The electricity industry’s business model has remained largely unaltered since its inception, with the greater part of our energy ecosystem supported by a centralized generation with large power grids.
The reliability, operation and security of the grids was based on well-understood laws of physics and technologies and significant asset redundancy. Historically, this has worked and helped support electrification around the world. However, with the rapid emergence of renewable energy resources and new technology from energy storage to IoT-enabled flexibilities, the current business model and infrastructure are undergoing a paradigm shift. Generation and flexibility will be distributed across all grid layers from high-voltage transmission connected resources to low-voltage customers. Advances in energy, flexibility and system services market design are now giving way to more players and enabling the participation of a wider range of technologies.
The utility’s role has traditionally been to generate electricity and sell it to the customer–a one-flow transaction. Nowadays prosumers, aggregators and communities are looking for a more active role in their energy management. A whole new ecosystem is emerging at the edge of the distribution grid. Now, with the availability of affordable technology such as solar panels, the decrease of battery storage costs as well as IoT facilitating the development of flexible demand, consumers can make more informed decisions about their energy usage, and in some cases, chose when to consume and even produce it. In fact, according to an Accenture study, it is estimated that more than 15 percent of people are expected to source their own power through solar panels on rooftops by 2036. The town of Carros in the South of France, for example, is creating a new community of prosumers by installing solar panels on residential and commercial rooftops, implementing demand response technologies and installing battery storage across the local grid as part of the Nice Grid project. Each house in the community operates like its own little power plant, as residents produce and sell their own energy, and manage their demand to support the grid when there are constraints.
These exchanges of energy can extend far beyond single neighborhoods. Existing power systems, such as the European system, enable exchanges of electricity, flexibility and reserves from country to country. With new HVDC interconnections between Europe and North Africa being planned, North Africa could trade its abundant solar energy resources with the North Sea’s extensive offshore wind parks. A hybrid system like this has the power to combine local decentralized systems with large transmission grids connecting countries and continents across the world.
While the shift towards a decentralized energy future is giving consumers a far more active role in their energy usage, it is also creating a strain on the distribution grid system that was not initially designed to handle a two-way flow of power. With the emergence of prosumers and the rise of renewable energy set to disrupt the traditional power delivery system, utilities and policy makers will be bound to make critical investments towards modernizing the grid as well as enhance organization and market design structures to avoid security of supply risks.
While innovation is accelerating quickly, the pace at which the technology is being adopted is slow, namely due to financing and inadequate remuneration schemes. It is essential that these evolve and focus on the full energy value chain so that the grid can keep up with a twenty-first century decentralized energy future.
Whether it is updating a mature grid system in the United States or Europe or developing a brand-new grid system in developing continents like Africa, digital technology will be key to facilitating the shift to a modern grid system that is secure, resilient and reliable.
DIGITAL INNOVATION OF THE GRID
Digital technology is core to the orchestration of the generation and flexibility sources, transmission, and distribution grid. It facilitates coordination across grid layers from transmission to distribution and devices at the grid edge.
The industry needs a system that can make centralized resources like power plants as well as bulk storage and decentralized resources like rooftop PVs and battery storage truly complementary. This can ultimately only be done with the right grid software tools, such as distributed energy resource management systems (DERMS). Two big features of DERMS are improving forecasting and observability, optimize the grid and access flexibility from distributed energy resources. For example, DERMS give distributors forecasting tools that allow them to estimate the amount of solar energy coming from rooftop PVs and solar farms. Combined with the right measurements, distributors can not only make more informed predictions, but also have greater awareness of the grid and edge devices that support grid operation. The increase of grid and edge device controls will facilitate access to different flexibilities closer to real time. With these features, distributors now have the ability to strategically manage grid constraints, whether that’s by reconfiguring the grid, adjusting grid equipment settings, resorting to flexibility from demand, charging or discharging batteries, or by dispatching renewable energy.
Artificial intelligence (AI) and machine learning (ML) along with data ingestion and management also create new opportunities for grid modernization. While still in the early stages of implementation, deployment of these new technologies allows operators to collect and store larger and larger amounts of data. The use of AI, ML, and data analytics could revolutionize both the demand and supply side of the entire energy ecosystem as well as grid operation and asset management. AI and ML can be used to help machines learn on their own from spotting patterns and anomalies in large data sets as well as support advanced grid automation applications, device management and network self-healing schemes. Data analytics can support asset management, storm recovery, system restoration and increase overall grid resiliency.
Digital technologies will help utilities use the full potential of data as the basis for end-to-end grid operation tools that plan, analyze, and optimize the system, ensuring that their networks are secure, reliable, and resilient enough to deliver the energy and quality of supply that consumers need every day.
As more renewables come online, the demand and generation balance will become increasingly dependent on weather and grid operators will need to manage variability during periods when generation exceeds demand and during periods of generation scarcity. When this happens on a local level, some of this variability can be managed with exchanges of generation and flexibility. One way this can be facilitated is through blockchain. Blockchain technology has been quickly evolving and redesigning the way we trade energy. With PVs, battery storage and EVs exchanging generation or flexibility, blockchain can help facilitate new peer-to-peer secure transactions and support the creation of new business models. As residents produce their own energy, they can either use it, store it or even sell it to their neighbors.
Digitizing residential, commercial and industrial electricity gives consumers the opportunity to manage their energy use and even manage the local generation and provide flexibility services to the system. This is changing the traditional relationship between consumers and utilities.
EVOLVING ROLE OF UTILITIES
As consumer demand for energy rises, the electrification of heat and transport combined with large-scale integration of variable renewables is giving utilities the necessity and opportunity to facilitate effective demand management with digital technologies. This will ensure that demand contributes to system operation and that the grid continues to function in a resilient manner in real-time. Recently, the European grid experienced a frequency deviation where 1.5 gigawatts of industry loads in France responded to reduce consumption, preventing an incident. These loads were equivalent to a large nuclear plant and emphasize the necessity to have access to new resources that are flexible and available in real-time to stabilize a grid system.
Distribution system operators will be vital in helping to push the energy transition, but this can only be done by embracing digital technologies. The growth of prosumers and clean distributed generation is creating a significant shift in how energy will be generated, distributed, and consumed in the future. The grid will remain the backbone of the energy transformation as it connects generation and demand and helps to benefit from diversity in generation and consumption across large areas. One thing is clear: in order to keep up, the grid of the future must be smarter – it needs to enable more decisions closer to real time and be more resilient.
All pathways to the energy transition will rely on a solid grid that can accommodate and efficiently orchestrate technologies and energy resources. Through investment in grid modernization, the digital transformation of the global power infrastructure will move from a reactive mode of operation to a predictive and even autonomous, self-healing framework. Whether it is through implementation of new advanced technology or integrating products with digital software, utilities and governments across the world will need to make these investments to keep up with the future of energy.
About the author: Vera Silva is chief technical officer of GE”s Grid Solutions business.