Enabling technologies

Technological applications such as in smart devices and data services are a crucial amplifier of the energy industry transformation, enabling the management of large energy systems and optimizing increasingly complex energy systems. The growing emphasis of digitalization is a consequence of a growing trend derived from the rise of renewables - decentralization. Decentralization is led by the increased deployment of small distributed renewable resources (DERs), mainly in residential solar and small-scale solar PVs which are connected to the distribution grid. The increasing number of these DERs on the supply side are adding complexity to the conventional power sector, making real-time management and control a crucial factor in the success of renewable-led energy transformation.

Digital technologies can support renewables by offering methods for better monitoring, operations and maintenance, and less reliance on human interactions. Data-driven services, new market designs, and new business models can also arise as data from renewable assets can be acquired in mass quantities in real-time. Of the many recent advancements, internet-of-things (IoT), artificial intelligence (AI), and blockchain are often highlighted as the new tools to optimize the operations of the increasingly complex power system based on renewable energy.

Internet of Things (IoT)

In the power sector, the IoT could play a valuable role in making the electricity system more agile, efficient, and smart. When the decentralization of the system is considered, IoT holds significant potential for new management and business model options due to its capacity to obtain and consolidate data. As IoT literally connects power suppliers, consumers, and grid, IoT can facilitate the operations of complex systems and to open new commercial possibilities by enabling users to further monetise the value created by their assets.

• IoT enables the distribution of computing intelligence throughout the entire power grid infrastructure by enabling access to data from remote PV sites, wind power stations, and hydroelectric power systems. The real-time data can be coupled with other public data sources such as weather patterns to help improve the accuracy of renewable generation forecasts. Ths would enable renewables participation in electricity markets and help optimize system operations.

• Real-time acquisition of operational data can also complement the currency practices of managing energy supply based on historical data. This transition from reactive to proactive operations is one of the key factors which can actualize the concept of “smart” grids, offering automated control of multiple distributed power stations.

• Using IoT technology to connect, aggregate, and control various DERs can allow them to participate in frequency regulation markets and demand response, thus providing a balancing mechanism to the grid network. Digitalization can thus enable operations to alert distributed energy resources to the current need of the grid, so that consumers, retailers, or other service providers can react and benefit accordingly.

Big data and AI

By year 2025, over 75 billion devices will be connected by IoT and thus offer a vast outlet to obtain and consume data in the power sector. The use of AI is the most useful tool for decision making in complex systems with massive amounts of data, where more traditional data analysis tools may struggle to define actionable insights. As the power sector becomes increasingly interconnected, AI is needed to intelligently manage systems and derive value from data, as AI algorithms have the ability to produce more precise models. Most of the advances currently deployed in the field have been quite limited to renewable power generation forecasting and in predictive maintenance.

• Self-learned weather models and renewable generation forecasting technology can integrate large datasets of historical and real-time data from local weather stations, sensor networks and sky imaging. Accurate power forecasting at shorter time scales can help generator and market players to better forecast their output and to bid in the wholesale and balancing market. This increased dispatch agility can therefore reduce the operating reserve required in the power grid.

• AI can also improve safety, reliability, and efficiency in the power system by automatically detecting disturbances in the grid. AI models with historical and repetitive system outage data can gradually learn to distinguish between normal operating data and system malfunctions.

• AI can predict not only network load but also consumption habits, which is even more relevant in the current deployment of DERs, such as in solar PV panels, electric vehicles, and heating systems, which change the traditional load shape drastically. Understanding the consumer end habits, value and motivation can greatly predict demand and thus bolster the balancing effectiveness of the smart grid.

Blockchain and digitalized ledgers

The basis of blockchain, in the underlying distribution ledger technology (DLTs), matched with the proliferation of distributed energy resources and grid-interactive devices makes blockchain applications a potential game-changer in the power sector. The technology has the ability to propagate decentralized communication and coordination, by building the technological infrastructure to allow users to safely, and cheaply and quickly connect with each other without a centralized intermediary. Peer-to-peer validation of transactions through enhanced security, better data management, and increased ability to cooperate among multiple actors in the power landscape can be operated while bypassing the need for a trusted, centralized intermediary to verify each transaction.

Currently in the energy sector, blockchain technology is considered for many aspects of the sophisticated energy network, from management of power generation and distribution, sales, billing, payments and trading - particularly in the aim to reduce transactional time and costs. Tools such as blockchain, due to its decentralized and cryptographically secured structure, help to reduce fraud and abuses in privacy which have become a major problem in the power sector.

• Peer-to-peer trade: With smart contracts, trends can be made automatically using price signals and real-time renewable energy production data through the network. The ability to freely sell one’s generated power at market rates to a network of peers can provide incentives for increased adoption of distributed renewables.

• Finances: While hundreds of billions is being invested in renewable energy annually by the public and private sector, it is still not enough to address climate needs. Thus, an opening is still apparent for financing mechanisms and marketplaces to bring together energy demand and finance supply. Blockchain offers a low-cost transactional platform and security features to accelerate financing, in either community-based grassroot movement or large institutional investment.

• Management of renewable energy certification: In many countries, RECs are awarded based on estimation and forecasts rather than on actual generation. This guarantee of origin paradox is yet to be properly addressed in legislation, while the EU have proposed issuing GOs based on measurement of electricity produced. The potential usage of blockchain in the REC process is preventing double spending via cryptography and decentralized governance.

Examples of initiatives that use blockchain for renewable energy operations and management

LO3 energy	LO3 Energy operated the Brooklyn Microgrid, allowing participants to actively engage in the generation, storage, and selling of energy at a local level. This blockchain-powered trading system makes renewable energy more accessible, while making the localized region resilient to external factors, such as power outages.
Energy Web Foundation	EWF is a non-profit organization focused on accelerating blockchain technology across the energy sector, and is developing an open-source platform for large-scale energy sector use cases.
Sun Exchange	Crowdfunding for solar PV installations are operated and overseen through distributed ledger technology, allowing for cross-border transactions and investments.