New power generation means a new set of rules
Source: Wikisha
The power industry is in the process of transformation as technology and innovation disrupt traditional models from power generation to instruments.
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The three trends are particularly converging. First, electrification is underway in large economic sectors such as transportation and residential heating. Secondly, the decentralization of resources has increased due to the sharp decline in costs and the public's support for distributed energy (DER), such as distributed power generation, distributed storage, energy efficiency and demand response . Third, the digitalization of systems is increasing, both before instruments with intelligent metrology and digital network infrastructure, and with the advent of the Internet of Things and the surge in power-consuming connected devices, outside the instrument.
These trends at the “edge” of the power grid have together paved the way for energy systems where traditional boundaries between producers, distributors and consumers are blurred – the complexity of system governance is intensifying. What is the return for
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This smarter, more fragmented but more connected power system has the potential to improve reliability, security, environmental sustainability and asset utilization and create new opportunities for services and businesses.
Consumers' expectations for energy suppliers are also developing rapidly. Today a considerable number of consumers, both residential and commercial, are increasingly focused on reducing carbon emissions, increasing options, and improving reliability and safety. While consumers may express their desire for these attributes and their willingness to participate in energy use, most grid edge technologies are still in the early stages of adoption, and even such early adoption requires a meaningful boost of subsidies or regulation. Over the past half century, the massive adoption of innovative products ( penetration rate exceeds 50%) has dropped to about 15 to 20 years and is dependent on “reasonable adopters” who focus on cost and convenience.
In view of this, how can we accelerate the adoption of these new grid edge technologies in the coming years and achieve it in a way that meets the new set of needs described by consumers? The challenge for policy makers, regulators and the private sector is to help make these technologies more economical and convenient, thereby leveraging consumer preferences to transform the system.
In order to speed up adoption, it is necessary to combine the “push” of regulatory and policy actions with the “push” of private innovation, marketing and product development. To fully realize the vision at the edge of the grid, significant efforts are needed to overcome four key challenges in consumer engagement, regulation, infrastructure and business models.
1. Consumer Engagement
Many factors affect consumers and make it difficult to achieve high participation in the current system. Today, electricity is seen as a commodity, and it is expensive and difficult to engage consumers in new technologies. Electricity also accounts for a low share of consumer wallets, with a cost of about the same as the daily latte in the United States. Furthermore, consumers rarely spend time thinking about their electricity bills – which may be due to complexity and inconvenience. In practice, most consumers do not adopt new technologies unless they are both economical and convenient.
2. Specifies
The current regulatory paradigm hinders distributed resources from providing the full value of the system and often generates incentives to promote inefficient development of DERs, which is not based on system efficiency and distorts its best use in the grid. New grid edge technologies and services are breaking through traditional boundaries and regulatory paradigms that have been successful over the past century. However, they need to make progress to further promote technology adoption and keep up with evolving systems.
3. Infrastructure
Uncertainty in ownership and cost recovery has hindered key stakeholders in the public and private sectors to deploy favorable infrastructure – these infrastructures that complement the grid and will become the backbone of future power systems. This new infrastructure is crucial to improve consumer convenience, accelerate adoption, and give full play to the full value of technologies such as storage, demand response and electric vehicle .These charging stations, as well as smart meter , broadband communication infrastructure, network control and automation systems, are all basic elements. Establishing appropriate data ownership and transmission regulations and laws is also crucial to the digital world ahead.
4. Business model
Based on changes occurring at the edge of the power grid, new consumer segments are emerging. The industry has traditionally treated consumers in a very standard, one-size-fits-all manner and has not experienced the same level of demand-based consumer segmentation as other industries have. With consumers’ differences and the combination of different technologies, they provide opportunities for new, complex segmentation. The new segmentation model will find ways to maximize consumer value based on consumer preferences.
Regulation, infrastructure, consumer engagement and new business models are key to unlocking these huge opportunities and addressing this transformational challenge. Through the future platform of electricity, institutions that provide solutions work hard to collect and analyze practical examples and best practices in these four areas, which can develop recommendations for both the public and private sectors.
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