Electrification, decentralisation and digital to transform energy system

11 April 2017 Consultancy.uk 5 min. read

Three major trends – electrification, decentralisation and digital – are set to transform the regional and cross-boarder energy system, according to a new report by the World Economic Forum.

The global energy system is set for considerable transformation as the world ramps up its efforts to meet climate change agreements. The transformation process itself will require considerable investment from a range of stakeholders, the integrations of new technologies, from renewables to distribution, as well as new regulatory environments.

The new study from the World Economic Forum, in association with Bain & Company, titled ‘The Future of Electricity New Technologies Transforming the Grid Edge’, explores the various elements that are likely to play a part in the wider transformation.

Three trends of the grid edge transformation

The transformation of the energy system is likely to follow three key themes, electrification, decentralisation and digitalisation. Electrification remains a critical step in the longer-term picture of a low-carbon world. Electrification includes vehicles, heating and other functions that would otherwise require fossil fuels of some variety.

Decentralisation also contributes to the wider requirements to meet long-term climate goals, this factor includes efficiency gains through better use of energy, solar generation, distributed electricity storage, microgrids, and demand responsive networks. The third key area of development is digitalisation to improve the efficiency of the system as a whole by better controlling and understanding needs across the wider network.

The effect of the changes in expectation, in the face of climate change, as well as the deployment of new technologies, according to the authors, is a considerably more complex energy value chain – in which the traditional boundaries between producers, distributors and customers are blurred.

Grid edge technologies adoption S-curve

The transformation of the wider energy network, in the face of continued pressure to transform and in light of new technologies, means that – like many of the recent technological developments – will show an S-curve. Cell phones, computers and the internet took merely 20 years to reach 80% penetration across the US, with the trend for mass adoption of new technologies tending to accelerate with time.

The transformation will not necessarily come easily however, requiring the intersection of the three key pillars to be successful. This includes considerable regulatory impositions, given the potential effects of technologies on society.                                              

Years to break even EV ownership                

One major area set out for transformation is the electrification of formerly fossil fuel fuelled processes. One of the largest segments is transportation, which accounts for around 15% of global greenhouse gas emissions. The WEF’s analysis highlights that the use of electric vehicles as a share of total vehicles is set to increase steeply in the coming years, as battery technologies improve further and the economies of scale kick in.

As it stands the technology involved in electric vehicles has improved drastically over the past decade. Some EV models now have a range of up to 300 miles, while the cost of batteries has fallen from $1,000 per kilowatt-hour to $300 per kilowatt-hour. By 2020 it is likely that EVs will be price competitive with ICE vehicles without subsidies in a range of countries, as battery prices fall further while additional improvements to wider vehicle design further boost consumer sentiment in the technology.

The total number of electric vehicles on the roads is, according to the report, set to increase drastically in the coming years – with around 25% of all new car sales by 2030 fully EV. Challenges and opportunities in the segment remain however; including the deployment of charging stations as well as planning for increased grid peak loads from increased numbers of people charging vehicles.

Distribution network development

The distribution side of the story would see several new technologies and practices become systematically important on the wider energy network. Distributed generation would see increasingly large amounts of renewable energy generation come online to the grid, which itself my be relatively distributed across the energy network, including homes and businesses that use solar to become energy independent or themselves small scale generators. To make the latter practical, distributed storage will need to be developed, while allows distributed generation to be stored locally to use during peak periods or as backup.

While clean generation and storage make up a key component of the wider move towards carbon free energy networks, energy efficiency is also likely to play an increasingly prominent role – whereby focus is placed on reducing the need for consumption, either through simple measures such as insulation or through the deployment new technologies – such as LED lighting. Finally, demand response technology would allow for an evening out of energy use within the wider cycle by planning the use of demand around availability of supply.