Industry 4.0 has brought with it, a whole host of changes to the way we generate and consume electricity. The grid, as we know it, is about to evolve dramatically in the near future. Most of the grid infrastructure that we see today is becoming obsolete fast with the advent of variable renewable energy generation, and the electrification of industries like transport, domestic heating and cooling. These new variables need flexible grid operation and faster demand-response mechanisms. To keep up with modern electricity demands, the grid is being modernized, and the “grid edge” is where most of the work is taking place.
The term “grid edge” is used to refer to the various business, hardware and software innovations that has resulted in smart, connected infrastructure being installed at, or near, the edge of the power grid. The edge of the grid implies greater proximity to the consumer side of the grid, rather than its generation side, like power plants and transmission lines. Grid edge technologies are expected to inject $2.4 trillion worth of value to the electricity grid over the next decade. It will benefit the industry, customers and the environment. In a world grappling with the effects of climate change, grid edge technologies could have a major say in deciding whether we win that fight.
The three major trends that drive the evolution of the electricity sector:
1. Electrification
Industries that have historically been big polluters are being electrified now due to stricter emission regulations, and climate change commitments. Sectors like transportation, chemicals, and domestic heating, which were previously heavily dependent on fossil fuels, are slowly being electrified due to better levels of energy efficiency and the increasing availability of renewable energy. Key technologies for this sector include electric vehicles, smart charging and heat pumps.
2. Decentralisation
Decentralisation, spurred by a decrease in renewable energy prices, is slowly taking the energy monopoly away from large utilities. A bigger share of power has been given to the consumers, who get to choose where they get their electricity from now. In many countries, distributed renewable energy generation through residential, or commercial solar/wind power already supports fossil-fuel power generation from large utilities. It has made the grid more resilient to outages, and has lowered carbon emissions. Decentralised generation enables greater control over energy consumption patterns due to the larger number of power sources that are available during periods of peak-demand, and high electricity tariffs.
3. Digitisation
The rise in the use of smart devices, connected over the internet, has resulted in an increase in connectivity, and optimisation options to the power grid. Smart meters measure the exact amount of energy used, and makes this information visible to both utilities and consumers. This has brought about significant behavioural energy efficiency improvements to the sector. Other technologies like demand management suites are bringing further optimisation options to the grid. They have minimised the wastage of energy, and provide faster demand-response mechanisms to increase the flexibility of the grid.
Distributed technologies help moderate issues related to daily peak demand patterns
Distributed generation from renewable sources like wind and solar help reduce the demand on fossil-fuel plants on days when the sun is out, and during optimal wind conditions. Distributed storage from battery systems allows energy to be stored locally. The stored energy can be used to supplement the grid during periods of peak load, or as a backup during power outages.
Energy-efficient devices reduce the overall energy demand from various appliances. They help bring down the average energy use, while providing the same service. Demand-response technologies help limit energy use during peak demand, and other high-priced periods, by automatically switching off devices that consume larger amounts of energy like air conditioners and heaters. This negates the need for utilities to switch on peaker plants to supply during periods of increased demand, and saves money for consumers, who would otherwise be paying higher tariffs on electricity during periods of peak demand.
Most new technologies are still not being used widely. But, momentum has definitely picked up.
For grid edge technologies, there are a large number of products that are still not being widely used, but will see large-scale adoption in the near future. Such technologies include battery storage, electric vehicles and smart thermostats. These technologies are currently being bought by people who are environmentally-conscious, people engaged in energy choices, and those motivated by sustainability and the novelty of new products in the market.
There are other grid edge solutions that have already reached the mass market. They are commonplace in many countries. Such technologies include small directional lighting and smart meters. Due to their widespread adoption, these products have become economically viable, compared to older technologies. They are being used by people because these products result in cost savings and are convenient, even if they are complacent towards energy.
The final group of grid edge solutions consists of solutions or products that are present abundantly across the globe, and are not considered the standard for their categories. An example of this is energy star ratings, used to define the energy efficiency of appliances. The program was initially started to promote energy efficiency. But, over time, as people have begun to realise the advantages of purchasing an appliance with a higher star rating, the program has seen an 80% market penetration rate in the US. The ratings are being used widely, across many other countries like Canada, Japan and Taiwan, as well as the European Single Market.
The pathway to maximising the potential of grid edge technologies
Existing regulations are slowly being rendered obsolete as the grid evolves. It is critical to revisit old policies, and regulatory frameworks. They need to be modified to give utilities a larger playing field, encouraging them to invest more in new technologies and solutions.
The new infrastructure also needs to be deployed on priority, for the optimal functioning of the advanced grid. Smart meters will be necessary to efficiently manage dynamic power flows. Electricity storage will be critical to control the intermittency of variable renewable generation. Automation systems and charging stations will serve as the building blocks for the electrification of the transportation sector.
As a larger number of new technologies enter the market, it is essential for companies to simplify the customer experience, and make these technologies easier to use, to manage electricity consumption. Uptake rates will be much slower than required, unless these technologies are user-friendly and will slow down the overall evolution of the grid significantly.
Using the large amounts of data available to utilities in the modern grid, new business models need to be created by energy providers to capture value from the new revenue streams that will be created by new products and solutions entering the market. Adaptation and evolution is critical to ensure that the grid can keep up with the energy demand and generation patterns of the future.
