Traditionally, electricity is generated centrally, in large plants and then transmitted to consumers through transmission and distribution lines. Consumers use energy without realizing its origin, usually remembering their local dealership only when paying the monthly bill or, in the worst case scenario, during a power outage.
However, the energy industry is undergoing transformations that are changing the relationship between utilities, suppliers and energy consumers. This transformation is guided by three trends that are often referred to as the 3Ds: Distribution, Decarbonization and Digitization:
- Distribution: the popularization of solar panels made it possible to generate energy in a distributed way, not in centralized manner in large plants. Consumers are now able to produce their own electric energy, and are no longer wholly dependent on their energy distributor.
In the wake of this trend, new business arrangements have emerged, such as solar farms and wind farms, which allow access to renewable energy by consumers who, perhaps, cannot (or do not want to) directly produce their own energy. If, on the one hand, distributed generation can help the electric system to meet the growing demand for energy of modern society, on the other hand, it must demand greater dynamism on the part of the electric system operators, who do not have much control over the energy generation infrastructure.
The challenge is even more complex because of the intermittent nature of wind and solar energy sources (that is, the amount of energy generated depends intrinsically on environmental conditions, such as sun and wind), which makes the management of the electrical system (and the necessary balance between supply and demand) more complex.
- Decarbonization: the impacts of global warming and the need to reduce carbon emissions should drive the entry of electric vehicles into both Brazillian and international automobile markets. In addition to the increasing demand for electricity, electric vehicles will also require greater dynamism from the electrical system, as they will be moving and will need to be recharged in various locations. The expansion of the charging infrastructure, both public and private, is one of the essential factors for making electric mobility feasible on a larger scale.
- Digitization: digital transformation, which has revolutionized several industries in recent years, has also reached the energy sector. The connectivity and computerization of electrical systems, a concept known as Smart Grid, promise to make the system more efficient, reliable and sustainable. In Smart Grid, there will be the collection of data from the electrical system, in real time, through IoT (Internet of Things) devices, and their subsequent processing in Big Data infrastructures.
It will be possible, for example, to access energy consumption data remotely — reducing operating costs — and immediate detection of supply failures — allowing fast action to solve problems in the system. Artificial Intelligence (AI) algorithms can predict equipment failures, so preventive maintenance can be done, or even help in forecasting and balancing energy supply and demand, which will be some of the greater challenges as electric mobility and distributed generation increase.
These trends should make the electrical system more complex and dynamic, with less control and predictability over energy generation (due to distributed generation) and demand (due to mobility of electric vehicles), and technology can be an important ally in this scenario. In this context, the list below introduces some technological trends for the energy sector for 2020 and the coming years.
IoT in legacy system instrumentation
The change from the current electrical system to the Smart Grid will probably be done through the instrumentation of the legacy system, since the complete replacement of current equipment (such as power meters, transformers etc.) by modern (and already connected) equipment may not be viable economically.
IoT devices can be used in this context to enable data collection and the performance on the elements of the electrical system. Although IoT devices are often associated with 5G technology, current communication technologies (such as GPRS, LoRA, CAT-M1, PLC) can meet the needs of most applications in the energy industry, creating solutions focusing on low-cost hardware devices that can bring connectivity to the legacy system.
Blockchain and renewable energy trading
The distributed generation of energy created a new type of actor in the electrical system, called a prosumer. The term is used to define users who not only consume energy from the grid, but also produce energy through, for instance, a solar panel installation.
At times of the day when the solar panels’ energy generation is higher than the prosumer’s demand, the excess energy is injected into the network, resulting in credits for the prosumer. In periods when the local generated energy amount is lesser than the demand (for example, during the night), the consumer can use the energy directly from his distributor, deducting the credits he generated in times of excess from his final bill — this is how the system works: credit clearing.
This credit clearing can even be done in other consumer units under the same client, allowing, for example, a person to install the solar panels in a property in the countryside and use the credits to reduce the bill for the energy used in their apartment in the city. The credit clearing system also allows for shared generation (through cooperatives or consortia) in which people come together to create higher-capacity facilities that can benefit participants (this is how solar farms operate). More details on this topic in the article Blockchain, distributed generation and energy sharing.
Currently, the Brazilian credit system does not allow direct sale of credits between different users, but this mechanism has already been explored in some countries. It allows, for example, a person who does not have a solar panel installation to buy energy directly from their neighbor’s installation, at prices freely negotiated between them.
Blockchain shows up in this scenario as a technology that enables direct energy transactions, between energy producers and consumers, in a form that is decentralized and independent from energy distributors. Although this direct trading model is not yet allowed in Brazil, Blockchain has also been explored in Brazil as a way to ensure the traceability of renewable energy, from its origin (for example, on solar farms) to its final consumers — usually people or even companies that seek not only cost reduction, but incentives to the production of clean energy.
Blockchain has also been used in this context to enable the commercialization of Renewable Energy Certificates, certificates for a certain amount of renewable energy generated (1 REC equals 1 MWh of energy), which are normally purchased by companies to achieve their carbon credit reduction targets.
Artificial Intelligence in recharging electric vehicles
Smart Charging Systems can optimize the use of public and private charging infrastructure, in addition to minimizing the impact of electric vehicles on the operation of an electrical system. Smart Charging Systems are capable of managing recharge sessions, intelligently balancing the demand of vehicles with the availability of charging points and the supply capacity of the electrical system (more details on this topic in the article Smart Recharge of Electric Vehicles).
Artificial Intelligence algorithms are used to generate charging strategies that take into account the needs of drivers, as well as the limitations of the grid and the electrical installation of the electric vehicle charging station. The systems can take into account the specific characteristics of the vehicles (such as the capacity and current level of their battery), the needs of drivers (such as their geographical location and charging preferences) and the availability of public and private charging infrastructure (including factors such as proximity and price).
The systems can plan the charging sessions, controlling not only the allocation of vehicles to the charging points, but also the power that will be used during the charging session. The system can increase or reduce the charging power according to the instantaneous capacity of the network (or of the local installation), thus avoiding spikes and overloads to the electrical system.
Virtual assistants and consumer empowerment
Digital transformation has profoundly changed the way companies relate to their customers. In this new era, consumer experience has become a central element of business across all kinds of segments of the economy and this trend is also reaching the energy sector.
The energy trading model is changing, bringing greater power of choice to consumers through distributed energy generation and a free market. Customers will be increasingly empowered by this power of choice and by the digital technologies that are already part of their daily lives.
To meet the demands of the digital consumer, energy distributors created self-service channels through websites and smartphone applications. A consumer who wants to register a lack of service, ask a question about energy bill or get some other information, can solve the problem directly through their computer or smartphone.
More recently, virtual assistants capable of interpreting text or voice in a more natural way, called chatbots, have been used compose service channels. These virtual assistants bring even more convenience and engagement with consumers to businesses (more details on this topic in the article Virtual Assistants in the Utilities Sector).
The popularization of so-called Smart Speakers, electronic devices with native voice interfaces (such as Amazon’s Alexa or Google’s Nest) will represent yet another channel for users to interact with digital services. Companies and energy distributors in the sector should also adapt to this new trend.
It is not just a matter of creating another support channel, but of integrating voice solutions (and also Internet and smartphones) into service proposals, in order to bring greater engagement with customers. Imagine, for example, in the near future, a customer asking their virtual assistant to ensure that their electric car is recharged for an emergency trip that has arisen. The virtual assistant will be capable of not only interpreting the voice command, but also determining the best way to respond to the request, also taking into account the cost and origin of the energy.
Cybersecurity in the energy industry
After all, will the digitalization of the energy industry also bring security problems, with possible cyberattacks, as has been the case in other sectors? Yes, in fact, there have already been attacks on the energy sector and the problem may intensify with the evolution of the sector’s digitalization.
The first known cyberattack to cause a blackout in a power grid happened in the Ukraine in December 2015. The hackers were able to compromise the systems of three power distribution companies and interrupt the supply of electricity to final consumers for several hours. Since then, other attacks and invasion attempts have been identified in different countries around the world (more details in the article Cyber Attacks in the Energy Sector).
In Brazil, there are still no confirmed cases of cyberattacks that have caused power supply suspension, although there are rumors that blackouts in 2005 and 2007 were caused by cyberattacks. However, utility companies in the energy sector must be aware of this risk and consider investing in information security as one of their priorities.
Security policies must be adopted by companies in order to guarantee the security not only of their operation but also of their customers’ data. Digital solutions must adopt security practices and technologies (such as cryptographic keys, or even Blockchain) to ensure greater security of systems and data. Artificial intelligence techniques, such as anomaly detection, can help in the detection of possible invasions, so that measures can be taken to prevent further damages.
The trend of advancing distributed energy generation, electric mobility and digitalization should modify the electrical system profoundly, affecting energy distributors and companies operating in the sector, as well as consumers.
The scenario will present challenges, but also many opportunities for the sector, as shown in the cases explored in this article. Obviously, this list is not exhaustive, just an overview of some trends that we can see for these and the years to come.
Venturus wants to be part of this transformation, helping companies and energy distributors create innovative solutions through our expertise of more than 20 years of experience with technological research and development.