If the story of how energy has evolved were to be made into a film, we’d now be in the middle of a very exciting key scene. From the transition to clean sources, market liberalisation, the decentralisation of power generation, the growth of electric transport, the transformation of the client profile from simple users to knowledgeable participants, access to energy being made available to an increasingly large proportion of the world population, smart distribution networks and the digital technologies that make all these possible, there isn’t a single aspect of the energy system that is not undergoing profound change. But even more significantly, everything is happening very quickly - just like in a film.
Electric energy: the trends driving transformation
Three elements in particular are driving change in the electricity sector – decentralisation, digitalisation and electrification. All three form part of the “grid edge transformation”, the group of innovations (technical and otherwise) that enable electricity networks in particular and cities in general to become more connected and smarter.
The hows and whys are explained in the World Economic Forum (WEF) “Electric Vehicles for Smarter Cities: The Future of Energy and Mobility” report, a document produced by a group of leading energy industry figures, including Enel CEO Francesco Starace and Jean Pascal Tricoire, CEO of Schneider Electric.
The report dedicates significant space to grid edge transformation and describes how the three crucial factors interact, multiplying the individual benefits each of the three contributes individually.
Synergy and complementarity
Electrification, the transition to the use of electrical energy, is particularly significant to mobility. Two of the most cutting-edge innovations in this field are smart charging infrastructure and “Vehicle-to-Grid” technology that enables an electrical vehicle to return unused energy to the grid, turning cars into mobile batteries that can help stabilise the network. But electrification also means heat pumps – more efficient, sustainable heating systems, in other words. Overall it is a crucial factor in achieving long-term environmental objectives.
Decentralisation facilitates the spread of electrical infrastructure and enhances its benefits – local electricity networks, based on small-size renewable source generation, storage systems and energy efficiency-boosting technology make it possible to extend access to electricity in developing countries and contribute to the development of the solar energy infrastructure. The physical decentralisation of the networks goes hand-in-glove with the virtual decentralisation of their management, which in turn is aided by electrification (such as Vehicle-to-Grid technology). Another example is “demand response”, an agreement whereby large companies cut their energy consumption during peak periods and receive financial compensation in exchange from the electricity companies. This is a clear demonstration of how clients are increasingly involved in running the grid.
Finally, digitalisation is what makes the benefits of electrification and decentralisation possible. It includes technologies ranging from smart meters to automation and remote control systems, sensors, smart devices, integrated digital platforms and the Internet of Things. These innovations enable automatic coordination and control of the grid, optimising consumption in relation to production and client needs.
The future of electricity: optimism in numbers
According to the previous WEF report, “The Future of Electricity: New Technologies Transforming the Grid Edge” (published in 2017 by the same authors), mass adoption of these technologies could occur much more quickly than was the case with previous innovations - they could, in fact, become widely established in as little as 15-20 years.
The first turning point in the transport sector occurred in 2015, when the number of electric vehicles on the road exceeded one million, and the second is predicted to come in 2020, when falling battery prices will make electric cars more affordable than conventional models. By 2030 electric vehicles will make up 25% of sales and 5-10% of the total number of vehicles on the road.
The projections for photovoltaic panels are also encouraging – peak power installed across the world will increase from 260 GW in 2015 to over 700 GW in 2020. Estimated growth in the storage market is even more striking – it should increase by a factor of over 120 by 2025, jumping from 400 Mwh to 50 Gwh.
The advantages for industry and society
According to the WEF, the synergies between the three key elements of innovation could yield benefits for industry in particular and society in general estimated at 2.4 trillion dollars on a global level by 2025. These results will be generated by energy efficiency, new client services and investment optimisation.
To the economic advantages must be added the social and environmental benefits that were examined in depth in the 2017 report – job creation linked to the development of new technologies, a more diversified market for consumers and improved environmental protection in terms of pollution at a local level and measures to combat climate change on a global level. The grid edge transformation can also be a useful social development tool, extending its benefits to the less advantaged sections of society.
A legislation to enhance technological development
Transformation of the regulatory framework, however, is vital in order to exploit this potential to the full. The report suggests clear strategies in this regard: introducing dynamic pricing and opportune framing of decentralised energy resources to integrate them into the market, methods of removing political and geographical barriers impeding technological development, and measures to encourage innovation with results-oriented regulation.
The manufacturing and technology sectors are playing their part, but they alone cannot deliver, for example, game-changing growth in e-mobility in the cities of tomorrow. All the stakeholders involved will have to do their bit if the energy story is to have a happy ending!