know some of the areas that will be important.
One thing seems certain – consumers will play a key role in driving the change as their energy needs for warmth, light, power and, increasingly, mobility change. The energy businesses of the future will provide those services cleanly, cheaply and efficiently by taking advantage of new energy technologies and digital enablers.
The old way of simply sending electrons and gas molecules down the wires and pipes will be replaced by a better, much more sophisticated way of meeting people’s needs.
Energy as a Service
Energy consumers don’t value a kWh (unit) of electricity or a BTU of gas. They value the warmth that it provides, or the light that it enables. That’s why energy-as-a-service models are starting to appear where consumers might buy warmth, lighting and power rather than units of electricity and gas. The service would be provided by a business that competes for customers by delivering that warmth, lighting and power most efficiently – perhaps by helping improve home insulation, supplying the best equipment to deliver the required service, sourcing the best energy supplies and optimising any local generation or storage.
With energy as a service, consumers will have more choice in how energy is produced, and the environmental impact of its production, which could lead to more of a focus on locally produced energy. Thanks to the continuing reduction in costs of renewable energy technologies like wind and solar power, we could see the old economies of scale being turned upside down so that generating and using energy locally will represent better value than generating power in relatively few, large, centralised, locations.
Fossil fuels and related technologies have enabled all the major developments in the industrial era, from advances in iron production that made the Industrial Revolution possible, to the advent of the internal combustion engine and its influence on – and benefit from – mass production. Now experts are forecasting that green energy, harnessed with the power of ICT, will drive the next wave of economic development.
Decentralised energy and digital technologies
One of the major benefits of decentralised energy is the move away from large power stations to localised production. That means avoiding the wasted heat in power stations and instead using it locally, and avoiding having to produce the electricity lost in transmission because we have to send it so far. At present, we waste about half of our energy in the UK.
With the rise of decentralised energy, local producer-consumers – or ‘prosumers’ – will need to flexibly manage the energy in the system, and technologies including energy storage, ways of adjusting usage better (demand-side response) and digital technologies using big data, analytics and cloud computing could help them do that.
For example, there are always surges in energy demand in Britain at half time during an important sporting event like the football Cup Final or the Wimbledon finals, as everyone gets up and puts the kettle on. To meet this demand, other non-essential household appliances such as fridges or freezers might be run on minimum for just 10 minutes to even out the flow of energy without any impact on the food inside them.
The energy market will become largely digital, so that it can integrate all the many parts of the energy world and enable them to work together. The complexity of matching energy demand with energy supply locally and nationally, and integrating storage and demand flexibility, is of such a scale that automation, machine learning and real-time price signals will be needed.
Through the Internet of Things and connected homes concepts though, electronic devices such as washing machines, dishwashers and freezers can all be connected up to use energy at the best price, or stop using energy when there is too much demand.
It’s easier than ever for us to generate green energy. The cost of renewable generation equipment is coming down, and there’s more capacity on the grid – often to such levels that during sunny days or when there’s a lot of wind, there can actually be too much electricity on the grid. The swings that this creates in wholesale prices can mean that prices can go negative, so that there is effectively free energy available. While this can be a problem for managing the grid, the good news is that if consumers can take advantage of these increasing free energy periods by consuming when prices are negative, they can of course save significant sums of money.
Traditionally, consumers have purchased their energy from one of the big 6 energy suppliers yet, with the rise of microgeneration, people will generate their own power and can sell it back to the grid – so everyone can also be their own energy supplier.
‘Vehicle to grid’ or V2G could also be a significant solution to the issue of balancing national energy supplies as well as saving money for consumers. Electric car owners could charge them overnight and allow the National Grid to use the stored electricity at times of higher demand the next day.
New technology will make this possible by allowing EV owners to communicate with energy companies via an add-on to their home charging point to ensure they can use their car when they need to, while at times when they don’t need the vehicle, its stored energy will contribute a small part of its storage to an intelligent charging system. There is already a scheme in operation for owners of Nissan Leaf vehicles which will earn them cheaper electricity if they sign up.
Getting major energy users on board
The move to new, greener production and consumption of energy will only be successful if major consumers are also on board. It’s estimated that the cold chain in the UK currently consumes around 14% of all electricity generated, with food retailers operating massive networks of machines distributed throughout the UK. Tesco Stores Limited is currently participating in a project, funded by Innovate UK, to develop dynamic energy control systems for food retailing refrigeration that could significantly impact on the way the cold chain consumes electricity.
Any changes to refrigerator operational performance must ensure that food safety is not compromised. This project seeks to demonstrate that systems can be developed and delivered which will enable food retailing refrigeration systems to be linked to demand side response, or DSR, electricity tariffs. Large-scale projects such as this are needed to establish industry interest and confidence in DSR mechanisms, which help the National Grid control demand as well as supply, helping balance the ever-increasing input of renewable generation system.
Consumers at the heart
The biggest change of all, though, is that consumers will go from being on the edge of the energy system to being at its heart. They will have more control over where their energy comes from, how and when they want to consume it, and can take an active role in making sure it doesn’t cost the earth.
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