Energy Technology Convergence, Explained

Photo by Marius Masalar on Unsplash

The energy industry is entering the age of the ‘Energy Technology Convergence.’ 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 by capitalizing on their capabilities, opens new markets, and reduces cost. The energy industry’s technology convergence will consist of:

  1. Distributed energy resource (DER) technologies
  2. Internet of Things (IoT) (connectivity of devices)
  3. Technology cost reductions
  4. Blockchain technology
The Energy Technology Convergence (Source: EBN)

Prosumer

As part of the Energy Technology Convergence, the energy industry is 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. A prosumer can now create a level of energy independence or generate new revenue streams, shifting their leverage held in the marketplace. This has been made possible by significant cost reductions and technology advancements in DERs (reference previous post).

Distributed Energy Resources (DERs)

Simply defined, DERs are assets located at the grid edge that can impact load. DERs typically include rooftop solar PV, batteries, electric vehicles (EVs), demand response (DR), demand-side management (DSM), energy efficiency, etc.

Reference Industry Definition 1:

Smart Electric Power Alliance (SEPA), in collaboration with Advanced Energy Economy (AEE) and Rocky Mountain Institute (RMI), defines DERs as:

DERs are physical and virtual assets that are deployed across the distribution grid — typically close to load, and usually behind the meter — that can be used individually or in aggregate to provide value to the grid, individual Customers, or both. A particular industry interest centers on DERs that can be aggregated to provide services to the electric grid, such as solar, storage, energy efficiency, electric vehicles, and demand management.

Reference Industry Definition 2:

US-based Regional transmission organization (RTO) PJM International LLC (PJM) defines DERs as:

‘Distributed energy resource’ is a term for smaller power resources — such as storage, load reductions and advanced renewable technologies — that are connected to the electric distribution system and can provide services necessary to meet power system needs.

Enter Blockchain (and Distributed Ledger Technology)

Blockchain technology is the missing component that enables Peer-to-Peer (P2P) and Transactive Energy (TE) 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 (unit of energy, reference below) transactions between peers, but could also include valued grid benefits such as flexibility, resiliency, reliability, deferred transmission & distribution (T&D) upgrades, etc.

Peer-to-Peer (P2P) describes interactions and/or transactions that occur between two parties in the absence of intermediary or centralized oversight. In energy, P2P is locational marginal pricing that leverages the provenance of an electron.

Transactive Energy (TE) is defined by the National Institute of Science and Technology (NIST) as a system of economic and control mechanisms that allows the dynamic balance of supply and demand across the entire electrical infrastructure using value as a key operational parameter.

Watt is the SI unit of power, equivalent to one joule per second, corresponding to the power in an electric circuit. Consumers may notice their electricity bill rate is reported in $ per kilowatts-hours (kWh) which is simply 1,000 watts per hour. Reference here for further explanation on the difference between a watt and watt-hour.

In P2P & TE markets, the local balancing authority, utility, and/or T&D provider will likely be a participant and compensated accordingly for the value they contribute.

A Familiar Example

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. The effect is to connect users with resources, networks, marketplaces, etc. that were previously unattainable and unknown. This is technology convergence, and make no mistake, energy is next.

Smartphone Technology Convergence (Source: AT&T)

Bringing It Home

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.

EBN is building an ecosystem that will lead the Energy Technology Convergence. The mission is to drive DER asset supply chain efficiencies and scale installations for a low-carbon future — today! In our next post, we’ll discuss ‘The Case for DERs’ in detail, including economic value, consumer choice, storm hardening and public safety, and resiliency.


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