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Solar, wind, storage and big data: Why energy may soon be free

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Global investment bank Citi is predicting that the combination of near zero-variable cost energy sources such as solar and wind, along with smart analytics and “big data”, may deliver what the nuclear industry promised nearly half a century ago – free energy.

“The notion of free energy came to prominence in the 1960s, as nuclear fusion was touted as a way to provide free energy,” Citi writes in the latest of its “Disrutive Innovations” series, in a section focusing on Big Data and the energy industry.

When those claims were made about nuclear fusion, the technology was in the embryonic stage, and it turned out nuclear energy wasn’t free at all, but incredibly expensive, and getting more so by the year.

But wind and solar, along with demand and storage optimisation, may finally deliver on that promise, Citi says.

“Big Data and advanced analytics are developing rapidly to improve forecasting, automation, customisation, and the democratisation of energy,” it says in its reports.

“The end result is that we are producing more energy with fewer resources ….. the goal of dramatically lowering energy costs for all, with the possibility of free energy in some corners, may finally come to fruition.”

Citi is not the only research institution making such forecasts, but it is in sharp contrast to the general public discussion in Australia, which is dominated by those who insist that the old centralised energy system – slow, inefficient and expensive – will not and cannot be replaced by new technologies.

South Australia is now the focus of that debate, and the push-back against wind and solar by conservatives and, of course, vested interests, seeking to protect their sunk assets is striking.

But Australia is already well down the path to this transformation, given its high level of rooftop solar and the fact that it is considered to be the world-leading market for household battery storage, and smart software.

Already, it has more than 1.5 million households and businesses with rooftop solar, totalling more than 5GW, and many will soon add battery storage. Smart software will allow households and businesses to pool their resources, and trade with each other – if regulators allow.

Citi says this “democratisation” of energy could see renewables and distributed energy resources (DERs) proliferate at the local level, and that will mean fewer new power plants.

Consumers could eventually “trade” energy with others, in the form of “transactive energy” – a concept that is already being trialled by utilities and community energy groups in Australia.

citi energy future

This, of course, has profound implications for current energy industry business models. Instead of investing in large fixed assets, as they have done for the best part of a century, Citi suggests the utilities of the future will become distribution service platform providers.

The state of New York is already going down this path through its remarkable REV (Reforming the Energy Vision) program, and some analysts want this model adopted in Australia.

Citi says REV is one of the most ambitious regulations put forth by a regulatory agency in changing the business models of utilities. The focus is entirely on distributed energy, creating the right regulations and rules for the appropriate platform and operations, as well as system integration and operation.

In the distributed, decentralised world, particularly in the electricity space where the supply and demand of electricity has to match instantly, ensuring a smooth and optimal operation of the grid necessarily requires advanced analytics to process the vast amount of data generated.

“Technology companies could provide energy network optimising software or even operate platforms and energy companies that transition to providing services could become asset-light, as they could control how energy is routed and optimised,” Citi suggests.

“Third-parties or homeowners would become energy providers through Distributed Energy and auto companies would become service and energy providers (e.g. through their battery technology).”

Citi says the fundamental technologies of solar panels, wind turbines, converters, and energy storage have been around for years, but having nearly half or more of total electricity supplied by wind or solar was previously thought to be impossible due to grid integration issues.

But Big Data and advanced analytics are helping the electric grid to function more seamlessly, enabling wind and solar utilization and penetration rates to rise more sharply, and integrating more distributed generation.

A lot of this comes down to predictive software. “Having more precise estimates of renewable generation allows the grid to schedule in the appropriate amount of backup generation and deploy other measures, such as demand-side management.”

One example is the creation of “virtual power plants”, which pool the output and resources of numerous solar and storage arrays that could be located in households, businesses, or CBD buildings or factories.

The software can bring these devices together and operate them as if they were a single power plant. Citi says these are critical because they negate the traditional response to rising demand in an area by building a new centralised power plant or adding new infrastructure.

Recently, the New York regulator denied Con Edison’s request for a $US1 billion upgrade in resolving equipment overloading. Instead, ConEd created the BQDM (Brooklyn Queens Demand Management) program that relied on both traditional utility and non-traditional customer/utility improvements at a total estimated cost of only $US200 million.

Those sorts of cheaper alternatives are being considered in Australia, but the regulators have been slow to catch on – and when large spending cuts are recommended the regulator is taken to court by the utilities.

Citi says this requires a whole new way of thinking. It would require pricing energy and ancillary services at the neighborhood or an even more micro level.

“What does the future of energy look like?” the Citi report asks.

“Producers could tap previously stranded assets and do it quickly; utilities could be winners but only if they transform with the times; renewables, despite intermittencies, could operate as smoothly as traditional fossil energy; emissions should be limited as energy demand is optimized and renewables proliferate. Trillions of dollars are at stake.

“This is a story of how software will transform a hardware-dominated sector; it is the kind of creative destruction that demands fundamental changes in an entire sector.”

  

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  • Charlie

    Kind of with Citi’s big vision but don’t think free energy will become a reality neither think it will be good even if technologically possible. In a market economy there is really nothing for free – this is one thing. Secondly, all the electrons for smart control and big data analytics cost energy to run – this will gradually become a new end-use of energy at both consumer and systems levels.
    I would think smart technology and big data should help with behavioural change in efficient energy use in the first place, i.e. a freedom in control and choice of energy use instead of a free use of energy.

    • david_fta

      These Citi people may be over-egging their argument.

      • solarguy

        Ah, yes just a tad.

  • This is one possible future scenario (one of a number of diverse scenarios) we are wondering about:
    http://www.wattclarity.com.au/2016/04/what-happens-when-energy-is-free/

  • simulacrum

    “… and it turned out nuclear energy wasn’t free at all, but incredibly expensive, and getting more so by the year.”

    You seem to imply you’re still talking about fusion. If you are, I’m not sure where the source of the data is for the claim that generating energy by fusion will be cheap or expensive, given its still a largely undeveloped technology.

    If, on the other hand, by “nuclear energy” you are referring to conventional fission reactions powering nuclear power plants at the moment, then its a slightly odd jump from one topic to an unrelated one, without explanation.

  • solarguy

    Cheap for sure, but never ever free!

    • Andy Boothroyd

      well, it could be free or even negatively priced at certain times of the day, smart meters could take advantage of times of excess supply to fill up batteries, or run appliances.

      • solarguy

        Andy, I can’t see why any utility scale RE supplier would do that. For rooftop solar it can be free once the system has reached pay back for the individual household. Mine has already.
        I can see that a glut of power would be sold cheap for big scale storage etc.

        • Andy Boothroyd

          It already happens, see this example where in Germany, the price reached -130 euro’s per MWH. If the system is producing too much, and you can’t shut down coal and nuclear power stations for short periods, then the most flexible producers are paid to take themselves off grid – often wind turbines are just shut down, so the payment makes up for what they are not producing. Ideally, there would be battery storage or other flexible power use to soak up this excess though, and smart meters could enable this. When prices are low (or zero or even negative) they charge up the batteries. http://www.independent.co.uk/environment/renewable-energy-germany-negative-prices-electricity-wind-solar-a7024716.html

          • solarguy

            Judging by what I read in the link, this was for a brief time only, because of excess wind energy. As wind and solar can be taken off line or reduced very quickly and coal and nuclear can’t, I don’t know why they didn’t shutdown some turbines or sell excess to another country.
            Come a 100% renewable scenario that would have to happen.

  • john.boland

    It might seem odd for me, as a researcher in the field, to not be very happy of the prospect of ‘free energy’, if that ever were to come about. I have put forth the argument many times that an infinite amount of totally clean energy would be a bad thing. Why would I say that? It is because of the innate lack of forward thinking of humans. All we would do would be to make much more stuff, and thus Jevon’s Paradox would come into play. By making things more efficient we would end up using more energy, but embodied rather than operational.

    • Andrew Roydhouse

      Which is exactly what happened with the free home insulation scheme. Follow-up surveys following the insulation being completed showed that the average home that got free insulation – subsequently power use went up quite substantially.
      Fearing some error in data collection the homes were recontacted and detailed questions asked. It turned out that without insulation generally the people did not use heaters much at all and certainly only to heat say one room with the doors closed and windows with curtains etc.

      Post insulation the peoples’ habits changed – they felt that they would no longer be wasting heat due to being insulated so many started heating multiple rooms and leaving the doors open to ensure the entire house/terrace/semi was heated.

      • Barri Mundee

        I’d like some evidence to back up that claim. My understanding is quite diffrent to yours.

        • Andrew Roydhouse

          It was in one of the reports that came out a few years back after the investigation into the scheme. I think (but not certain) there was a story on reneweconomy about it as well.

          I cannot find the original articles/PDFs on my PC (always back up a hard disk even if less than a year old) unfortunately.

          A quick search has not thrown up any obvious results to look at.

          Wikipedia refers to no statistical evidence of predicted decline in power demand as a result of the scheme.
          “however any reduction in daily peak demand is not evident using the linear regression peak demand analysis.”[12]

          Also a report in the decline in total electricity demand cited the fall in purchases by the three (subsequently) closing smelters over the following three year period accounted for a fall of 3.7TWh in consumption (around 10% of total power generation).

      • Alastair Leith

        I’m not aware of that evidence at all. CSIRO review the program and said from an EE POV it was highly successful.

    • Alastair Leith

      If the embodied energy has no environmental footprint then it’s implicit use is not problematic. It’s when the use of the energy has an environmental or negative social impact it becomes problematic. Note BZE Buildings Plan wrote a pretty good refutation of Jevon’s paradox coming into play for their proposal of EE retrofits of our building stock. And in Australia electrical demand has fallen since 2012 (rooftopPV, loss of economic activity and EE all being a factors).

      Energy use is neither inherently bad or inherently good, just like technology and even scientific knowledge, there is zero moral dimension. So you trying to assign it one isn’t helpful in understanding the problems. The fact that there’s no moral dimension is problematic in itself, because ignorance abounds in human affairs, mine included, but it doesn’t mean cheaper energy is implicitly a bad thing. If for example we get to a stage as Kurzweil predicts that by ~2036 (and Tony Seba says earlier) PV modules are ubiquitous (equivalent deployment to current day global energy demand) and produced at a near-zero cost it will be trivial for cladding manufacturers to apply sprays or films for POS value add.

      At this point of ubiquitous, excess and near-zero cost-to-create, energy could have an economic value in sequestering atmospheric/ocean carbon. Building products can be made using mineralisation of olivine/serpentine for example that sequester carbon, instead of todays cement production that creates massive amounts of GHGs.

  • john

    I so do remember the story Nuclear Energy will deliver virtually free energy.
    What happened?
    The countries who wished to develop Nuclear Weapons forged ahead that was the main reason they put these plants in place.
    The outcomes not exactly a brilliant picture of { free energy } at all.
    Just look at the pathetic outcome happening in England with their new endeavor in this area.
    As to Fusion, yes if it comes to being doable then it is game over for sure.
    Being realistic that would appear ATM to be still years away.
    So implement Wind and Solar and every other part of this technology because the energy input is free and that my friend is a compelling story.

  • MaxG

    … and hey lived happily ever after 🙂
    What a crock …

    “Free energy” not going to happen — contradicts reality, neoliberal capitalist markets, economics, and common sense.

    Was RenewEconomy bought my the Murdoch’s? They are renown for such fluff.

    • Alastair Leith

      yep even the sun can be taxed and some government-owned-utlitities charge people for the rainwater they collect on their properties. but the learning curve of PV is irresistible, and people variously put the line for near-zero PV modules at 2030-40. Storage is much harder to extrapolate for the many competing technologies and unknowns around them (who knows where graphene will end up for example).

  • ALchemyst

    Giles, do you mean “Zero variable cost” and you are just using literary license?

    • Alastair Leith

      I think that was a typo, suspect “(near)-zero-cost, variable” (meaning generation goes up and down with the sun) was intended meaning

  • Alastair Leith

    I watched this two nights ago and if ever I’ve been convinced that low-cost energy for any use profile was on it’s way it’s when I hope that SunCell® is legit and not a hoax. Dr Mills seems to be a very brilliant man either way… there’s been some verification but no scientific papers on this technological development. 25 years in the development phase so far apparently.

    http://brilliantlightpower.com

  • Alastair Leith

    this is good on scheduling, dispatch, and DSM

  • raaj

    crude way to pull down energy companies shares … a distant dream may be 100 year down the line

  • Leif Erik Knutsen

    Germany has already had days where costumers were paid to use electricity. ~ 90% of Germany is north of the US-CA border.

  • Leif Erik Knutsen

    “We don’t have a right to ask whether we’re going to succeed or not – the only question we have a right to ask is: What’s the right thing to do? What does this Earth require of us if we want to continue to live on it?” Wendell Berry

    Here are the grim realities on what it takes to continue to evolve into a livable, rewarding society, as well as human species. If you do not watch this engrossing, awakening 38 minute interview you do a disservice to yourself, your family, society and humanity. If you are a public servant, IMO, you even have a fiduciary responsibity to do so as well as pass it on to your superiors and co-workers. ~38 minutes long.