With the energy industry moving to an increasingly digital future, it’s important to understand where both the opportunities and challenges lie. Optimising our grid alone could unlock US$1.2 trillion of societal value by enabling smarter efficiency from customers, creating new jobs, and lowering peak energy demand.
The International Energy Agency (IEA) highlights how digitalisation could ‘identify who needs energy and deliver it at the right time, in the right place and at the lowest cost’, and it’s already improving efficiency, safety, accessibility, and sustainability in energy systems across the world.
Energy Watch explores three digitalisation projects around the world, and how they can inform the digitalisation journey in countries like Malaysia.
Germany has a well-established global reputation for efficiency, and one which the nation is working to extend into the realm of digital power. One area the country is particularly focusing on is the development of energy efficiency products and services.
To incentivise innovation and the development of digitally-enabled energy efficiency solutions, the German Energy Savings Meter Programme was introduced in 2016. The scheme provides individual businesses up to EUR2mil of public funding to encourage enterprises to innovate and develop energy efficient processes for their clients. The amount of funding from the scheme is directly linked to the energy savings achieved by the new tech or processes, providing an incentivised pathway to enhance sustainability. This initiative also provides a testing ground for digital solutions for energy efficiency.
In the first round of this initiative, rolled out between May 2016 and December 2018, the German Government committed EUR62mil of funding. The second round has been expanded to EUR100mil, and runs through to end of 2020.
The initiative has sparked a vibrant start-up culture for digital energy companies, with more than 50 pilot energy saving projects approved. It has also led to a greater roll-out of smart meters, providing further consumption insight that will unlock wider efficiency opportunities.
Thanks to its broad criteria, the programme has delivered innovation across a wide range of digital ecosystem initiatives. While the flexible nature of the program has been welcomed, it also contributes complexity in proposal assessment and issuing funding. This has resulted in increased administration costs, and necessitated a customised evaluation process due to the diverse nature of projects.
Germany’s experience in this project has shown that continued communication with stakeholders is vital to evolve and streamline a project. Crucially, it also demonstrates how connecting energy savings with wider market benefits can be an important enabler to further adoption of digital technologies.
The IEA predicts that big data and analytics could save the global power industry US$80 billion annually between 2016-2040. Digital analytics can improve generation and network efficiency, reduce unplanned outages, reduce operational costs, and extend the operational lifetime of grid components. Programmes such as Australia’s National Energy Analytics Research (NEAR) US$14.3mil initiative are aiming to tap those benefits.
A result of a partnership between the Australian Government, the Commonwealth Scientific and Industrial Research Organisation (CSIRO), and the Australian Energy Market Operator (AEMO), the NEAR initiative seeks to link data on energy demand with energy consumption data.
The data is collected across key aspects, such as appliance usage, building profiles, demographics, consumer behaviour, and evolving economic circumstances. With the information collected, NEAR aims to improve demand forecasting (the ability to project and plan for energy demand) and incorporate emerging innovations such as rooftop solar PV generation and network flows.
This program is helping unlock greater knowledge of energy consumption down to the residential level, providing regulators with a better understanding of end consumer experiences. It also provides a valuable insight into peak demand, particularly around weather-related spikes that previously caused challenges for forecasters.
Information gathered by this project feeds into the important competition policy in Australia’s liberalised energy market, showcasing how tariff changes can impact households, particularly the most vulnerable consumers. This is creating a system which supports even the most disadvantaged households.
The programme has not been without its challenges. Accessibility and availability of data is perhaps the largest hurdle, with regulatory restrictions creating an incomplete data landscape. Analysing individual data from smart meters while avoiding privacy concerns has required the initiative to turn to user-group forecasting rather than focused individual consumption insight. This has spurred a call for regulatory and technical reforms to further enable timely and accessible data usage.
Smart grids offer a digitally-empowered backbone to future electricity infrastructure. In 2011, the Basque regional government initiated a public-private partnership to modernize its electricity grid in the urban areas of Bilbao and Portugalete, as well as the rural district of Lea-Artibai to enhance efficiency while improving the competitiveness of local businesses.
Smart meters once again formed an important foundation to this initiative, allowing remote management and providing real-time data for electricity suppliers to inform supply decisions. Smart substations also helped improve supply for more rural areas of this grid.
Six years from its launch, the project was complete, with over 400,000 smart meters installed across a region with a fresh, innovative new grid infrastructure. This has resulted in reduced electricity costs for consumers, while also improving the operational efficiency for energy suppliers. Crucially, this new grid also provides a future-ready integration for renewable energy, decentralised generation, and energy storage and electric vehicles which are projected to experience rapid adoption in coming years.
As well as providing cost benefits to the local industry, the project stimulated local innovation and economic opportunity. 96% of all project contracts were awarded to suppliers from the Basque region, providing further local stimulus.
While the project was broadly seen as a success, retrospective analysis does indicate that better consumer communication would have been valuable. Innovative new smart grid infrastructure marks a significant change for many consumers, and education around the benefits of this transition can be vital to ensure public support.
Malaysia is in the midst of its own digital transformation journey, leveraging advanced digital technologies to power a more sustainable, efficient, and cost-effective electricity ecosystem.
Digitalisation is an opportunity that will need to be driven forward in partnership
In Malaysia, Tenaga Nasional Berhad (TNB) is expanding use of smart meters across Peninsular Malaysia, with the target of nine million units installed nationwide by 2022, an ambitious goal to achieve across four years. The lessons from a pilot project in Malacca mirrored the learnings of Spain’s 6-year programme, highlighting the value of consumer communication and education.
On a fundamental level, the basic connectivity to enable these opportunities is as vital as the technologies. On this front, Malaysia’s National Fibre Connectivity Plan aims to deliver 98% broadband coverage in residential areas by 2023, delivering a minimum bandwidth of 30Mbp/s. TNB is leveraging its extensive infrastructure experience to accelerate the implementation of the national broadband plan. This will provide a further avenue for connected opportunities that integrate everything from smartphones to whole smart cities .
Image source: Says.com
The adoption of big data analytics for Malaysia’s large-scale solar project in Sepang is just one example of how analytics is leading a smarter, more efficient energy ecosystem in Malaysia. Big data analytics is one element of the ‘Grid of the Future ’ emerging in the country, using digital technologies and automation to enhance the energy ecosystem.
Inevitably, this is an opportunity that will need to be driven forward in partnership — a reality evidenced in all three case studies highlighted above. Government, energy regulators, industry operators, businesses, and consumers will have to work together to unlock the greatest value, taking an informed approach informed by many of the lessons of other markets. Connecting to that approach through digital technologies represents an economic and social opportunity which will transform the energy supply industry and consumers all around the world.