The power of digitised energy

The digitisation of the world’s energy networks will lead to new opportunities, drive the uptake of renewables and even help shape an entirely new market model.

The long arm of digital technology has reached into every aspect of business, industry, and society, and its application across the energy sector promises to be no less dramatic. Its influence extends from artificial intelligence being used to improve the operational efficiency of power plants, to domestic smart meters and intelligent appliances that promise to reduce energy consumption. These alone will have significant implications for the energy industry, not least in the sheer quantity of power consumed.

Smart energy systems in buildings that monitor power use and weather may be able to cut consumption by adjusting appliances based on natural heat and light.

In a post-pandemic world less centered on the traditional nine-to-five working day, this could have a significant impact on wastage. The International Energy Agency has estimated that “smart energy buildings” could cut consumption by 10 percent.

The area in which digital technology may play the most transformative role is the world’s energy networks. Already, experts are predicting a world of ‘smart grids’, ‘microgrids’ and ‘virtual power plants’, as well as the digital integration of renewable energy sources.

In the UK, the National Grid Electricity Supply Operator regards digitisation as more than just a helpful aid to meeting carbon emission targets. In its 2020 strategy document, Future Energy Scenarios, it declared: “Open data and digitalisation underpin the whole system thinking required to achieve net zero.”

The drive to increase digitisation in energy networks stems from the exponential growth in the number of participants in energy markets. Investment in renewable infrastructure, from new solar and wind farms to energy captured from waste management, means the energy market is already becoming vastly more dispersed and complex than ever before.

In this emerging new world of energy networks, digitisation has a role in assessing, maintaining and managing existing infrastructure, and in co-ordinating a vastly more complex market of new energy assets.

Mapping existing infrastructure is itself a challenge. David Adkins, manager of digital transformation at the UK’s National Grid, says: “One of the biggest issues we have is that we have 240 locations, mostly substations, and we have so much going on at those sites. Even internally we do not necessarily know everything. We are now bringing all that together with geographical information systems.”

Such precise and centralised mapping – knowing exactly where cables lie or the space available for new developments – is key to improving the speed of new additions to the infrastructure, Adkins says.

Virtual power plants

The most significant long-term role for digitisation in energy grids is likely to be in managing flows of energy, directing the resource from the ever-growing number of providers to users, and maximising efficiency in its use.

‘Demand response’ – whereby high energy users receive financial incentives to reduce consumption at peak periods – already exists in several markets. However, digitisation is expected to allow ever more complex and flexible systems for managing the balance of supply and demand.

In 2017, the IEA estimated that “smart demand response” could allow 185GW of flexibility in global electricity networks – the equivalent of the supply capacity of Italy and Australia combined. This, it suggested, could save $270 billion in investment that would otherwise be needed for global energy systems to meet expected demand.

While smart demand response may reduce the need for investment in traditional forms of energy infrastructure, digitisation is also vital to the growth of new investment in renewables. Investment in new wind or solar farms involves not just the construction of assets but the connection of those assets to the existing grid. The number of connections is growing faster than ever, creating integration challenges for grid operators.

The UK’s National Grid has set up a digital platform, ConnectNow, to streamline access to the grid for new energy-generating infrastructure and to help identify access points to the grid.

Adkins explains: “ConnectNow was first aimed at the smaller portfolio generators – those of about 50MW. They were often low carbon supporting, but had been finding it hard to get capacity on the grid. Today we are seeing much larger projects using ConnectNow – 150MW or even 500MW.”

The scale of such generating infrastructure is significant. A 500MW solar farm is about the size of London’s Heathrow airport, according to Adkins.

Smaller generation projects can be linked together in virtual power plants – a network of many small-to-medium-sized power generators including solar and wind farms. Each organisation retains its own operational control, but they come together as a VPP, a single commercial entity that offers energy provision to grids.

AI and microgrids

Flexible and dynamic responses to demand for electricity also have a role to play in maximising the use and effectiveness of renewable energy. Wind farms only generate power when the wind is blowing, and solar farms depend on sunshine. If those outputs do not coincide with demand, the result is known as ‘curtailment’, meaning energy production is deliberately reduced. This reduces the effectiveness and, of course, the returns of such energy-generating infrastructure.

The use of machine learning or AI to match demand and supply is expected to allow a much more effective allocation of that renewable energy. In Europe, curtailment accounted for 7 percent of potential renewable energy generation in 2017.

The IEA estimates that the digitisation of networks to match supply with the variable output of wind or solar energy could reduce this to just 1.6 percent by 2040.

The emerging picture amounts to a dramatic change in the electricity supply landscape. In the past it has been a one-way street, with energy flowing from large-scale producers, through national transmission grids and distribution networks, to businesses and residential consumers.

The future looks more like a web of interconnected parties, a much larger network of generators of varying size. Combined with demand response, this shift also transforms the relationship between the various participants in the energy network.

Peer-to peer energy trading, where generators sell directly to customers, is also emerging in several countries. US group LO3 has applied blockchain technology to allow the sale of energy within small communities, including the Brooklyn Microgrid in New York. Here, small-scale producers – including residents with a few solar panels – operate a local energy market.

As the IEA states, the new world of energy networks will increasingly blur the distinction between energy producers and consumers. Investment in energy infrastructure in the coming decades will be unlike anything that has gone before.