Better data management will drive energy revolution like internet boosted global economy
We founded WePower over three years ago. Throughout that time we have been focused on finding the easiest way how businesses of all sizes could buy energy directly from producers. Two third of global energy is consumed by corporate and industrial users, so helping them move to full sustainability is the easiest way we can make an enormous impact.
Our research and development included technological, commercial and legal aspects of green energy procurement. Now, three years later, we have a robust platform that connects corporate energy buyers, energy retailers and green energy generators to allow easy direct energy procurement for companies of all sizes.
An important part of our research included exploring data management concepts for energy transactions. But why is data, well regulated and technologically well executed data access important for the energy transition?
There are three fundamental trends shaping the energy markets today. First, technology and production costs of green energy are dropping rapidly. Second, energy generation is rapidly decentralizing and, third, the average size of an individual generation unit is dropping. Perhaps counterintuitively from a pure economies of scale perspective, but this is how energy developers are bypassing transmission and distribution grid constraints in the real world. By building more lower sized units instead of large units which are more susceptible to revenue loss from curtailment.
What does it mean? More deals. More counterparties.
It’s clear that we cannot subsidize renewable energy forever. At least not in the western market economies. And subsidies are decreasing everywhere. This means that we have lots of investment looking for returns in a more uncertain market.
On the other hand, we see large global companies making exotic transactions (Power Purchase Agreements or PPAs) directly with generators. In essence, what we are seeing is the balance sheets of private companies being used to back the bank loans needed to build new renewable generation. PPAs are the model on how new renewable generation can be built without government subsidies.
What can we learn today from places where the fundamental conditions are met? Where renewables are market competitive unsubsidized?
We witness that only large companies are doing PPA deals. It’s because buying and selling these energy products that are correlated to individual renewable generators at scale requires a different operating system. Most importantly, those systems depend on the availability of data from the energy generators and energy consumers. Our consumption data represents our patterns and choices as consumers.
Energy is a commodity and price is everything. The value we can create depends on the volume of energy that we transact. The cost depends on the number of metering points. So to realize the dream of a democratic energy system, where people vote with their wallets for what type of generators they are purchasing energy from, we need cheap, GDPR compliant and technically robust data access to market participants and third party software providers. Without GDPR or alternative strong regulation there is a real threat that the consumers themselves become the products. That is why we at WePower today focus on the corporate energy buyers.
In 2018, we aimed to test the mass tokenization of energy data. We successfully uploaded a year’s worth of energy production and consumption data to Ethereum blockchain. This data represented more than 24 TWh in national energy consumption. In 2020, we expanded our collaboration further and participated in European Energy Data Access Pilots 2020 program. Our goal was to evaluate the complexity and the cost of accessing individual user data from Elering Estfeed, as well as the Estfeed system’s fit with our platform. And that we did.
From our results, I can say that the Estfeed system is still one of the best we have encountered. However, even with Elering’s rather good solution, the process wasn’t easy. Opening data to digital service providers and traditional energy market participants requires balancing a robust legal framework, a good technical solution, and a workable commercial arrangement.
The differences between countries and their approaches are rather significant. While each smaller hurdle on its own seems solvable, when combined they make the problem complex. It sure seems that the path to developing a secure and reliable energy data access platform that could be used by digital energy services throughout Europe will be longer than expected.
What are your thoughts on this? Feel free to also read my previous article on how well-defined consumer data rights are key to a faster energy transition. Our mission is to speed up the global shift to renewables. We aim to provide the next generation technology layer for the energy industry.
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