What do digital trends mean for future of energy as we approach the fourth industrial revolution?
Wood was the world’s first source of energy and served as the preeminent form of energy though the latter part of the 19th century. Water mills, coal, petroleum, natural gas, nuclear electric power, and renewable energy were respectively momentous advances in our history of energy consumption.
Humans have always hunted down easier, faster, and more efficient methods to make energy work for them. With flourishing populations, new sources of energy, and technological prosperity, how will digital trends shape the fate of the energy world?
When the onslaught of more efficient, environmentally-friendly power sources is paired with encouraging policy and programs to cut energy use, it makes for a sunny outlook on a refreshed energy infrastructure. But what good is any of this innovative work without energy security?
The International Energy Agency (IEA) considers energy security as the uninterrupted availability of energy sources at an affordable price. Short-term needs highlight resiliency where energy systems can quickly respond to unforeseen changes. Long-term ambitions are geared towards investments in economic developments and sustainability.
Right now, a global spotlight is on the demand for energy security, but sometimes it is misunderstood through a politically-charged lens. This matter is not just a geopolitical issue of import dependency or security of supply: the issue of energy availability and affordability is directly tied to social and economic vulnerabilities.
“There is no one single solution to our energy challenges or to the challenges posed by climate change… we need to be creative. We need to be innovative and we need to work together.” -Canadian Prime Minister Justin Trudeau
Let’s Get Political
It is difficult to speak on the matter without getting political. President Barack Obama’s call for increased research in energy—with a huge clean energy effort—transcends political ideology. The Mission Innovation accord is slated to double energy research spending to cut emissions through new, vital sources. This research and development could lend itself to the economic, social, and environmental safety every living thing depends on.
“Substituting solar, wind and safe nuclear energy for fossil fuels is a big plus for safeguarding the global environment,” City College of the City University of New York’s Professor of Physics Michael S. Lubell wrote. “But it is also a vital step in fighting terrorism and reducing the corrosive whipsaw impacts of price volatility on economies that have come to rely overwhelmingly on oil and natural gas production.”
During the “Three Amigos “ Summit Press Conference in June, Canadian Prime Minister Justin Trudeau explained, “One of the things that we’ve learned, and this is through the Paris Agreement and through many years of following different paths toward solutions, is there is no one single solution to our energy challenges or to the challenges posed by climate change. That we need to be creative. We need to be innovative and we need to work together.”
And work together they will. The landmark North American Climate, Clean Energy and Environment Partnership is a commitment that accentuates the demand for stronger reliability, resilience, and security of the North American electricity grid. These three countries have a shared vision and have started the necessary dialogue about infrastructural changes. What next?
“I know that we will have to pursue multiple different solutions when it comes to clean energy. But cooperation and the collaboration… among our three countries will give rise to innovative solutions that are positive in the area of green energy. I can’t wait to work with the United States and with Mexico in order that together we’re able to face climate change challenges,” added Trudeau.
On a political level, local reactions to current geopolitical concerns—including the call for greater sub-regional independence and the decline of trust in global institutions—indicate further localism. With so much uncertainty and volatility, not one country or its national plan can pull this off without collaboration or the help of smart technology.
“There is a core paradox at the center of the global macroeconomic and geopolitical landscape: economics is becoming more global and politics is becoming more local. The global economy is more interconnected than ever before.” –World Economic Forum
Digital Transformation
A combination of technologies is driving a digital agenda towards embedding more data and intelligence in business models. The need for agility, speed, and digital competence in our complex and often volatile world is urging industries’ reliance on the cloud, analytics, mobile, and cheap sensors.
The energy industry is no outlier in this trend. Supply and demand is exceedingly altered by digital, especially when it comes to four directions: changing patterns of consumption, new ways of optimizing assets, cross-industry partnerships, and the greater use of industrial platforms.
Consumption in our digital age is ruled by the online world. The sharing economy boasts less ownership in lieu of pay-per-use. In turn, our vehicles, homes, and appliances are evolving into intelligent, connected devices that rely on real-time information and the demand for energy. These connected devices can enable efficient use of assets through this data and also create more transparent physical and digital supply chains.
As digital technologies aid the need for data-intensive skillsets, wearables and the vast array of online learning courses will boost workers’ operations and “reskilling” with complex new tools in the energy sector. Industry lines will blur, especially as new consortia are formed and provide integrated pay-by-use services.
The energy industry is understood to be a sector that is slow to change, but the current low prices of oil and the rapid pace of digital is not letting this transformation take its sweet time. Changes are already underfoot in the scheme of the energy value chain.
As the World Economic Forum put it, “The supply side of the industry is impacted by the ability to implement real-time, remote control asset management and predictive maintenance to extend the operational efficiency of assets. This is becoming even more important as the portfolio mix becomes ever more diversified with the growth of renewables.”
Now the myth that solar energy would be too expensive of a technology to show any promise has been dispelled. Thanks to dropping prices, installations at both a utility scale and consumer level have been soaring. In fact, GTM Research says 59 gigawatts of solar photovoltaic systems (PV) were installed globally in 2015, a 34 percent increase from 2014. Concurrently, residential PV has been the fastest-growing sector in U.S. solar, installing over 2 gigawatts direct current (GWdc) for the first time and growing 66 percent over 2014.
Energy storage also has cheapened, resulting in more accessible, affordable options for customers down the line for off-the-grid capabilities. This trend seems to affect regions with high energy prices and where feed-in-tariffs—policy mechanisms aimed to expedite investment in renewable energy technologies—are decreasing. Meanwhile, most consumers and businesses are affected across the board.
A study by the Institute for Building Efficiency revealed that 58 percent of the 687 North American organizations surveyed planned to have at least one facility that can operate off the grid within the next 10 years.
According to Bloomberg New Energy Finance’s annual long-term view of how the world’s power markets will evolve in the future, New Energy Outlook’s (NEO) 2016 report, renewable energy is set to overtake fossil fuels by 2040.
What else is boosting distributed energy resources? Increased electrification of heating and cooling systems thanks to high-efficiency heat pump technology, application of efficient LED lighting and appliances, smart charging of electric vehicles, and advances in energy-efficient products and demand-side management. Now it’s generally two to three times less costly to save a kWh of electricity than to generate one.
A major issue with diversifying our energy resources is the blueprint of the grid itself. “The difficulty associated with integrating variable sources of electricity stems from the fact that the power grid was designed around the concept of large, controllable electric generators,”Scientific American pointed out.
“Today, the grid operator uses a three-phase planning process to ensure power plants produce the right amount of electricity at the right time to consistently and reliably meet electric demand. Because the grid has very little storage capacity, the balance between electricity supply and demand must be maintained at all times to avoid a blackout or other cascading problem.”
The digital transformation of energy systems is paving the way for affordable, reliable energy for everyone. Prosumers—those who produce and consume energy—and the reciprocal communication between energy producers and consumers are easing energy distribution into regions with supply shortages, grid stability issues, or intermittency issues from renewables.
WEF explained, “The aggregation and centralized management of these distributed energy resources— sometimes referred to as ‘virtual power plants’—can transform zero-energy buildings and community-scale microgrids into regional resources by providing, or freeing up, critical electrical system capacity when needed.” In the instances of developing economies, changes like this can break open energy resources for those not even connected to a national grid.
Many North Americans believe the lack of cheap storage for renewables—especially on a large scale—is an assumed threat to accessible clean energy. The U.S. energy storage market has jumped from $111 million in 2013 to $441 million by the end of 2015. It is only expected to grow more—up to sixfold—by 2021, according to Energy Storage Monitor reports.
But a new study may beg to differ.
According to a recent study in Nature Climate Change, the future may not call for storage. Because of the various weather patterns across the U.S., researchers suggest that all we may be in need of is a bigger grid, more renewable power, and better power lines. By focusing on delivering energy to regions when it’s needed, electricity prices could drop by 2030 and emissions could be cut by up to 80 percent from 1990 levels.
The future of digital energy trends will support the evolving patterns of consumption and a demand for energy bolstered by swift rise in populations. How much of this is up to policymakers? Protecting our energy infrastructure falls under their job description, however investing in energy research will be left up to the world of tech and the legacy of STEM education.
Digital can improve capital, productivity, and labor efficiency. It can upskill energy workers, establish better energy security, and ensure predictability. These benefits won’t come without trials: the energy sector will require new skills, and data security will only grow more consequential for everyone.
Once we unleash these possibilities, who knows what the future of power will bring.
