The use of information and communication technologies (ICT) across sectors has been boosted by the declining costs of sensors and data storage, by faster and cheaper data transmission and by advances in artificial intelligence. Digital technologies have been used in the energy sector for decades, but in recent years their application has expanded rapidly.
The ongoing digital transformation of energy has the potential to bring more efficiency, flexibility and co-ordination to the management of energy end-use sectors and across the entire system, with the added benefit of advancing the integration and further deployment of renewable energy.
Digitalization is rapidly and fundamentally changing the way in which energy is produced and consumed. On the supply side, the use of sensors and analytics is helping to reduce operation and maintenance costs and plant outages, and is improving power plant and network efficiencies. On the demand side, vehicles are becoming smarter and more connected, energy efficiency in buildings is increasing, and process controls, smart sensors and data analytics are contributing to cost-effective energy savings in industry.
Digitalization has further potential to transform energy systems by integrating energy sectors across supply and demand (sector coupling) and by improving overall system flexibility. The electricity sector is expected to be central to this transformation, by facilitating: the integration of VRE; efficient demand response for energy balancing and security; time- managed charging of EVs; and the efficient deployment of distributed energy resources such as rooftop micro wind turbines and solar PV systems.
With more than 50 million kilometres of power lines deployed worldwide (enough to cover the distance to Mars), the electricity grid is one of the most complex infrastructures in existence. Traditionally, electricity flows in the grid have been managed in a unidirectional manner, with electricity generated in large-scale production plants and with limited participation from the demand side. Digitalization is helping to change this paradigm. I
Investment in smart and digital technologies grew to reach in the hundreds of billions in 2019 spent in retrofitting, upgrading and expanding grids.
New digitally enabled business models are set to reshape the experience of energy consumers as digitalization redefines their interaction with energy suppliers. Some of these models enable peer-to-peer trading, and others are based on aggregation platforms that allow for higher degrees of customer participation in ancillary services.Traditional utilities, network operators and third parties are developing joint platforms for decentralized energy that include installing rooftop solar PV and batteries behind the meter and operating them as “virtual power plants”. The number of projects that are testing blockchain in the energy sector has increased rapidly.
Many of these projects focus on customer markets and enabling micro-trading among solar power prosumers. Peer-to-peer trading or virtual marketplaces are already being tested in several pilot projects at varying scales in Australia, Denmark, France, Japan, the Republic of Korea and the United States. In the United States, for example, New York’s LO3 Energy is using blockchain and a micro grid to enable a Brooklyn community to buy and sell locally generated renewable electricity peer-to-peer within a small neighborhood.
As energy systems become increasingly digitalized, a series of risks come to the forefront, including the security, privacy and ownership of the vast volume of data generated. Numerous questions remain to be addressed, including:
Which data will be critical and prioritized, and for which stakeholders or sectors?
Who should own data from meters and sensors, and who should have access to these data?
How best to reconcile such risks and concerns against the presumed benefits of facilitating new business models and solutions that require the development of these new data sources?
A smarter, digitalized energy system is emerging; however, maximizing its potential, accelerating the transition and mitigating the risks of the transition require increased awareness and action across a range of sectors and stakeholders.
Smarter energy systems depend on the deployment of new infrastructure across end-use sectors, across distribution grids (electric, gas and thermal) and on the centralized supply side. In parallel, smarter energy systems require interconnection via high-speed communications networks that use standardized protocols to effectively integrate ICT with the world’s energy systems.
Finally, some cultural and institutional challenges to the transition may arise as traditional utilities, regulators and consumers strive to stay abreast of new ICT. Policies will play a key role in steering developments towards a more secure, sustainable and smarter energy future.
Source: IEA.
Joshua D. Mosshart MSFS, CHFC, CLU
https://www.linkedin.com/in/energydevelopmentpartners/
