The Pull of Potential Economic Benefits
By Craig Cavanaugh, OMNETRIC Group
Community energy initiatives-coalitions of consumer groups, businesses, local governments or simply groups of neighbors dedicated to generating and distributing their own energy-have increased rapidly in recent years and will likely continue to do so. At least 5,000 community groups in the UK explored the opportunity between 2009 and 2015, while the Rocky Mountain Institute (RMI) estimated that the community-scale solar market for municipal and cooperative utilities could exceed 10 gigawatts through 2020.
Current media and industry noise would suggest that this rise in community energy groups is driven by sustainability aspirations. OMNETRIC Group’s recent research study highlighted, however, that while sustainability is important, and often the initial impetus to considering a community energy scheme, the primary goal of community energy initiatives is economic. The people involved in these initiatives cite the potential for more affordable energy, as well as the opportunity to keep the value generated by their local energy system inside the community.
What’s Fueling Community Energy?
Energy technologies, such as solar PV and storage have matured and proliferated in less than half a decade, bringing down the related costs. We are seeing growing recognition from U.S. and European citizens that community energy schemes are economically viable. OMNETRIC Group’s analysis shows that the cost savings from a community energy scheme already could be enough to prompt consumers to make the switch. OMNETRIC Group estimates that a single household could make a one-off saving of nearly $4,000 from a community energy scheme compared to going it alone, while also effectively hedging against rises in energy prices. While the sum is not “life-changing” for most consumers, it makes the switch a choice of reason, rather than principle.
The potential for economic benefit-cost savings realized and new value generated-is targeted by a group of partners working on a smart grid project in Rotterdam, the Netherlands.
The city of Rotterdam, Dutch system operator Stedin, independent aggregator Lyv Smart Living and Siemens are working with OMNETRIC Group to implement a distributed energy management system across the city starting in the Merwe-Vierhavens harbor area. The system will enable more flexible management of energy demands and generation across the district, reducing congestion on the electricity grid and providing savings in energy and distribution cost.
The smart grid will also stimulate investment in more sustainable electricity generation and innovation related to electricity storage, as well as lower investments related to future grid build-out. The city’s aldermen believe that in addition to the emission reductions it brings, there is an opportunity to build economic and sustainable value for the district and to expand the model more broadly across the city and surrounding areas.
Where Do Utilities Fit In?
The economic ambitions of many community energy initiatives cannot be achieved without energy expertise and dedicated resource. This can drive the creation of new roles. For example, Lyv Smart Living, the aggregator in the Rotterdam project, will manage the solution that will enable the creation of new energy-related services for the city’s residents and local businesses, as well as for the regulated network operator, Stedin, with which they are closely collaborating. Stedin brings deep technical competence around how to safely and reliably manage the smart grid.
Some communities are attracting experienced professionals from the energy sector to make the new energy economy a reality. While consumers’ enthusiasm for community energy is growing, however, a lack of in-depth technology and business knowledge has held some schemes back.
One source of such support could be the traditional utility providers. There could be benefits to “getting in front” of this new model.
There are, broadly speaking, three possible models utilities can employ to help them adapt to the rise of community energy:
1.Collaborative Community Partner-participating as a technical observer and sounding board
2.Community Service Provider-consulting to communities and providing eco-system solutions that meet their unique energy needs
3.Community Energy Platform Provider- acting as a market maker, utilities can develop and package a suite of solutions for communities designed to enable communities’ active participation in energy distribution
Some utilities are already actively pursuing the first two roles. The third offers an additional step and a way for utilities not only to play a role in growing the emerging community energy market, but also to shape it.
A new energy economy is emerging, driven by the economic benefits on offer. This focus on energy affordability, combined with technological advancements and growing expertise, means that energy supply is no longer the reserve of the traditional players.
By getting closer and sharing the knowledge needed for community energy initiatives to grow, utilities will be able to benefit from the opportunities that unfold.
Craig Cavanaugh is regional CEO of OMNETRIC Group for the Americas. He leads a growing team of experts dedicated to developing and delivering integrated smart grid solutions across North America and Latin America. Cavanaugh is focused on growing the company’s market share, responding to utility companies’ needs to use data intelligence to improve their grid and business performance. Previously, he was vice president, leading the North America Sales team. He started with OMNETRIC Group in 2014, moving from Siemens, one of the company’s shareholders. During his time at Siemens, Cavanaugh was responsible for activities such as strategic planning and ecosystem design. He was instrumental in Siemens’ acquisition of eMeter.
Craig is based in Raleigh, North Carolina, which is one of four OMNETRIC Group locations in the U.S.