Power distribution in the age of distributed storage will be on everyone’s minds this year, along with many other merging technologies. John Ascroft, chief innovation officer, Jade Software.
ARE WE AWARE of how efficient our energy industry is? Positive signs, like new entrants in the retail market and customers who are willing to switch suppliers when it makes sense, are part of the scenery now.
The industry serves people well, which is good to know because in the coming months and years we’ll need even more engagement and conversation within the industry, and with customers, as new technology becomes part of our everyday lives.
When it comes to introducing and embedding new technology, the energy industry is generally addressing the right questions and having useful conversations. A couple of examples from 2016 are the issue of solar panels and network charges, which Unison brought to the fore, and the Electricity Authority’s (EA) transmission pricing review. (The discussion around closing down fossil fuel plants was an interesting exercise and a vindication of the market theories, because in the end, existing mechanisms stood up.)
You will know well that photovoltaics (PVs) don’t really stack up as environmentally positive in New Zealand, given our very high levels of energy from renewables. It ought to be clearer to consumers that “solar” doesn’t mean “green” in this country as it does in Australia or California. Issues of distribution and transmission charges deserve a higher level of discussion than “solar tax” rhetoric. Next year I think the facts will become clearer and the discussion more useful.
Unlike most other markets, New Zealand has a lot more to gain from batteries than PVs. Batteries will become mainstream, whereas solar probably won’t. That will help flatten out demand curves without so much of the distortion that solar-heavy networks are learning to deal with elsewhere.
A pressing question is the most equitable way to charge for power distribution in the age of distributed storage. Current charging methodologies are already coming under pressure. In the next year or two a lot of thought will go into finding a fair way to charge for distribution.
One difficult aspect to this conversation will be finding the balance between the overall cost of the system and security of supply. The EA, as the effective representative of consumers, has to take the lead here.
Before we can solve the charging model problem, we need to see how broad, distributed storage works in practice. The way ahead will be discovered iteratively, in tandem with product roll-outs from the likes of Tesla.
In theory, the diversification and localisation batteries offer ought to mean a lower risk of system failure. That will make the question about steady supply and variable demand even more abstract (the value of power security can be hard to understand unless you lose it one day), and will probably reduce the base over which costs will be shared. We’ll know if reality follows this theory before 2017 is over.
It’s easier to approach industry-wide challenges like these when information flows easily between participants. More automated communication, between retailers and distributors for example, is very achievable in the near future, and will help the industry work together.
Keeping an eye on left field
I expect 2017 to be more about incremental improvement than anything else, but if you’re looking out for the next big thing, watch battery technology. It’s a very high-tech field with a tremendous amount of global research going into it. All that investment and effort is one reason to believe that batteries could be the next thing to fundamentally change energy (although for anything to come to market within a year would be very improbable). Batteries are so central to everything we do these days, in new applications like EVs, in almost every device, and soon in the walls of the average home. If researchers can make them exponentially more powerful and/or cheaper, dramatic change would follow at every level of the energy industry. I’m not saying that this is likely this year or next, but if something literally disruptive on a global scale arrives before next Christmas, there’s my best guess.
In this country specifically, the biggest energy-related upheaval that we’ll see in 2017 could well come from EVs.
The government has a target of doubling the fleet every year, which in 2016 was achieved two-and-half months early. I don’t see any reason why this trend would slow down, and it might look timid in hindsight. By the end of next year the novelty factor will have disappeared. Charging stations aren’t ubiquitous enough yet, but 2017 could be the year that they become a regular sight on the side of our roads. There will be no lack of demand.
From this technologist’s point of view, EVs are inextricably entwined with driverless vehicles, which will also roll out more quickly than people expect.
Today’s technology already takes a lot of work away from human drivers. I suspect that the general population is unaware of what’s already possible, let alone what’s just around the corner.
Looking slightly beyond 2017, driverless cars will bring a shift to the rental model. Instead of lots of individuals buying imported EVs, we’ll see branded fleets arrive in numbers that dwarf the effect of personal ownership. Over time, people will use their own (probably petrol-powered) vehicles less and tend to catch a driverless car instead. Owner-drivers will become a minority, especially in cities. The energy industry will obviously be a central enabler in this.
A few years ago there were all sorts of new consumer technologies on the horizon and no certainty about which would reach the mass market first. It’s clear to me that batteries and then EVs are at the front of the queue now, leaving the potential of smart homes and smart grids somewhere further in the future.
At the moment manufacturers of smart home devices are doing their own thing. You get an app to control your air con, another app for your home theatre, and a third one for your lighting. It’s not easy to hub everything together yet. Although this is a big barrier to adoption, I don’t expect the proprietary mindset of device manufacturers to change terribly soon.
Similarly, the potential of a truly smart grid is a number of years away from being realised. Retailers are taking a conservative approach, which is why most customers are still being billed as if the meter reader visits once a month. Players like Flick are making strong inroads though.
The litmus test of smart grids living up to their promise is real-time pricing signals becoming part of normal life, at least as an option, for consumers. It’s hard to say exactly what consumers want here, or how those options should be packaged.
In time we’ll gain a much better view, and then we’ll see larger retailers get out of ‘wait and see’ mode and start moving.