Engerati speaks to chief technology officer and founder Matthew Williams about the benefits of digitalisation and the company’s plans for the future.
E: How will digitalisation of the energy sector change the role of the DSO and TSO?
MW: As the system becomes more decentralised, the lines drawn between different levels of the industry become increasingly blurred. Distribution Network Operators (DNOs) are beginning to take on more system operator roles, and their ultimate role may be providers of transactive platforms for distributed energy services.
The fastest-moving areas of transition and innovation are increasingly at the fringes of the distribution networks – smaller renewable plants and demand-side resources, roof-top solar PV, electric vehicle charging and vehicle-to-grid discharging, smart metering, battery storage etc. – in the very areas where the centralized ESO has the least visibility of the system. It is generally accepted that there should be a move towards a more “whole system” style working and cooperation between the ESO and distribution operators.
Digitalisation will provide visibility for distribution and transmission network operators, and increasingly the focus will be on operating the system and the data, rather than just the physical asset itself.
E: What obstacles lie ahead that might slow down full digitalisation, or is this even possible?
MW: Security is going to be a major topic in the digitalisation of energy for some time. There is no doubt that digitalisation will allow better visibility and finer grained control of the electricity grid. However, three issues need to be addressed in the process.
Firstly, the cost of digitising the grid: communicating the information, processing it and making use of it for operations, and finally storing it. The second is ownership of the data, with regards to both the privacy of parties using the grid, as well as the value of the data itself – there are a myriad of business cases where the value of power-related data becomes more valuable than the power itself. And thirdly, there are concerns around cyber security: electricity is the very underpinning of our entire society and economy. Exposing the electricity grid further to the digital space increases the attack surface area, where cyber-attacks can go beyond stealing your passwords to shutting down an entire city.
E: Will 100% renewables be possible in the UK and other countries?
MW: From a purely technical perspective, reaching 100% renewables is possible. We know we can generate enough power from renewable sources – the main barrier to achieving decarbonisation targets and ultimately 100% renewables is cost.
Broadly speaking, there are two challenges with variable sources such as wind and solar. The first is intermittence: is the sun shining, is the wind blowing. Various ways to store energy to combat the problem of intermittence are available. The challenge at present is finding a way to store this energy cost effectively. The economics currently has lithium ion batteries as the most cost-effective way to do this. However, some simple back-of-the-envelope maths shows that to go to 100% renewables with enough storage to ensure power irrespective of weather events would make electricity so expensive, it would crash the economy.
The second challenge is volatility: the asynchronous nature and rapid rate of change in solar and wind generation make it harder to maintain the stability of the system. Traditionally, the inertia of the physical mass of spinning turbines in a power station provided stability. As wind and solar do not produce this, stability must be delivered from elsewhere. Currently, this is done through balancing services; specialised energy markets where electricity generators, storage, or load aggregators are paid to provide this service. Balancing services alone cost the UK over £1 billion last year, and this is only forecast to increase as the penetration of renewables rises.
E: What regulatory changes are required to reap the full benefits of digitalisation?
MW: The regulatory framework governing the electricity industry is still largely founded on the commercial and technical codes developed at the time of privatisation of the industry in the 1990s.
The result is a power system and associated regulatory framework which is increasingly unfit for purpose. They were devised for centralised power stations, operated by a small number of large participants, with the experience and resource to navigate the complex regulatory framework of price controls and technical, operational and commercial codes.
Strict governmental requirements incentivise network operators to regard power reliability as their highest concern. As such, network companies face a regulatory disincentive to experiment with or adopt technologies, such as digitalisation despite their potential benefit to consumers. It may be possible that increasing market-based measures, such as lessening network regulation requirements - in certain situations and under certain conditions – can stimulate the testing of digitalisation and show its benefits on existing electricity networks.
E: How does the challenge differ in the different countries Faraday is active in?
MW: Physics is universal – on one hand, all electricity systems have to follow the same set of rules. On the other hand, despite the same building blocks of poles, wires and transformers, each grid is very specific in terms of topology, capacity, generation, and loads. This means that maintaining the fine balance of system stability comes with various challenges in each case.
Different countries also have different electricity market structures, technology standards, and policies, within all which the Faraday Grid technology is designed to fit. Rather than focusing on an individual technology or product, Faraday looks at the entire electricity system to determine the optimum grid solution for the future. We work closely with utilities and policy makers to ensure our future energy systems will be the most productive and resilient possible, and the optimum pathway to achieving this both in the physics and the economics of the system.
Our focus is currently on continuing engagement with all key stakeholders to increase awareness and understanding. Being a platform and the first fundamental innovation in the architecture of how electricity grids work in over a hundred years means that we want to ensure we hasten slowly, ensuring the reliability of the grid at all times during the energy transition is of the utmost importance to us.