I recently had the opportunity to chair the Strategy and Innovation stream at the EnTech Conference in London. The agenda was well thought through and took the audience on a journey from the high level (as outlined by Ofgem) through the lens of the institutional investor, the corporate innovator, and the technology-led new-comer.
I have always believed that the big question for the energy system (and by that I don’t mean IT system – I mean all elements of the system including people, devices, companies, regulators) is one of Optimisation: “How do we optimise to deliver minimum damage to nature with the best outcome for people?”
That theme of optimisation was taken up by Jonathan Brearley of Ofgem, who talked clearly about the contribution from Power, Transport and Heating. There was a clear insight that there are significant points of integration and that interoperability must be designed into all innovations if we are to have the biggest impact.
A discussion facilitated by a provider of EV infrastructure was up next. The description of a software platform-based approach using machine learning to optimise electric vehicle charging. The talk was entitled “Intelligent Platforms ‘Joining the Dots’”. It was an impressive talk and great to see how emerging technology is operating at the intersection of the energy and transport systems. However, when pressed about full interoperability of vehicles (mobile energy assets) across platforms and open standards, it all became tricky. Comments from the stage and in the audience “we need to be quite careful” … “balancing commercial interests” was revealing; platforms may be intelligent, but it appears that a still-prevailing mindset is that commercial value is dependent on closed platforms and lock-in.
The panels from institutional investors, corporate innovators and angel investors highlighted some of the success stories, but also the problems people face when wanting to push the innovation agenda forward towards a net zero system, but still face barriers within the organisation and from financial markets.
It’s interesting to see where the mindsets exist across the entire energy landscape. Running through the answers from the investment community was a thin thread of “it has to big or it has to be aggregated to be of value”; the incumbent retailers were struggling with the question of how to innovate in a large corporate when the KPIs at the heart of the organisation perpetuate the focus on short term earnings; the angel investment community frustrated with the inability of the whole industry to change fast enough to combat climate change.
Optimisation must be based on open data and interoperability
It is clear to me, from my days in Innovation in an energy company, through my journey as an independent with IoT, digital identity, AI and blockchain, that there is a clear answer:
We need to create a situation where optimal decisions are taken at every point in the energy system (at “the edge”), based on trusted open and verifiable data. Such a system will enable millions and billions of DERs at the grid edge, in homes, streets and buildings, and moving from location to location (as in the case of EVs) to transact with each other and the grid in ways that we never thought possible. Value will be given back to the people, through optimising their position in the home, transacting with neighbours, trading on flexibility markets and responding to constraints.
This will require a new digital operating system that uses digital identity, smart contracts and an interoperable blockchain transactional layer. This will allow certainty and trust and regulators will ensure that rules are coded into transactions.
The question I always get is “it’s ok to say what we need, and provide a vision of the future, but how do we get there from today’s top-down system?” We clearly need the debate around TSO-DSO to make the right call; we need DSOs to implement systems and processes that are able to have visibility and enrolment of all connected assets down to kW level; we need regulatory changes to get ahead of this curve and not play catch up. This will, of course, require collective and co-ordinated effort.
I can’t help but feel that new businesses will step in, show the rest of the market the way, and everyone else will follow.
A glimpse of the future
I have seen the future operating system with the Energy Web Foundation – the power of “the ecosystem”: open-source, public, governed by the global energy community.
It was towards the end of the session at EnTech, that I had a glimpse of the future energy company.
Social Energy: the vertically integrated Retailer, Aggregator and VPP behind the meter. How innovative to see the model, previously thought of as only possible at large scale and connected to the Transmission Network, deployed in every house. How interesting is it going to be, as we see this type of model replicated by others with millions of such arrangements aggregating, not only to erode the returns from the large assets that have been funded by institutional investors, but to return greater value to people?
It was amazing to listen to the sheer attention to detail in optimising all parts of their business; the use of AI and analytics in sharp relief when observing that the inverter was consuming 100W of power, on standby – then working with their ecosystem partner to bring this down to 22W. It is this type of focus that will get us to minimum carbon and best value to people.
The true breakthrough will be when an individual asset, with its own identity, can operate across any platform in line with the rules of regulation and physics, without being double counted.
Optimising the Whole System
It’s great to see such businesses arriving and gaining traction. It’s also great to see the intelligence inherent in new platforms. But the true breakthrough will be when an individual asset, with its own identity, can operate across any platform in line with the rules of regulation and physics, without being double counted.
We must ensure that the likes of Social Energy and other companies that emerge, including hyper-local communities, are able to transact seamlessly with each other, with the local grid and with the national system in a way that is frictionless and trusted. That will require a new operating system; one which is open-sourced has open-access for all and is fully interoperable; one which has, at its basis, a unique digital identity underpinned by the immutability of a global open blockchain.