How Distributed Energy Will Impact Consumers of the Future?

Sudipta Saha's picture
Utility Domain Consultant, Tata Consultancy Services Limited

Energetic, trusted, and detail-oriented IT Professional and solution provider with over 17 years of overall experience in Utility domain.

  • Member since 2023
  • 1 items added with 410 views
  • Feb 10, 2023

Co-author: Aninda Mukherjee


1    Introduction:
Utility industry in this digital era is going through a flux of rapid transformations. The experience that consumers expect to have, is continuously evolving, part of which is attributed to technology disruptions. The outbreak of COVID-19 also fueled the behavioral shift of the consumers from mostly reactive, on-demand, location dependent to proactive, anytime (real-time/near real-time) and anywhere. Energy consumers also tend to incline more towards the flexibility and availability of green energy, that are being supported by the recent growth of new energy sources viz. Distributed Energy Resources (DER). 

This paper focuses on industry trends, regulations and technology advancement related to the evolution of DER. It elaborates the drivers behind DER from both consumers & utilities perspective. This is followed by a set of opportunities and recommendations keeping customer experience at the epicenter.

Figure 1: Key Drivers Influencing

The energy consumers are eventually becoming prosumers and are not merely the ratepayer of the energy they consume. They are also gradually engaged in co-creating values with the energy providers along the following themes:

Figure 2: Utility Market Themes

These themes above are helping the evolution of Distributed Energy Resources, enabled through digital technologies.

2    What Exists Today?

2.1    Industry trends

We find utilities around the world are trying to phase out their energy generations from conventional sources to renewables such as solar, wind, hydro, etc. For example, North-Carolina based Energy Utility in the USA plans to increase its renewable portfolio to 16000 MW by 2025 which is almost double its current value.

We also observe Australian Energy Market Operator (AEMO) is embarking upon several DER programs. Examples are:

  • Virtual Power Plant (VPP) demonstrations
  • Demand Response Trials
  • And many more.

Major Australian utility partnering with a fruit and tree nut farmer in the New South Wales Riverina region to shift their irrigation system of a commercial almond orchard from diesel power generators to solar and battery storage.

We also see in the UK, the government is driving rapid increase of homegrown power for greater energy independence. Prime focus is around below items:

  • Increase solar capacity – grow five times by 2035 from the current value of 14GW
  • Double  low-carbon hydrogen production capacity to 10GW by 2030
  • Offshore wind – aim is up to 50GW by 2030 – targeting up to 5GW from floating offshore wind deeper seas.

One of the Britain’s biggest generators of zero-carbon electricity is well up for supporting net zero carbon emissions through Corporate Power Purchase Agreement (CPPA) to have long-term price certainty for business along with traceability and authenticity of  renewable supply.

DER growths in the utility industry revolve around five key facets such as:

  • New business model
  • Innovative technologies
  • Supply chain ecosystem
  • Infrastructure development
  • Sustainable growth

Now-a-days solar PV systems are most cost-competitive energy resources in the market. We see greater momentum on and around solar-plus-storage combinations, floating solar PV modules, community solar projects. Pairing storage with solar offers cost synergies, operational efficiencies. Picture below shows potential business impact due to digital disruptions.

Figure 3: Digital Forces Disrupting Utility Sector

2.2    Regulations Across the Globe:

  • We see the United States target to reach net-zero emissions by 2050. About 400 US-based companies have aimed at this target proactively. Some are working towards the targets to halve green-house-gas emissions by 2030.
  • Australia is giving highest priority to focus on lowering the emissions. Legislation is passed to cut carbon emissions by 43% by 2030 and to net zero by 2050.
  • Similarly, the United Kingdom (UK) did pass laws in 2019 to meet net-zero targets for global warming by 2050. Target was recommended by the Committee on Climate Change, the UK’s independent climate advisory body.

2.3    Technology as Enabler

The consumer is at the heart of the existence and services that utilities are up for. Digital technology is not only helping the consumer experience, but also enabling utilities compete each other. 

The table below depicts how digital technology adoption is helping the consumer experience.

Figure 4: Technology as Enabler

5G & cloud technology are also enabling energy transition through data communication and processing. Since there will be numerous sources of energy, power quality is important. The power quality monitoring & management based on 5G has tremendous potential to reduce supply faults and failures.

3    What Happens in Future?

3.1    Consumer Empowerment and Experience

Consumers are likely to get numerous benefits from the distributed energy ecosystem. Some examples are:

  • Alternative source of income using DER
  • Reduced price of electricity consumed
  • Discount/incentives through Feed-in-tariff for selling electricity
  • Environmental contribution of consumers towards net zero target through self-sustained energy technologies (Solar PV and other DERs)

Consumers expect each experience to be as good as their most-recent best experience. Some of them expect to transact in the autonomous digital self-service channels faster than they can do on a phone call or any other indirect/offline interactions. Consumers also expect relevant and context aware communications. Key tenets of consumers engagements are primarily driven by the following aspects:

  • Unified Experience – consistent experience for both consumer & prosumer across channels
  • Intent Detection – pre-emptive and proactive, guided interactions, efficient FIT (Feed-in-Tariff) processing
  • Hyper Personalization – consumer demographics, priority & need, tailored product & services

E2E Empowerment – informed decision making, total control, taking advantage from DR (Demand Response) & other events.

Figure 5: Consumer Involvement Approach

For example, an advance notification through automated e-mail or SMS to consumer about potential outages due to harsh weather helps them remain up-to-date and be prepared with  battery storage back-up they have. 

3.2    Potential Opportunities

We observe DER brings plethora of business opportunities, some of the key ones are listed below:

  • DER aggregation – provision of grid/energy services
  • Digital trading of energy through blockchain
  • Widespread adoption of IT/OT technology
  • Consumer to prosumer – alternate source of revenue
  • DERMS (DER Management System) orchestrations – data collection, processing, and provisioning
  • Load forecasting – DER system integrations & data analytics

… and so on

3.3    Recommendations

Given below are the lists of recommendations to be applicable for Utilities and End-Consumers:

Figure 6: Recommendations for Stakeholders

4    Conclusion

As the traditional boundaries of utility industry continue to blur, consumers are looking towards a) affordable, b) reliable, and c) sustainable energy. To solve the puzzle of this energy trilemma (a, b, & c), utility companies are already in their energy transition journeys. This would call for a conscious effort towards the empowerment of prosumers by helping them contribute to decarbonization. Focus is on rapidly growing zero-carbon solutions & corresponding technologies, irrespective of the current state and maturity of utility in their digital transformation journey. Future consumers will need to be treated as a partners, wherein the relationship is based and nurtured on value sharing amongst the entities throughout the DER journey.

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