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How the energy landscape will change in 2018

Blockchain, artificial intelligence, drones and software are just some of the drivers that will change the face of energy in the next 12 months.

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The world’s most powerful utility in 2025 does not exist today.

At very least, this utility does not operate today as it will in the future. Perhaps that means the world’s most powerful utility will not own any generation capacity. Or that this utility will entirely forego electricity trading in its current form. Or perhaps the world’s most powerful utility in 2025 isn’t a utility at all. Maybe it’s a software company or an electric vehicle network operator.

Radical as these propositions sound, we’re well on our way to some version of this future. ‘Digital’ advances including data science and the Internet of Things are bringing every possibility closer.

In the US alone, the International Energy Agency’s new Digitization & Energy report states that digitization has the potential to save $80 billion per year, or about 5 per cent of annual power generation costs. The same report finds that investment in digital has increased more than 20 per cent annually since 2014.

So what are the key technologies leading us to this brave new world of electricity? Below are my predictions for some of the ways the energy landscape will change in 2018:

The grid gets really really smart

At Minds + Machines San Francisco 2017, Exelon Utilities vice-president and chief analytics officer Brian Hurst showcased how Exelon is using software to improve grid reliability during major weather events.Blockchain, artificial intelligence, drones and software are just some of the drivers that will change the face of energy in the next 12 months, writes GE Power Chief Digital Officer Steve Martin

In preparation for a big storm, Exelon would traditionally staff maintenance workers in specific areas that were likely to experience problems caused by downed trees and other debris impacted T&D. The result was often unnecessarily overstaffing some areas while the utility waited for storm events to occur. Adopting GE’s software will enable Exelon to aggregate weather data alongside historical outage data to predict where T&D might be impacted by storms.

The result will be more reliable electricity delivery even during wet and windy weather. In 2018, utilities will increasingly connect every asset in their network, thereby building a sensory network that knows what is attached, its energy profile and its condition, so that they may better serve customers, keep costs low, and find new revenue opportunities.

Blockchain: Pilot project to mainstream

2017, blockchain cropped up in the electricity industry in the form of peer-to-peer trading within microgrids. Peer-to-peer energy trading startups and pilot projects proliferated quickly. Companies like Conjoule and Grid+ are already running large projects in Germany and Texas, respectively.

Sonnen GmbH, a GE Venture-backed battery maker, has partnered with a home building company to install batteries that will store excess energy from the rooftop solar installed on each home. I’d bet peer-to-peer trading will not be far behind. What remains to be seen is how established utilities compete or begin incorporating Blockchain technology into their trading strategies.

The size of the prize is real: The World Economic Forum has already identified the digitalization of Real Time Supply and Demand Platforms as an $800 billion market opportunity. In 2018, I predict that major utilities will experiment with Blockchain as a flexible trading solution that suits the dynamic nature of renewable energy and distributed energy resources.

Combined artificial intelligence approach in plants

Power plants are like robots without brains, and AI can solve that problem by making physical processes more predictable and, in some cases, automated.

The cost of operations and maintenance for running the grid and power plants, even wind farms and large-scale solar, remains high. In 2018, we predict AI will rapidly automate basic maintenance of industrial processes, from real-time fuel optimization (which significantly impacts greenhouse gas emissions from coal and gas power generation) to wind power forecasting (whereby AI optimizes turbine blade positions to increase power yield).

At the same time, we foresee a blended human/AI approach to digitalizing operations that frees up human capital to focus on high priority issues. Electricity has a mature workforce with 25 per cent of industry workers reaching retirement age within five years, so power producers and utilities will need to invest substantially in creating a culture where operators are comfortable working in AI-enabled environments.

Drones integrate with maintenance alerts and human workforces to lower O&M costs

In 2017, use cases for drones moved beyond consumer goods deliveries to the industrial sector in the form of airborne video inspection using GPS, radar, and infrared.Drones integrate with maintenance alerts and human workforces to lower O&M costs

Drones have huge potential for reducing O&M costs. Just think about the ability to monitor long stretches of transmission lines, or even directly removing debris causing outages. Global demand for drones in the energy industry is expected to reach a cumulative market value of $4.47 billion between 2017 and 2025.

In 2018, utilities will adopt drones as key nodes in the electricity network, connecting equipment health and maintenance apps like Asset Performance Management with the field service workers and drones that complete the maintenance. The result will be an automated process by which an application predicts an outage before it occurs and assigns the work to the appropriate person or drone, which then closes the work order with information about the asset health for improved app intelligence.

EV adoption forces the smart charging issue

Electric vehicle sales will increase rapidly in the next 30 years. BNEF’s latest report suggests that “EVs are on track to accelerate to 54 per cent of new car sales by 2040”.

The resulting growth of electricity demand from electric vehicles could overwhelm the grid and pass on higher electricity costs to consumers. National Grid estimates that if all of the new EVs in the UK alone were to charge during peak times, the resulting demand growth could reach 8 GW higher in 2030. Utilities like PG&E are already exploring the need for demand response, completing an 18-month pilot programme with BMW that incentivized drivers to be flexible with their EV charging by sending alerts via a mobile app. In 2018 and beyond, these programs will become the norm as utilities, startups and government organizations launch smart charging programs alongside growing EV adoption.     

An explosion of consumer apps finally delivers on the promise of smart meters

After years, in some cases more than a decade, of smart meter build outs, 2018 will finally be the year we see consumer-friendly software applications emerge that help both utilities and their customers manage demand, and the cost of electricity supply, and to mitigate the need for additional capacity buildouts.

Even countries with 100 per cent smart meter penetration have yet to see these types of breakthroughs, but 2018 should be different. GE’s recent partnership with Apple, and the subsequent work by some leading utilities to roll out new consumer-friendly apps are leading the way. For commercial and industrial customers, where intelligent consumption can mean significant savings, adoption is likely to be even faster.

The recent IEA report states that if the full potential of demand response were implemented, the results would be “about 185 GW of additional flexibility for the electricity system globally in 2040 – roughly equivalent to the currently installed electricity supply capacity of Italy and Australia combined.” The dollar value adds extra perspective here: “This amount of flexibility would avoid a cumulative $270 billion (in 2016 dollars) of investment in new electricity infrastructure.”

In 2018, utilities will rethink the smart meter data lake and launch mobile friendly apps that are easy to use and explore incentive structures most likely to enhance the success of demand response programs.

That’s my take on the year ahead.