This is the last in a series of posts (Part 1, Part 2, Part 3) exploring how automated devices that produce energy conservation outcomes can integrate with local energy trading, reducing network costs and driving financial value for energy users.
Currently there are very limited ways for fully valuing the negawatt—that is, in a way that captures the value to the broader network and community — and returning value to the end customer who invests in the equipment and systems required to enable them. While these devices often offer additional value (over and above their demand reduction capabilities) as part of their overall proposition, there are many cases where, at present, the individual savings do not outweigh the upfront cost of the device itself (even though such costs can be relatively low).
While markets exist for demand response (DR) at the larger scale — for example industrial customers — we’re not aware of markets supporting energy conservation actions of this nature — i.e. small scale, household-level, aggregated. The National Electricity Market (in Australia) is not geared towards distributed energy resources in general, less so DR, and thus is not a good fit for valuing and triggering the sorts of responses and actions we’ve described in this series of posts. With different manufacturers and vendors developing their own models and ways of accessing this capability within their offering, there is potential that we’ll end up with a fragmented marketplace that weakens the value of the whole. Not only in terms of having fragmented customer networks (as highlighted in our previous post), but also in having to deal with different models and implementations of how to trigger a desired outcome across different mechanisms and technology.
A well designed local energy trading marketplace resolves these challenges, providing a unified, coherent and consistent model of mobilising behind the meter resources to achieve a specific outcome, whether this be generation, storage or demand response.
But there are other challenges, inherent in the concept of the “negawatt,” that also need to be considered. A key one is being able to verify that action was taken. For generation, it’s pretty easy to see that energy was exported to the grid in response to some signal — that an action was taken. It’s much harder to verify that an action has not been taken as a result of such a signal. That is to say, a way to confirm that the device would have been consuming at a certain level and was either reduced or deferred in response to the signal, rather than just not being run at that time as it would have otherwise. For example, how would you verify that you intended to have your washing machine run in the afternoon peak, but instead you ran it in the morning?
In the case of a large, relatively consistent load, in an industrial context for example, it is relatively easy to determine that key equipment was not run or turned off for a period. When we’re talking about lots of smaller appliances — where the timing of the load is not necessarily constant nor consistent (for example, air conditioners, washing machines, pool pumps), and where each individual action is relatively small, falling within a “margin of error” of measurement — it’s much harder.
“Big data” and energy disaggregation techniques (PDF 850KB) can play a role, by being able to accurately demonstrate energy consumption patterns had deviated from what was expected or “normal”— indicating action taken — based on previous usage data and other inputs like weather or temperature data feeding into a predictive model. This is also one area where blockchain technology may be beneficial. A smart contract may indicate the usage profile that was in place at the time the request was received, and what usage profile was actually executed in response, with corresponding usage data encoded in the blockchain as evidence.
There is also a need to define a clear and trusted “source of truth” and some form of auditing/certification for devices as well as verification that such devices have not been tampered with to fudge the results. This conundrum has collectively been solved, albeit imperfectly, with the heavy regulation of metering infrastructure, so this type of mechanism is certainly plausible.
Thus, more work needs to be done before negawatts can become commonplace. But in our view it is a worthwhile effort given the significant benefits that both users of energy, and the providers of electricity, can gain. And one that we’re very excited to be exploring in our roadmap for the Nexergy local energy trading platform.
Posted by Grant Young, Chief Experience Officer (CXO) of Nexergy.
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