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New push for cheaper energy costs and a much more efficient energy industry

Paul Budde's picture
CEO Paul Budde Consulting

Paul Budde is the CEO of Paul Budde Consulting, an independent consultancy company, focusing on the telecommunications market and its role within the digital economy.  Paul specialises in the...

  • Member since 2016
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  • Jun 27, 2020

As the initiator of Smart Energy Australia in 2007, I looked with the experts of this industry association at how we could use technologies to make our energy system more efficient, cheaper, and less polluting.

Of course, this included the arrival of renewable energy and technology developments in areas such as microgrids, distributed energy and smart grids. One of the advanced concepts that was globally developed to bring that all together – now more than a decade ago – is known as “transactive energy”(TE).

What triggered me to revisit the model again is the news that Monash University has developed an energy exchange framework to better manage distributed energy resources.

One of its architects is Associate Professor at the Department of Data Science and AI, Faculty of IT, Ariel Liebman, who was also one of the early expert pioneers of TE within Smart Energy Australia.

The reason for the slow progress with modernising our electricity system comes from a total lack of energy policies from successive Coalition governments over the applicable period. This is rather disappointing, as time and time again the current Government deploys the argument that technology will bring carbon (CO2) emissions down, but so far, they have failed to come up with policies to make that happen.

So, what is transactive energy?

It can be described as a means of using economic signals or incentives to engage all the intelligent devices in the power grid – from the consumer to the transmission system – to achieve an optimal allocation of resources and engage demand in ways that haven’t been possible before.

At the core of these models are cloud computing, big data, and data analytics. With the progress made over the last decade, transactive energy models are rapidly becoming viable options for smart energy management in other parts of the world.

Employing the now prevalent two-way information and communications technology, consumers can begin to interact with the electricity system in unprecedented ways. A transactive energy system utilises smart grid infrastructure to send signals back and forth between utilities, grid operators, and individual assets in the grid system, communicating the real-time flow and cost of power.

These systems integrate both utility-owned and third party-owned resources including power generation sources – such as solar panels, ancillary services, and load management services – to utilise the lowest-cost electricity in real-time. The key driver of transactive energy systems is the market-based approach, which allows every service provided to the grid to be valued.

Those providing the services – whether they are generating power or providing load reduction services or something else – can be compensated. This splits the benefits and savings of the increased efficiency of the electricity system between the customer and the utility.

This system is a long way from the traditional unidirectional flow of power (from utility companies to consumers) and supply side-focused mindset of the historical electricity sector.

With a host of newly accessible power generation such as solar and wind farms and load management resources – thanks to the rapid development of battery technologies – on both the supply and demand side and armed with real-time information as to which resources cost the least, utility companies that take the time to explore these new business opportunities could end up becoming more cost-effective.

But the concept of transactive control should not just appeal to economists, utility industry representatives, and engineers.

The establishment of such a system will have benefits for consumers, both financially and environmentally. While the system may be focused explicitly on grid reliability and economics, the shift to this smarter electricity sector provides significant environmental benefits.

Creating a more responsive, resilient grid is a significant step to integrating variable and decentralised renewable energy generation. This would enable clean energy solutions such as wind power and energy efficiency to be brought to the forefront of power sector operations.

Transactive energy demonstration projects are now being used to help understand the challenges and benefits of such systems.

There have been several large-scale projects and pilots, namely, in the U.S.

Rather than seeing complete implementation, many of the elements of TE are implemented separately. Blockchain is seen as a potential accelerator of TE being the facilitator between the various data sets that are part of the transactive energy model, replacing the more complex and more expensive technologies that were used in the earlier projects.

Artificial intelligence is also a new element that has been included in these TE projects over recent years.

Monash University’s “net zero” project is one of the most prominent smart energy projects in Australia, using all the elements of TE.

The project is aimed at building a smart energy environment at the university’s four Victorian campuses with the goal of zero emissions by 2030. It will be interesting to see if such initiatives lead to a broader uptake of TE among the power distribution companies to provide the benefits to all Australians.

However, without clear government policies, no one is going to make the changes needed for such an energy transformation and nobody is going to make massive investments that will need to support such a national transformation.

Even if the next government should finally provide that leadership it will take many years before such a transformation can be implemented. In the meantime, it will just be a continuation of the same old.

There is however no doubt that new business models will play a key role in future energy management with initiatives such as TE, smart grid exchanges, microgrids, smart buildings and smart campuses, consumer-based energy projects and the interconnection with large scale renewable solar, wind and hydro projects.

What we will see in coming years will be many stand-alone projects such as the “net zero” project in Melbourne.

Another early starter could be smart energy systems in remote areas that are not connected to the grid, such as mines and Aboriginal communities.

Back in 2010, the United Nations looked at Australia and to the distributed diesel-based systems in Western Australia and the Northern Territory. They looked at the possibility that the transformation of these old systems into smart energy projects could be a catalyst for developments elsewhere.

It would be of enormous benefit to countries without proper national distribution networks. Politicians in Australia were at that time interested to see if such systems would be of benefits to some of the South Pacific nations.

Very little, however, has happened since that time.

Associate Professor Liebman’s aim of the framework to see the implementation of a transaction energy marketplace that will both benefit consumers and the industry. With the right information, consumers will be more in control of their energy costs, industry can avoid peak demand issues and have access to a truly smart grid.

Even back in the Smart Energy Australia days, it was estimated by energy economists that the overall costs savings could be between 30-40 per cent.

Matt Chester's picture
Matt Chester on Jun 29, 2020

At the core of these models are cloud computing, big data, and data analytics. With the progress made over the last decade, transactive energy models are rapidly becoming viable options for smart energy management in other parts of the world.

Do you see that there are more possibilities to be unlocked with further progress on the technical side, or has the progress that was needed more or less 'complete' and it's a matter of proper utilization, deployment, etc. at this point?

Paul Budde's picture
Paul Budde on Aug 7, 2020

Sorry Matt I only saw your message today. To be honest we have enough technology at the moment to start implementing it. This will over time both bring CO2 down as well as end user prices. It is the political will that is needed, the engineers have all the tools and are more than ready to get it implemented.

Matt Chester's picture
Matt Chester on Aug 7, 2020

It's a shame how often it comes down to that, with politics getting in the way of science and engineering. I can't imagine how frustrating it must be for the tech developers who otherwise thought they had at least partly 'solved' the problems!

Paul Budde's picture
Thank Paul for the Post!
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