Electricity: Vision of the Future

Go back Hrishikesh Tripathi
Expert in Transmission & Online payments

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The future is HYBRID!

The electricity system is in the midst of a transformation, as technology and innovation disrupt traditional models from generation to beyond the meter. Three trends in particular are converging to produce game-changing disruptions:

  • Electrification of large sectors of the economy such as transport and heating
  • Decentralization, spurred by the sharp decrease in costs of distributed energy resources (DERs) like distributed storage, distributed generation, demand flexibility and energy efficiency
  • Digitalization of both the grid, with smart metering, smart sensors, automation and other digital

network technologies, and beyond the meter, with the advent of the Internet of Things (IoT) and a surge of power-consuming connected devices

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These three trends act in a virtuous cycle, enabling, amplifying and reinforcing developments beyond their individual contributions. Electrification is critical for long-term carbon reduction goals and will represent an increasingly relevant share of renewable energy. Decentralization makes customers active elements of the system and requires significant coordination. Digitalization supports both the other trends by enabling more control, including automatic, real-time optimization of consumption and production and interaction with customers.


Three factors fuel the potential for disruption by these grid edge technologies:

  1. Their exponentially decreasing costs and continuous technical enhancements.
  2. Their enabling role for innovative business models, built around empowered customers.
  3. The sizeable improvement to the asset utilization rate of the electricity system, which is typically below 60%; electric vehicles alone could add several percentage points to system asset utilization (as noted below)

Together, these grid edge trends pave the way towards a system where traditional boundaries between producers, distributors and customers are blurred, increasing the complexity of system governance. Customer preferences and expectations are shifting towards fewer carbon emissions, greater choice, real-time interaction and sharing, always-on connection, higher transparency, experiences and learning opportunities through services more than products, better reliability and security.

Drawing parallels to the media industry and the internet revolution, it is possible to expect that customers will participate differently from before. The role of the grid is evolving beyond supplying electricity and becoming a platform that also maximizes value of distributed energy resources. Revenue models will see a smaller share of income derived from centrally generated electrons, but could be compensated by revenue from new distribution and retail services. Individual customers will be able to select the technologies of their choice, connect them to the grid and eventually transact with other distributed and centralized resources.

This smarter, more decentralized, yet more connected electricity system could increase reliability, security, environmental sustainability, asset utilization and open new opportunities for services and business.

 

We will touch second part of this topic soon. Stay tuned!

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