By John Langley-Davis, Strategic Marketing Manager at Schneider Electric
Before the century is through, the energy world as we know it will cease to exist. Spurred on by massive and widespread electrification programmes in the developing world, humanity’s hunger for energy is unlikely to be sated. At the same time, concerns around climate change are driving calls for the deep decarbonisation and decentralisation of energy sources the world over. Owing to the technological advances of the last few years, this energy transformation is well within our grasp.
Yet, at the heart of this transformation is the need for greater resilience and increased reliability. Faced with challenges such as severe weather events, value chain disruption and fluctuating power supply and price, many companies are seeking to improve energy security and responsiveness to future-proof operations.
Reliability of power supply is a real — and growing —concern. A recent survey of 250 energy managers indicated that 25 per cent of companies experience regular power outages. These power disruptions can be costly: 18 per cent of responding companies had experienced an outage that cost the equivalent of £70,000 or more.
The key barrier to achieving reliable power supply is either an immature or aging grid. For instance, in India, where more than 240 million people still lack access to power, 50 per cent of electricity generation is wasted due to poor transmission to rural areas, as well as power theft.
Some have suggested that the solution to reliability rests in stockpiling coal to support conventional baseload generation, but this is actually very risky. For example, during Hurricane Harvey in the US, grid operators in Texas had to switch from coal-fired generation to natural gas due to the coal’s level of water saturation.
Instead, the key to the reliability problem is an integrated, active approach to energy management that enables resilience with its diversity of supply and demand. Active energy management is a holistic view of the strategies, data and resources needed to reduce consumption, drive innovation and maximise savings. Rather than treating the procurement, dispensation and evolution of energy as disparate activities, the Active Energy Management approach assumes that these activities are interdependent and indispensable.
Active energy management
By addressing operational efficiency, enabled by digitisation and technology, operators can reduce susceptibility to outages and potential downtime. Strategically sourcing energy supply from a diverse portfolio that includes renewable generation reduces risk while maximising continuity. Investing in new energy opportunities and distributed energy resources (DERs) — like demand-side management (DSM), microgrid technology and battery storage,— can further the development of corporate assets that are responsive, agile, and reliable.
DSM is the process through which consumer electricity demand is modified to satisfy energy needs across the grid. It bolsters electrical grid reliability, ensuring that demand does not exceed supply and flattening demand curves by redistributing consumption from peak to off-peak times. It also addresses operational and emergency reserves, capacity, and real-time balancing. Yet, in addition to the capabilities of DSM to balance demand and supply and maintain grid reliability, it has great potential to enhance the lives of energy consumers and end-users.
DSM greatly encourages the consumer to better understand and manage their energy usage. The provision of advanced metering infrastructure (AMI), or smart meters, gives users unprecedented insight into their consumption. With this knowledge, they are better equipped to manage their energy needs, moderating their consumption to reduce costs.
Smart meters serve as the point of engagement for consumers and their energy, providing them with more information on their energy consumption across various interconnected devices. In the future they could allow them to participate in automated demand response programs, with the widening provision of adaptive energy tariffs offering an additional financial incentive to homes and businesses.
The result is both cost and carbon savings. Reductions in resource consumption from efficiency projects lower carbon emissions and the money saved can be used to fund sustainability projects. Once a cost centre, clean, green and renewable electricity is now cheaper than conventional generation in more than 60 countries, and will be the most inexpensive source of power everywhere by 2020. DERs continue to drive savings by allowing organisations to store power to use during peak load times and by reducing transmission utility charges.
Making DERs the epitome of resilience
As more entities embark on the Active Energy Management journey and explore the flexibility of DERs, it is inevitable that there will be a growth in the deployment of microgrids to achieve grid autonomy.
A self-contained, localised grid that typically includes a combination of generation and storage assets, microgrids can both integrate with existing grids or operate independently in “island mode.” This flexibility and reliance on DERs makes them the epitome of true energy resilience.
Microgrids can be used as stand-alone power generation sources — as they are in both rural or off-grid electrification, or disconnected, remote geographies — or, as back-up power stations that ensure continuity of critical systems. And new financing models, such as microgrids-as-a-service, mean that companies can invest in a system without any upfront costs.
Often a familiar component of microgrids, battery storage also has a vital role to play. As the technology becomes cheaper, it is growing into an economically viable route for reducing peak consumption levels. The ability to store the energy generated from distributed, renewable sources provides a dependable power source regardless of weather conditions. Battery storage also provides a valuable reservoir of backup power, which can ensure a consistent power supply when parts of the grid are shut off.
Onboard batteries housed within the latest electrical vehicles (EVs) also hold much potential. As EVs are rolled out in ever-greater numbers, they will undoubtedly create complexity for operators. Yet, while their charging stations may put pressure on localised parts of the grid, their batteries could be used to give some of the energy back in times of need.
Energy storage also further extends the value of renewable energy sources by enabling self-consumption to be increased by up to 100 per cent. It allows locally produced energy to be consumed when it is needed, produced when it is relevant, and be sold back to the grid when it is most economically advantageous to do so. It is estimated that 3 million energy users in Europe are already generating at least some of their own power. By adding an energy storage system, customers are maximising self-consumption of this energy and gaining more control over when to use it.
Practice what you preach
Despite the advantages of Active Energy Management and its role in improving reliability and resilience, corporate intention lags behind implementation. Research conducted by GreenBiz and Schneider Electric found that while 82 per cent of respondents have initiated energy efficiency upgrades, only 30 per cent are planning projects directly related to resilience, and a mere 1 per cent have considered or implemented energy storage solutions.
Pursuing Active Energy Management and its range of distributed energy solutions can help businesses and communities insulate themselves from the inevitable and profound energy transformation. Reducing consumption, introducing renewables into our power supply and investing in evolving clean technologies can create valuable redundancies in power supply that reduce the value of lost load, especially for power critical industries such as data centres, healthcare and air transportation.