In today’s post, we’ll delve into the first 3 of 6 important macro trends and themes that are driving and shaping the Internet of Energy. (We’ll examine the last three trends in our next post.) You don’t have to be a complete energy wonk to appreciate these ideas. If you live in the developed world and you use energy, you’re participating in the Internet of Energy every day.
Trend 1: Energy efficiency is bending the load curve
A combination of efficient technologies, programs, policy, and structural changes in the economy have helped to plateau electric demand in the U.S. starting around the beginning of the Great Recession. What’s more, per capita electricity use has actually peaked and started to decrease, all while the overall economy continues to grow. This is bad news for anyone wed to the old business model of simply selling electrons.
The Internet of Energy is partly concerned with addressing this issue and its existential implications (don’t worry, we’re not going to start proclaiming questionable death spirals just yet). Innovative utilities are looking to embrace more customer-centric energy service offerings before quick-moving (and less regulated) third parties swoop in and co-opt customers and relationships.
Trend 2: First solar, then storage, become competitive
It’s been said that solar is the earthquake and storage will be the tsunami.The revolution in solar technology is also disrupting utilities’ business as usual. You’ve heard about it before: solar quickly got cheap, is getting cheaper, and is very competitive with grid power in several markets today even without subsidies. As solar scales, batteries are expected to quickly follow, enabling greater renewable penetration and providing critical grid services. It’s been said that solar is the earthquake and storage will be the tsunami.
In this environment, the old centralized model of power generation will quickly give way to a hybrid system, with larger base load generators (some of which will be utility-scale renewables) serving alongside smaller distributed generators and storage assets.
Trend 3: Electrify everything
What are some of the ripple effects of this increasingly renewable grid? For one, it continues the decarbonization of U.S. electric production that has been occurring since the mid 2000s (although there are many factors behind this, including efficiency and cheap natural gas).
The Internet of Energy will be based on electricity and renewables, not direct consumption of fossil fuels.
It also contradicts what used to be prevailing wisdom on the use of combustion fuels in buildings. It used to be that high-efficiency natural gas water and space heating presented the lowest cost of ownership and carbon emissions. Now, with a grid that includes greater proportions of renewables and other lower-emissions sources, high-efficiency electric water heating, space heating, and transportation can be better choices than their fossil-fuel burning counterparts.
The Internet of Energy will be based on electricity and renewables, not direct consumption of fossil fuels. A push toward so-called beneficial electrification can help electric utilities stabilize declining loads, add valuable grid services (demand response, frequency regulation, and the like), while reducing greenhouse gas emissions.
In our second installment, we’ll review the next three trends that help put the “Internet” in Internet of Energy.
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