The ‘Energy Technology Convergence’ Explained
The energy industry will see a vast degree of transformation over the next decade, and it will be primarily attributed to ‘technology convergence’. Technology convergence aggregates separate technologies, creates efficiencies, opens new markets, and reduces cost. The energy industry’s technology convergence will consist of 1) Distributed Energy Resource (DER) technologies 2) IoT (connectivity of devices) 3) technology cost reductions and 4) blockchain (distributed ledger) technology.
As part of the Energy Technology Convergence, we’re already starting to see the ‘prosumer’ emerge. A prosumer is an end user of electricity who now has the option to both produce and consume electricity. Previously, an end user could only consume electricity and demand was assumed inelastic. This is no longer true, and has been made possible by significant cost reductions and technology advancements in DERs. Simply defined, DERs are assets located at the grid edge that can impact load. DERs typically include rooftop solar PV, batteries, EVs, demand response (DR), demand side management (DSM), energy efficiency, etc.
Blockchain technology is the missing component that enables peer-to-peer (P2P) markets for prosumers to participate. It creates the backbone (similar to the internet) and facilitates market transactions for prosumers to exchange their ‘products’. The product can simply be kWh transactions between peers, but could also include grid benefits to the local balancing authority such as flexibility, resiliency, reliability, deferred transmission and distribution upgrades, etc. In P2P markets, the local transmission and distribution provider will likely be a participant and compensated accordingly for their value.
A recent example of technology convergence is the smartphone. As illustrated below, the smartphone combines: the personal computer, internet, camera, video games, guided exercise, movies, tv, music, telephone, news, books, courses, maps, messaging, email, calculator, shopping, gps — the app list is endless. This is technology convergence, and make no mistake, energy is next.
History shows us that what results from technology convergence is superior than what was before, will dramatically transform, and those that build business models today will reap what they sow. Parting thought for all businesses in energy:
What are you doing today to be relevant and competitive in the Energy Technology Convergence?