For some time now, many commercial and government organizations have acknowledged the urgent need to transform into a sustainable, low-carbon society. The inevitability of the energy transition has driven many countries to embark on their own energy transformation journeys. For example, Europe aims to become energy-neutral by 2050 with the EU’s Clean Energy Package, which is intended to facilitate this transition and help the EU stay competitive through this period of change.
It is a formidable challenge on many fronts, not the least of which is the rapid electrification of society. This means that while on one hand we need even more energy, it has never been more important to use energy as efficiently as possible.
Record volume of renewable energy
There’s little doubt that our energy consumption is growing significantly. Last year, the U.S. Energy Information Administration released the International Energy Outlook 2016 (IEO2016) report, which forecasts world energy consumption levels growing by 48% between 2012 and 2040. While we prepare for this rapid increase in consumption, renewable energy is also growing at a record pace. The recently published Renewables 2017 Global Status Report by REN21* noted that in 2016 an estimated 161 gigawatts of renewable power generating capacity was added, compared to 147GW in 2015. This represents the largest annual increase to date. This record volume was installed at a 23% lower investment cost per GW, compared to 2015. To put the volume in context, 1GW of energy is enough to power approximately one million homes (by European standards).
Fluctuations in the grid
The total amount of renewable capacity available worldwide rose 9% in 2016 compared with 2015 and reached almost 2017GW, according to the Ren21 report. In Europe, despite the increase, many more gigawatts are needed to achieve the 2050 climate change targets. However, there are a number of factors coming together to meet these goals, including growth in the number of large offshore wind farms encouraged by government subsidies and the setting of price gaps; substantial increase in local generation with rising numbers of “prosumers”; and collaborations among consortia to develop new technologies and share learnings, like in Germany, where some companies are exploring joint ventures to develop energy storage plants.
This combination of central and local generation will lead to large fluctuations in the grid. One way to absorb these fluctuations is by storing energy. For instance, wind power technology has advanced to the point that it can match baseload power. There’s also a lot of progress in the super batteries realm and the possibility of virtual buffering is also being explored. However, managing fluctuations is going to be transformative and a big 'disruptor' in the energy transition.
Data will cause disruptive innovation
While there will be noticeable centralization, particularly in Europe, there will also be decentralized generation to achieve energy self-sufficiency at the local level. Still, a key question remains: When you need electricity, can you really be sure of getting it?
With all the changes, possibilities and challenges, how will the energy system remain intact and fit for purpose? The answer lies in the seamless exchange of data between all market parties, at both the local and central levels. This is critical to ensure a secure and reliable supply of energy. There is a huge increase in the volumes of data related to the consumption and generation of energy, in large part because of the exponential growth of smart meters and sensors. All of this data will fuel disruptive innovation.
Digital transformation to drive change
The energy transition is unquestionably being driven by data. To enable and benefit from data sharing, the energy system needs to embrace digital at all levels. This will spark a domino effect that will begin with the creation of new business models, like peer-to-peer trading, for example. These new models will in turn create and foster new relationships, new agreements and new roles. One of the new roles already being established is that of the 'aggregator'. The aggregator is one who can fulfill the role of a PV player at the local level by performing demand-side response management for the customer group; or that of a market operator, who will ensure that all market parties have access to their own data as well as the consumption data and 'energy behavior' of a household. Aggregators could even start to offer anonymized data to provide better energy forecasts.
Being proactive to progress
Rather than waiting for the “other shoe to drop,” we must proactively take steps to secure the continuous supply of energy in the years to come. At CGI, we believe that partnering across organizational boundaries and nurturing dialogue between energy market stakeholders is the key to advancing the energy transition and building a sustainable society. CGI utilities and digital transformation experts will be on hand at the European Utility Week (EUW) 2017 on October 3-5 in Amsterdam to discuss the challenges and opportunities of navigating the energy transition and how we can help provide a clear vision and roadmap to cross the digital divide.
*REN21 is an international non-profit association and a global renewable energy policy multi-stakeholder network that connects a wide range of key actors. REN21’s goal is to facilitate knowledge exchange, policy development and joint action towards a rapid global transition to renewable energy.
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A breath of fresh air, thanks Dorita! You may not be curing cancer but you're darn close to it! all my best, Darci