How an emerging digital backbone is enabling the transition to renewables

More than moving electrons, the energy sector is rapidly shifting to business models based on data, insights, and services.
Published: Fri 16 Aug 2019
A blog entry by Michael Beesley

Contributed by:

Michael Beesley
Digital Marketing Manager

Michael Beesley's Blog

Reliable and affordable energy is one of the pillars of modern society. We generate it from multiple sources and consume it on 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 power is still being generated by fossil fuels. With the ongoing electrification of our everyday lives, the world needs clean and sustainable energy that doesn't contribute to global warming. Unlocking generation from renewable sources has never been more urgent.

Until now, cost and complexity have held renewables back. But as prices approach parity with traditional generation, an emerging digital backbone is making it easier to manage all the wind turbines, solar panels and battery storage systems dispersed across Europe.

Reams of data 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).

The Fourth Industrial Revolution of AI, IoT, and data-driven decision making has arrived in energy. Its four key components are re-shaping the sector for the better.

The emerging digital backbone

Renewables come with three built-in issues that have slowed down adoption. They are intermittent - when the wind stops blowing, the sun sets, or clouds roll in, production stops. Intermittent generation is hard to synchronise with peak load times on the grid. And renewables projects are often separated by long distances from the populations they're designed to serve.

While grid penetration of ca. 10% has been manageable, moving to targets of 50 and 60% will compound the difficulty.

Along with those operational challenges, more straightforward business issues need to be overcome. Rising corporate demand for renewable energy has often been 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 jump these hurdles with data. That's paving the way for a smarter combination of energy supply sources and closer relationships between consumers and producers.

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 power.

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 allows all that raw information to be mined for insights, driving better performance across the entire grid.

2. AI in action

From power trading to weather forecasting, Artificial Intelligence (AI) is already well-embedded in the energy sector. Used to monitor power consumption, decide when to store electricity, and improve overall grid stability, AI is also driving advances in smart grid technology. That's allowing new sources of clean energy to be integrated into the wider grid, from rooftop PV panels to giant offshore wind farms.

As storage moves toward becoming a core element of the energy system, complex algorithms are enabling the creation of 'virtual' power plants', where groups of users can turn machinery on or off in response to changing demand. That's giving utilities the intelligence the need to make more accurate load forecasts and improve demand response.

3. Blockchain and P2P

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.

Unlocking the clean energy future

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 backbone is already driving new business models; for example, improving networks 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 crowd sourcing 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.