Speaking to customers from a variety of sectors, we know that they are looking for ways to improve their resilience and opportunities for growth. Energy can play an important part in this.Jorge Pikunic, MD Centrica Business Solutions
ENERGY DECENTRALISATION: WHY IS EVERYONE TALKING ABOUT IT?
The decentralisation of energy markets around the world is accelerating. Its effects are most noticeable in countries where behind-the-meter (BTM) energy generation, in which a business or household produces its own energy, has become entrenched. In parallel with the rise of renewables, we are seeing systemic changes to way energy is produced, distributed and sold. In foregoing the traditional centralised energy network, with its small number of predictable sources, countries around the world are testing innovative new approaches.
Decentralised Energy Exchange or “Virtual Power Plants”
In Australia, where rooftop solar has surged to account for 16% of all renewable energy generation, the government, big businesses and start-ups have come together to launch a pioneering new flexible energy marketplace: Decentralised Energy Exchange (deX). The venture is challenging the common concept of households being solely energy consumers, here they can also be active suppliers.
How does it work? The deX exchange system operates as an energy marketplace. At times of a power demand surge a call goes out to participants, triggering households to auction excess self-generated or battery-stored power back to the grid at market-determined prices. The deX system aggregates energy-generating households and businesses based on their locality, such that their combined energy supply is large enough to represent multiple virtual power plants which the grid can call upon. The aim of the scheme is to promote investment in renewable energy, reduce costs and stabilise the electricity grid (Guardian).
Peer-to-peer Energy Trading
In Germany, where the halt of all nuclear energy generation programmes in 2011 shifted the focus firmly towards renewables, we are seeing the development of household peer-to-peer energy trading networks. These networks are in some cases being sponsored by traditional power companies as they attempt to secure their futures in the emerging energy economy.
How does it work? A start-up Shine, incubated by RWE, is one of such network facilitators. The system allows users to optimise their own use of solar energy with a home energy management kit and connect to others for buying and selling the locally-generated power. Through this process, consumers are encouraged to improve their understanding of energy usage and how the investment in renewable sources can help them to be more independent.
Internet of Energy
The UK’s dominant energy provider, Centrica, is concentrating on large energy users and investing heavily (£700m over 5 years) behind its Centrica Business Solutions arm. This business provides Demand Side Response (DSR) systems, Combined Heat and Power (CHP) generators, solar panels and battery storage units, all enhanced by an energy IoT insights platform, which is seen as a key enabler of the new business.
How does it work? Centrica acquired a startup, Panoramic Power, which provides wireless sensors and an analytics platform. Together, the system allows for full visibility of a business’s energy estate, promoting improved cost management and operational efficiency, as well as enhanced engagement with energy usage. Centrica is now able to make bespoke recommendations based on the data in terms of what benefits the addition of new technologies could bring, including return on investment. Jorge Pikunic, MD for Centrica Business Solutions summarised: “Speaking to customers from a variety of sectors, we know that they are looking for ways to improve their resilience and opportunities for growth. Energy can play an important part in helping them to tackle these issues but we understand it can be challenging to know where to start.”
The traditional centralised power generation model is being disrupted and the shift towards more distributed, flexible and autonomous methods of energy production and distribution is coming into spotlight. This rapid move towards decentralisation comes about as the world today experiences uncertainty over future energy prices, a move away from older and more polluting energy sources, and increased occurrence of natural disasters highlighting the dangers of the reliance on a single power source.