Spurred by technological innovation and globalization, the world economy has undergone profound change over the past century. Entire industries have been reimagined and transformed. However, in the energy sector, change has come at a much slower pace.
Electricity generation largely looks the same today as it did 100 years ago, with large power stations at the center of our electricity network. While other industries, such as computer networking, have progressed toward a distributed structure that effectively connects people and resources, energy generation has yet to witness a similar evolution.
To be sure, the sources of energy powering these centralized stations have changed. Coal is beginning to lose its luster, having been dethroned by the rise of natural gas and nuclear energy. At long last, however, we are on the cusp of a seismic energy transition that promises to reshape the way we produce and consume energy. This shift heralds a more user-friendly, economical and technologically sophisticated energy economy, with tremendous benefits for industry players, consumers and the planet.
There are four factors contributing to this transition. First, due to declining prices, a growing number of solar-plus-battery systems are being connected to the grid, introducing new and distributed energy sources. Second, the proliferation of internet-of-things (IoT) devices is giving people significantly more control over how they use their energy. Third, the introduction of electric vehicles has not only created strenuous demands on the energy grid but also jump-started exciting opportunities that can also feed energy back into the grid and help stabilize it. Finally, traditional generators like coal plants are increasingly being retired and replaced by more cost-efficient and environmentally friendly sources.
At the electric grid level, this means that centralized power production will soon become a thing of the past. What will replace it? In the new energy economy, solar energy will be generated from individual rooftops, stored in batteries in homes, and the energy will then be used in the same location that it is produced. Neighborhoods may be connected in mini-networks, and cloud-management solutions will balance energy production and usage. The days of sprawling electric lines transmitting electricity from central stations to remote communities will become a thing of the past. Just as the “think global, act local” credo has changed how we think about and consume food, a similar shift will occur in the energy industry.
In our homes, our energy usage will mirror the way we use other high-tech devices — it will become smart. There will be one energy manager, likely the solar energy inverter, that manages all the home’s energy needs. The manager will produce solar energy, store it in a battery and govern the use of that energy at optimal times. This will all be done through one user-friendly, convenient app. You want to take a shower at night? Your energy manager will know how hot the water should be based on your personalized needs, how long your shower will take based on your preferences and how to use solar energy most effectively so that it won’t send your electric bill soaring. It won’t stop at showers — it will apply to all your appliances, from your washing machine to the charging of your electric vehicle, which today can already be powered by your solar energy system.
My company, SolarEdge, provides smart energy solutions and grid services to help with the creation of virtual power plants based on solar and storage systems. These have been implemented by a number of utility companies around the world, including Australian-based AGL and American-based Green Mountain Power. Other companies like Peak Power and Enernex are working to modernize the energy grid with new technologies, to both relieve pressure on the grid and to create new opportunities for energy storage and consumption.
Beyond solar, big data is helping engineers design wind farms that maximize energy production and minimize cost. SMART wind farm controllers respond to real-time data and direct turbines to shift their output to optimize power production. Toshiba Energy Systems & Solutions Corporation has invested in a research program to improve operational efficiency of their geothermal power plants by coordinating IoT and big data analytics by capacity factors of 10%.
Together, these create a shared energy economy in which consumers become active participants in the electricity market. No longer passive energy consumers, people will become energy producers and sellers. Not unlike the democratization of transportation and lodging by the ride-sharing and home-sharing industries, the new energy economy will create a marketplace filled with new opportunities, empowering ordinary consumers who will be able to take charge of their energy consumption.
When this new energy network is combined with the power of artificial intelligence, big data and predictive analytics, the possibilities for a smart energy grid will prove extraordinary. Equipped with AI and data analytics, the smart energy grid of the future will make insights-driven decisions for optimizing energy allocation. This will present a substantial boon to the market, generating unprecedented efficiency by enabling a better matching of supply and demand.
For an industry that has been slow to evolve, this change comes at a vital time, with the shifting energy demands of a growing global population combined with the immense power of IoT, AI and big data to create a brave new energy economy. Its arrival comes not a moment too soon.