The way the world produces and consumes energy is changing fast. Sustainable energy sources such as solar and wind are on the rise. Smart meters have become an industry standard and deployments are growing across the globe. Hybrid and electric vehicles have gone mainstream giving rise to a new breed of powerful car batteries capable of storing and sharing energy. In addition, the Internet of Things (IoT) is enabling compelling new business models that support an increasingly complex energy infrastructure.
How is the IoT driving change in the energy ecosystem?
We're in the midst of an exciting smart energy transformation. New stakeholders are joining the energy marketplace as they install solar panels on homes and businesses and purchase electric vehicles where power is stored. The IoT is a key driver of this smart grid evolution, enabling innovative ways to leverage devices, data and remote access to create new business opportunities for a variety of stakeholders. The trouble is, the supporting power infrastructure is stuck in the past. To capitalize on the new energy landscape and “Uberize” power production and consumption, the physical grid needs to evolve. Without it, the world will never realize the “Internet of Energy” and the full potential of the smart energy ecosystem.
How does the energy infrastructure need to evolve in order to "uberize" energy?
It's a tall order to evolve a well-established, 100+ year old industry! From a commercial perspective, many of the current energy processes and rules are too complicated and lengthy for the new data-driven, decentralized energy landscape. Energy plans and agreements are defined in a rather rigid, process-led environment, where all actors and regulators must agree, and market roles are tightly defined, as they have been for decades. Unfortunately, the existing system does not incentivize evolving business models.
However, integrating new sustainable distributed energy resources (DER) into the existing grid, which is designed to distribute centrally generated energy, is as appealing as it is challenging. Tapping energy from renewable sources is generally more cost effective than generating energy from fossil or nuclear sources, which makes the trend very compelling; and once started, irreversible.
So, what needs to change for this exciting evolution to occur? It's a marathon, not a sprint and it involves changes on many levels. To better understand, let's examine changes one step at at time.
Separating the physical infrastructure and IoT solution management is essential
Currently, grid operators control the entire energy transaction environment, collecting money from millions of households and then distributing funds to the power plants. Unfortunately, this system has no way of including and making use of regional, distributed intelligence provided by new energy assets and the IoT. There is a growing need to decouple providing copper lines and power from the gathering of information from new assets like solar panels on the grid's edge. In other words, we are moving toward divorcing the way we finance physical infrastructure from the management of energy data and IoT deployments that enable intelligence in the field.
A more flexible infrastructure can bring in added revenues for both operators and asset owners. As people buy energy assets for their own homes and buildings, they are becoming more independent from the energy infrastructure in the process. Consequently, patterns of grid use are changing and operators are becoming consumers of big data users without being obliged to gather and manage all the data originating on the consumer side. This is an important evolution because operators are now able to aggregate information from many sources and use artificial intelligence (AI) for predictive maintenance, outage prevention and improved quality of service.