The energy world is changing. From a concentrated and centralised system discovered in 1888, the energy system is evolving to a decentralised system with diverse energy generation sources. There are two main factors causing this transformation: the introduction of information technology in the energy sector, and the emergence of alternative energy generation sources at scalable levels.
The convergence of information technology and energy
In the past 20 years, the Internet has connected 2,5 billion people together. In the coming years, this number will double. Concurrently the Internet will connect 40 billion machines to those 5 billion connected people. The next stage of connectivity is about machines. The combination of IT software with electrical devices and products provides customers with real-time information and smart services that allow all stakeholders an opportunity to implement active energy efficiency, share better energy, and consume at the right moment across smart grids.
Alternative energy generation sources
From the shale gas boom in America, to the rise of renewable in the energy mix, energy sources are widening and reaching scalability. The price of crystalline silicon photovoltaic cells for instance, have gone from $78 per Watt to $0,72 in less than four decades. Policy driven markets have facilitated the deployment of these technologies that are reaching grid-parity in many markets. As of the first quarter of 2014, there are 79 countries where price of photovoltaic electricity is equal to or less than the grid average price.
This wider choice in energy generation sources, combined with the emergence of information technologies in the energy sector, are redefining the energy ecosystems on demand and supply side and paving opportunities of increased efficiency at all levels, from people to power plant, to ensure a complete optimisation of the supply chain.
Impact on the entire energy chain
For consumers, the connection of energy systems, phones and machines in everyday life, provides real-time information on consumers’ needs and offers an opportunity to control their consumption. It reduces the consumers’ energy bill, and increases their purchasing power within a very short pay back. Access to real-time information and flexible, connected devices, allow consumers to change their consumption patterns. They are empowered to choose when, what and how they consume energy, presumably when electricity is cheap and green.
At the utilities and regional level, energy efficiency enables increasingly reliable supply and provides hedging against black outs. It also saves significant amounts in investments costs by avoiding the creation of new plants. Energy efficient technologies also save significant amounts by increasing resilience, security and anticipation of extreme weather conditions. Utilities can connect supply and demand, and offer new services to their customers, so that they consume less and at a more optimal time.
At a country level, the implementation of higher energy efficiency levels creates an economic opportunity for reduced public expenditure as governments balance their energy trades that are causing major strains on the economy. The EU energy balance has multiplied by 6 in 10 years, with oil imports alone reaching USD 500 bn in 2012 (Enerdata, 2013). The Efficient World Scenario put forward by the World Energy Outlook of the IEA, highlights that there could be USD 570 bn positive effect of the Energy Balance of five key regions, with China seeing USD 190 bn and India USD 110 bn of positive effect, through the implementation of a higher energy efficient scenario; as well as a huge potential for job creation, with estimates ranging from 800 000 to 1 million jobs by 2025 in a country like France (Ademe, OFCE, 2013).
Power the people
Individuals are at the centre of this new energy world, where roles are redefined. No doubt, utilities must keep their central role in this evolution and they are already rethinking the way they operate and address customers. Customers are changing in needs and behaviours, as well as demands. This transition needs solid change management to avoid over-production. All stakeholders, utilities, cities, facility managers, technology suppliers, should be prepared to continue an evolution in their roles, in business models and in technology offers. The transformation places consumers at the centre and opens the way for new models of consuming energy and managing resources. A reliable and simple technology is needed to guide all through the various transitions.
Technologies exist to harness this efficiency at all levels
The evolution of technologies through software and the Internet of Things are opening new means of optimising the overall energy chain through systems of integration. Such systems ensure that energy is safe, reliable, green, and efficient for the least amount of money. Already, by using the Internet to connect people to their environment, and their environment to the smart grid, by switching off automatically, by promoting consumption when energy is cheap and green, at least 30% savings is achieved through energy efficiency measures that do not involve major renovations or disturbances to the end-users – all this with paybacks under three years. Software now allows the curtailment of peaks. As an example, Schneider’s EnergyPool has curtailed over 1,7 GW of energy since its inception – equivalent to a nuclear reactor. Customers in buildings, industry, and data centres are offered a range of technologies, from products to systems and solutions that restrain energy use and allow saving energy throughout the entire chain.
While we should embrace cost-effective tactics to confront some of the major challenges of our generation – from resource scarcity, traffic congestion, pollution, and an increase in extreme weather conditions, as well as energy poverty and competitiveness – estimates show that over two thirds of energy efficiency’s cost-effective potential is still not being implemented.
Change is now
Market failures and resistance to change explain this untapped potential. Pay back times are short, within a few years, and investments are refunded by savings. Governments should therefore create environments to facilitate the implementation of energy efficiency and smart grids. They should enforce a level-playing field and ensure that all energy markets are free and competitive.
Transitions can be long. But this one is worthwhile and should be happening faster as it brings benefits to all: carbon emissions reduction; consumer purchasing power; job creation and country balance of payments and capital expenditure avoidance are the benefits. It is time to power the people and unleash a new world of energy that is digital, local and consumer focused.
For more information contact Ntombi Mhangwani, Schneider Electric South Africa, +27 (0)11 254 6400, ntombi.mhangwani@schneider-electric.com, www.schneider-electric.com
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