The new world of energy: Digital, local and consumer focused

February 9th, 2015, Published in Articles: Energize, Articles: EngineerIT, Articles: Vector

 

The energy world is changing. From a concentrated and centralised system discovered in 1888, the energy system is evolving to a decentralised system with diverse energy generation sources. There are two main factors causing this transformation: the introduction of information technology (IT) in the energy sector, and the emergence of alternative energy generation sources at scalable levels.

In the past 20 years, the internet has connected 2,5-billion people together. In the coming six years, this number will double. Concurrently the internet will connect 40-billion machines to those 5-billion connected people. The next stage of connectivity is about machines. The combination of IT software with electrical devices and products provides customers with real-time information and smart services that allow all stakeholders an opportunity to implement active energy efficiency, share better energy, and consume at the right moment across smart grids.

Jean-Pascal Tricoire

Jean-Pascal Tricoire

Alternative energy generation sources

From the shale gas boom in America, to the rise of renewables in the energy mix, energy sources are widening and reaching scalability. The price of crystalline silicon photovoltaic (PV) cells for instance, have gone from US$78 per watt to US$0,72 in less than four decades (1978 to 2013, BNEF). Policy driven markets have facilitated the deployment of these technologies which are reaching grid-parity in many markets. By the first quarter of 2014, there were 79 countries where the price of PV electricity was equal to or less than the grid average price (Al Gore, www.politico.com).

This wider choice in energy generation sources, combined with the emergence of information technologies in the energy sector, are redefining the energy ecosystems on both the demand and supply sides, and creating opportunities of increased efficiency at all levels, from people to power plant, to ensure a complete optimisation of the supply chain.
Impact on the entire energy chain

For consumers, the connection of energy systems, phones and machines, in everyday life provides real-time information on their needs and offers them an opportunity to control their consumption. It reduces a consumer’s energy bill, and increases their purchasing power within a very short payback period. Access to real time information and flexible, connected devices, allows consumers to change their consumption patterns. They are empowered to choose when, what and how they consume energy, presumably when electricity is cheap and green.

Energy efficiency enables utilities to provide an increasingly reliable supply of electricity which provides hedging against blackouts. It also saves significant amounts in new-build investment costs by avoiding the need for new plants. Utilities can connect supply and demand, and offer new services to their customers, so that they consume less and at a more optimal time.

The implementation of higher energy efficiencies also creates an economic opportunity for reduced public expenditure as governments balance their energy trades. The EU energy balance has multiplied by a factor of six in ten years, with oil imports alone reaching US$500-billion in 2012 (Enerdata, 2013)1.

The Efficient World Scenario, put forward by the World Energy Outlook of the International Energy Agency (IEA), suggests that the positive effect of the energy balance of five key regions, through the implementation of higher levels of energy efficiency, could result in a global cost reduction of about US$570-billion, with China benefiting by US$190-billion and India by US$110-billion, as well as a huge potential for job creation, with estimates ranging from 800 000 to 1-million jobs by 2025 in France, for example (Ademe, OFCE, 2013).

Individuals are at the centre of this new energy world, where roles are redefined. Utilities must keep their central role in this evolution and they are already rethinking the way they operate and address customers, and customers are changing their needs and demands through new behaviour patterns. This transition needs solid change management to avoid over-production. All stakeholders, utilities, cities, facility managers, and technology suppliers should be prepared to continue an evolution in their roles, in business models and in technology offers. A reliable and simple technology is needed to guide everyone through the various transitions.

Technologies exist to harness this efficiency at all levels

The evolution of technologies, through software and the internet of things, is creating new means of optimising the overall energy chain through systems of integration. Such systems ensure that energy is safe, reliable, green, and efficient at the lowest possible cost. Already, by using the internet to connect people to their environment, and their environment to the smart grid, by switching things off automatically, and by promoting consumption when energy is cheap and green, at least 30% savings can be achieved. Energy efficiency measures, that do not involve major renovations or disturbances to the end-users, can have paybacks of less than three years. Software now allows the curtailment of peaks. For example, Schneider’s EnergyPool has curtailed over 1,7 GW of energy since its inception – equivalent to one nuclear reactor. Customers in buildings, industry, data-centres and infrastructures, are offered a range of technologies, from products to systems and solutions, which restrain energy use and allow savings throughout the entire chain.

Although we should all embrace cost-effective tactics to confront some of the major challenges of our generation – from resource scarcity, traffic congestion, pollution, and an increase in extreme weather conditions, as well as energy poverty and competitiveness – estimates show that over 66% of energy efficiency’s cost-effective potential is still not being implemented.

Change is now

Market failures and resistance to change explain this untapped potential. Pay back times are short, within a few years, and investments are refunded by savings. Governments should create environments to facilitate the implementation of energy efficiency and smart grids. They should enforce a level-playing field and ensure that all energy markets are free and competitive, notably by halting subsidies of fossil fuel technology2.

Transitions can be long. But this one is worthwhile, and should be happening faster as it brings benefits to all: Carbon emissions reduction, increased consumer purchasing power, job creation, and country balance of payments and capital expenditure avoidance. It is time to power the people and unleash a new world of energy that is digital, local and consumer focused.

1 This is higher than the entire GDP of a country like Poland.
2 Estimates show that there are still yearly subsidies of over US$500-billion in fossil fuel generation and some renewable subsidies are no longer justified.

Contact Ntombi Mhangwani, Schneider Electric, Tel 011 254-6539, ntombi.mhangwani@schneider-electric.com

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