March 1, 2017

The first steps into a new form of distributed energy business

Jyri Kivinen

Strategy & Business Development Manager, Energy Utilities, Tieto

The energy revolution is powered by advances in renewable energy technologies, electrified transportation, energy storages and digitalisation.

One key driver in the revolution is the plummeting price of photovoltaic solar panels that has now made solar generation one of the most cost-effective ways to generate electricity. On the horizon, we can even see advances in paint-on solar surfaces, which will exponentially increase the amount of solar-generated electricity in the future.

In the Nordics, though, solar radiation is heavily concentrated on the summer months, whereas most energy is needed in the winter months. This has always been the drawback of solar technologies in the Nordics.

Fortunately, the development of smart, compact electricity storages is developing in pace with the innovation in generation. Advanced energy storage solutions from suppliers such as ABB and Tesla are extending the benefits and usage opportunities of solar systems. These systems transform traditional household solar micro-production to distributed energy resources that offer benefits even during the winter months.

Digitalisation and cloud services open new business models when building-level micro-production, temperature, ventilation and storage can be controlled collectively in real time by energy companies or aggregators.

The whole network becomes a virtual power plant

A service provider controls the customers’ assets with automation, thereby creating a virtual power plant – distributed energy resources controlled through cloud services as an entity. These large energy storages enable the regulation and storage of renewable energy like never before.

Demand response, storage and micro-production transform the normal passive customers to prosumers, with the customer getting compensation for the control and/or smaller electricity bills. Customers can participate in the electricity market with very little or no effort.

Digital to manage the energy ecosystem

In future, digitally controlled large grid-level power storages will help system stability and enable the use of more renewable energy.

Customers with offline distributed energy resources will emerge and distribution-level storage facilities create micro-grids. Active customers can go online, assisted by IoT and cloud solutions.

Third-party energy service providers will appear, offering virtual power plant services to electricity retail and distribution companies, or become market players themselves.

This new business landscape brings benefits to all stakeholders. End-customers can minimise their energy costs and benefit from new services. Distribution companies can better control peak power and have backup power on tap, for example during brownouts and blackouts. Retailers can more efficiently exploit the spot market, balance management, and improve customer commitment.

On the brink of a new market

To enable these new business models, advanced IT companies are developing modular end-to-end SaaS solutions to manage the distributed energy resources of tomorrow, maximising their business efficiency. The core is a platform that enables the interaction and control of millions of devices. On top of the platform are the business applications needed to handle asset management, maintenance, service management and end-customer applications.

The solution covers the entire value chain from utility level to all the distributed energy resources. Adopters can operate virtually in Uber style, providing full service without owning a single power generation plant.

The Nordic countries have advanced to the point where the wholesale energy market is being operated as one entity, Nordpool. Electricity hubs will soon lead to the creation of a pan-Nordic retail market. The next step will be a pan-European wholesale market.

The market is already being divided among early adopters. Are you one of them?

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