Part II - Unlocking the potential of the Brave New Energy World

By: Michael Schmela, Executive Advisor


While the first day of our Digital Solar & Storage Event in December focused to a large extent on start-ups and their business models for the 'New Energy World' (see article with summary of Conference Day 1 here), on the second day, the presenters looked at the potential and challenges of digitalisation from many different angles.   

Storage costs - the way is down

Unlike solar, which has become the lowest cost generation source for many applications and in several regions, stationary battery storage is still in the early stages of the cost learning curve. However, Juan Pablo Ralon of the International Renewable Energy Agency (IRENA) illustrated that economies of scale as well as technology improvements that reduce material needs will drive cost reduction. The total energy installation cost of Li-Ion batteries could fall by an additional 54 to 61% by 2030 in stationary applications down to around $80/kWh. This will not be  exclusive to Li-Ion batteries, other storage technologies are likely to experience a similar dynamic. "With the dominance of Li-Ion batteries in the EV market and the synergies in the development of Li-Ion batteries for EVs and stationary applications the scale of deployment of Li-Ion batteries is likely to be of magnitude higher than for other battery technologies" said Ralon.

Saif Islam of the International Battery Energy Storage Alliance (IBESA) has identified 5 major trends for storage in Europe. Besides Germany, Italy and other European markets also show growth potential. While residential customers remain important, business and retrofit customers offer a huge potential but have yet to become the focus of the industry. Saif sees increasing competition and price pressure as many utilities, automotive companies and others move into the storage market. Regarding business models for the future storage market, he pointed to communities and other services, such as balancing power - but only if "market conditions are good", which in other words means that the regulatory environment needs to be set appropriately.

SolarPower Europe's task forces on storage and digitalisation have prepared policy papers with regulatory asks for the digital solar & storage business to thrive in the long run. Bernd Engel, SMA Representative of the Board for Grid Integration and Digitalisation Task Force Leader at SolarPower Europe presented the taskforce's updated 'Digitalisation & Solar' Report. This includes 10 regulatory asks, such as the removal of barriers to peer-to-peer trading, ensuring that regulation does not preclude new technologies and business models, acceleration of smarter grids and rewards for solar grid support services.

A number of companies are already much more advanced with their developments and product offerings than regulatory environments often allow today. Kelly Lin, Senior Director Solar, Storage & Battery at BYD from China showed how a global leader in batteries and electric vehicles, which even produces solar modules, is addressing the New Energy World. Lin presented a smart energy management system that allows remote monitoring via mobile phones.

If the policy framework conditions are set right, however, solar plus storage can today be installed even without subsidies. BYD supplied 10 MW of solar modules and a 6 MW storage system for a subsidy free solar+storage power plant in the UK, the first of its kind in the country. "Such a platform enables storage providers, distributed generators and assets to participate in grid balancing schemes, such as dynamic frequency response markets, ancillary services, etc.," said Lin. The Return on Invest is estimated to be achieved in around 5-6 years, she said. 

Traditional utilities need to re-invent themselves

"Energy transitions, the digital revolution and customer empowerment are the key challenges for the utility industry today," said Marianne Boust, Managing Consultant at Capgemini Consulting. "As digital start-ups are emerging at every stage of the solar value chain, traditional utilities must seize the opportunities that solar-plus-storage offer before the competition does," she added. Boust presented a case study about Dutch utility Eneco, which has developed a Smart Home IoT Hub platform called Toon as part of its transformation from a utility into an energy service provider. Designed as a smart home solution, Toon integrates a smart thermostat, energy insights and a smart home hub into one 'single-to-use' product. "This creates a daily customer interaction which results in increased customer satisfaction, better customer retention and a higher NPS score," emphasised Boust. Eneco has even created an open API for the Toon platform, which allows third-part developers to programme extra apps and integrate new services.  While this is a typical "make" example for a utility to get into the software value chain, Eneco has also pursued the "buy" path - and acquired innovative German clean energy supplier Lichtblick.

Many traditional utilities, in particular mid-size utilities, are missing the right strategy to address the digital energy transformation. One utility company on the forefront embracing the energy revolution is Enel from Italy. "You can play the game, watch the game, or change the game," said Enel Green Power Chief Innovation Officer Ricardo Amoroso in his talk "Towards the New Power Economy". Enel has decided to change the game, moving from a 'traditional strategic focus' to a 'Fast Strategy & Strategic Agility' (see slide). Part of this strategy is acquisitions, such as the takeover of demand-response/management leader Enernoc. The Enel X strategy is to address new customer needs with innovative technologies: the e-Industries (including distributed generation, energy efficiency, demand response and demand side management), e-Mobility (including private charging wall-boxes, maintenance and vehicle2grid), e-Home (including automated home management, financial services, home2grid) and the e-City (including smart lighting, fiber wholesale network, DG & DMR) - together these services will ensure that the future will be totally 'electric'. 

The challenge for both small and big players remains the same - missing regulatory guidelines, missing infrastructure. "To develop the business, a clear and transparent regulatory framework is needed," underlined Amoroso. Luc Grare, co-founder of the Belgium start-up Too Much Energy, shared his experience from a blockchain-based pilot test in the port of Antwerp. "The DSO is not ready to cooperate in a peer2peer transaction,"he said. One meter is currently connected to one electricity provider and it is not possible to have multiple power suppliers, this includes power supply from neighbours. In addition, the DSO is not able to charge a price meter line used to transport the power from generator to consumer.

See you in Munich

The 1st Digital Solar & Storage Conference clearly showed that we are only at the beginning of the Brave New Energy World - there is so much more to discuss, innovate and implement. Save the date for the 2nd Digital Solar & Storage Conference on 23-24 October in Munich.

Go Digital

In the meantime, we ask everyone to sign our 'Go Digital' declaration, which is putting the spotlight on the opportunities of digitalisation, which will help to make the energy transition cheaper and foster the integration of renewable capacities in the market. To learn more about the 'Go Digital' declaration, please contact Sonia Dunlop.