Energy Transformed Podcast: The future of energy systems – digital and data challenges

Energy Insiders – a RenewEconomy Podcast · Energy Transformed Podcast | The Future of Energy Systems: Digital and Data Challenges

Transcript:

Energy Transformed is a short podcast series brought to you from the team at Energy Insiders and RenewEconomy, Australia’s best informed and most read website focusing on clean energy, news and analysis. Energy Transformed is also brought to you by Ashhurst, a progressive law firm offering global reach and insight combined with local market knowledge and understanding.

Noriko Wynn

The boundaries between industries are blurring. You can no longer say that this is a digital industry, or this is a telecommunications industry, or this is an energy industry. We’re seeing these industries intersect particularly at the space of the user or the consumer.

And our legislation is not built to deal with that complexity. And it’s creating these really interesting conundrums around well, what does the future of legislation and these industries need to consider to address this complexity? And the fact that the boundaries between what might be considered their industry or their patch has shifted.

Paul Curnow

You’re listening to Energy Transformed, a podcast the webinar series that looks beyond the headlines to take a deep dive into Australia’s energy transition.

Hello, I’m Paul Curnow, a Partner with Ashurst based in Sydney, and global co-head of our energy practice. Welcome.

In today’s podcast, we’re looking at data and digitization challenges that are arising from the transformation across our energy markets. Australia, like the rest of the world is seeing rapid digitization of our energy system. And in this process, data management and governance are critically important because the solutions enabling energy transition are so inherently data dependent.

So think of our smart houses, smart buildings, lightbulbs, cars, and appliances. They’re all trying to optimize our energy use and in the process, of course, generating a lot of data. But our laws governing the digitalization of energy fit for purpose. How can future legislation address the complexities of the transition?

In today’s podcast, we look at the future of emerging energy and digital technologies with my guests who live and breathe digitization.

I was joined by Noriko Wynn from Aurecon, a global engineering and design firm, where she is the in-house futurist and draws on a multidisciplinary background to help plan for the future in an uncertain world.

I was also joined by Emma Butler, a partner here at Ashurst in our digital economy transaction practice who specializes in information technology, data and privacy.

Now, somewhat ironically, given our subject today, all things digital and technology, we had to battle a few tech problems of our own in recording today’s podcast. So we’ve included a transcript on the website for you to follow.

So please enjoy my discussion with Noriko and Emma.

Emma Butler  00:02

Thanks, Paul.

Noriko Wynn  00:03

Hi, thanks for having me.

Paul Curnow  00:05

Good to have you. So Noriko you are the resident futurist at Aurecon, which is a great job title, by the way. Can we maybe start with an understanding of what that entails? What whatdoes that mean for you? What is the job at Aurecon as the futurist?

Noriko Wynn  00:23

Sure. So I head up a capability which we call futures research and strategic foresight. And what that is, is bringing the academic disciplines of how people understand and interpret the future into an applied context. So what I really do for the business and for our clients is help them to understand emerging change. What are the things and technologies or behaviours that might develop or start or scale that could fundamentally disrupt infrastructure systems or how we might need to plan for them or how we design them. One of the key things I do is not just identify the trends, but really look at the implications and impacts of something new or something novel entering the system. One of the key things there is if we can anticipate what might happen around a new technology or a new social value, we then can understand how we might need to design differently, we can understand how the future operating environment might shift or change so that our infrastructure or the advice that we give is resilient, going forward into the future. One of the key things that I talk about is how change has a direction, right? And that if we want to understand and get clarity on what the future might look like, we have to understand how fast is that change going? Is it accelerating or decelerating? And what direction is it coming from? We talk a lot about technology in the energy space, we talk about all of those new technologies like hydrogen, or solar panels, and what’s happening when they scale or enter the energy system. But we also need to look at how does it interact with the socio economic environment? And what might cause those technologies to stall? Or what might cause broader impacts throughout our communities. So that we can make sure that we’re not creating unintended consequences, so that some of these technologies can have a smoother landing, or if we need to accelerate their deployment.

Paul Curnow  02:20

So from that, because today we’re talking about energy and so the transformation of our energy systems and as you mentioned many new new emerging technologies that come with that. So maybe just a bit more specifically, if we take the energy system, what was some of the work that you’re doing at the moment? How, how does the futurist’s role feed into that around the energy system?

Noriko Wynn  02:43

So there’s sort of three key things that I do as a futurist. The first one is to identify those signals, so what could create change, and getting an understanding of what the landscape might look like? That’s the first thing is saying, we can see an R & D Lab is looking at a new battery technology that could fundamentally change how batteries operate through the economy. Or, for example, an interesting signal that was picked up recently is Britain is looking at space mirrors, and looking at solar in space. And using that as part of the energy mix. So those are interesting signals, which indicate a shift and how the technologies that we might be using or considering as part of the energy mix. The other thing that we do is really help to identify and create that picture of what the future could look like. So we think about and create, in a really methodical and structured way, an understanding of the potential pathways, the different interactions, and how we might be creating different choices in the energy system. Lastly, one of the things that we do in this space is act as a challenger for the long term. What I mean by that is, we have a lot of short term thinking in how we design and how we operate. And that is a function of our economy. And this infrastructure, and the infrastructure we build often has a decad or long lifespan. So how can we make sure and when we’re thinking about what we designed, and how we design it, it has the long term in mind and the long term mind in a really structured way.

Paul Curnow  04:23

That’s fascinating. I want to come back to what that future might look like. We’ll dive into that a bit more, but just want to bring Em in here. So Emma your a partner in our digital economy practice here at Ashurst, working with a range of clients across the intersection of the energy transition and the digital economy. So obviously, you know what goes hand in hand, typically with technology and the evolution of, in our case, the energy system, is of course regulation. So I guess, keen to just to hear what are some of the sort of regulatory and commercial issues that are keeping you busy as we’re sort of moving through this transformation of our energy system?

Emma Butler  05:00

I think the quick answer to that one Paul is that there are many, many issues keeping us busy. And I think one of the fascinating aspects of working in this space is that my team gets to work with a range of participants in the energy market, from big energy companies, right through to startups. And I certainly think what’s particularly interesting is that no matter what participant in the sector we’re talking to, there’s some real commonality in the issues that we that we need to talk about. And those issues are typically linked to the functionality of the technology itself. So it’s really interesting to hear Noriko speak to, you know, the future, thinking about the future and what’s coming down the pipeline. In some ways, we’re doing the same thing a little further down the chain, I suppose, with new technology that is being brought to market and thinking about how does existing regulation apply to that technology and how it works. And we’re absolutely seeing that crop up in a range of instances, particularly through the increasing use of connected devices. So whether in the energy context, whether that seems like connected smart meters, or virtual power plants and of course, you know, right through to embedding automations into solutions. I would say, though, that, if I had to pick one regulatory, there would have to be regulation around the collection and use of data. And I really can’t emphasize how critical data management and data governance has become to these types of solutions. And of course, this is because the solutions that are enabling energy transition are either dependent, they rely on the collection and use of large, reliable data sets, which are then often linked to individuals and their patterns of behavior. So that, of course, raises a range of regulatory issues. Privacy is an obvious one that’s very sensitive. But these types of regulatory issues that we need to consider go well beyond privacy, and a range of issues around surveillance, and certainly cybersecurity, particularly, you know, additional layers of regulation. Another important regulatory layer in this and it’s not just in the context of consumer protection, but we’re also talking about regulation that facilitates consumer rights. And an example of that is certainly the extension of the consumer data right to the energy sector, which is designed to allow consumers to have greater access to energy related data about them, so that they can really assess the solutions that are on offer in the market and work out what’s what’s best for them. You know, coming out from those regulatory issues, one of the commercial issues that really dominates discussions that we have with our clients, now always seems to crop up in relation to this type of technology in the context of energy transition. The question is usually centered around who owns the data that’s collected or generated in connection with this technology. And depending on the deal, and the circumstances that we’re advising on, this could be a really robust discussion. And I think this comes from a greater understanding that data can be incredibly valued, valuable, and that there are commercial interests in data that needs to be protected. And the challenge here without going too deep into legal speak, is that the traditional legal concept of ownership doesn’t really apply to data. So what we find is, from a commercial perspective, we’re usually dealing with those kinds of issues at a contract level, which is particularly interesting, and as I said, can be quite robust those discussions. I could go on and on to be honest, but I know you’ve got lots of other questions. So I will pause there.

Paul Curnow  08:27

Yeah, no, look, I’m sure we can keep diving into that. Just to pick up one point. I mean, you mentioned of course, the role of contracts and bilateral contracting to deal with many of these issues. So I mean, would you say, therefore, that, you know, at least in Australia, we’ve, you know, the laws are not sort of fit for purpose, as it were, that they are still sort of catching up with a lot of these issues, you know, including data and many of the other topics you mentioned?

Emma Butler  08:54

Oh, absolutely, I think that without a doubt that’s what we see. And it’s one of the, you know, obviously the fascinating areas of advising in this space, but also a really challenging part of advising in this space is that, you know, we are often you know, presented with technology that does a range of amazing things, things that hadn’t been done before. And often what we’re trying to do is apply existing regulation, which has been written, you know, in some cases decades ago, trying to apply that regulation to that new type of technology. A good example I can think of is, again, in the connected device space. If you think about the use of connected devices in the context of energy, there’s so many different examples. And one of the challenges is that if as soon as you connect something to the internet, and use that device as a mechanism to carry some form of communication, you need to start thinking about telecommunications law. So all of a sudden, you’re not just thinking about energy regulation, you’re thinking about telco and honestly that, you know, as soon as you start talking about the telecommunications, that is confusing rabbit hole that nobody wants to go down let alone in the context of new technology, applying such a cumbersome piece of legislation to, which was never even envisaged at the time that the legislation was was drafted. So it’s absolutely a challenge. And it does sometimes feel like we’re trying to push square pegs into round holes. But it requires some creative thinking, but also absolutely implicates new technology in our communities.

Noriko Wynn  10:35

That’s one of the interesting things that we’re looking at and observing from a futurist perspective, is that the boundaries between industries are blurring. You can no longer say that this is a digital industry, or this is a telecommunications industry, or this is an energy industry. We’re seeing these industries intersect, particularly at the space of the user or the consumer. And our legislation is not built to deal with that complexity. And the fact that these industries are combining and we need new standards and approaches that lets us address that complexity. And lets us manage the fact that also our consumers are becoming more and more literate in the things that affect them. We’re getting more and more literacy around data privacy, we’re getting more and more literacy around energy mix, and the energy choices they want to be making. And they’re also getting their own data around this and their own response. And it’s creating these really interesting conundrums around well, what does the future of legislation in these industries need to consider to address this complexity, and the fact that the boundaries between what might be considered their industry or their patch has shifted.

Paul Curnow  11:45

So Noriko, that’s a really good point. And I want to come back to that, pick up on some of those challenges, you know, for the regulations to be made fit for purpose. Just to bring this back or bring it down to some concrete examples. I want to pick up on on what you talked about, obviously, in your role, considering what the energy system of the future looks like, you talk there about the prosumer, the rise of the prosumer, much more engaged consumer, we obviously see trends around centralized versus decentralized generation, the concept of electrifying everything. Can we can you just talk us through a few of those key trends that you’re seeing and a few specifics around those?

Noriko Wynn  12:33

Sure. What is really interesting, I think, when you look at the future of energy, is that we’re moving from something that is relatively simple. And I say that with inverted commas, and relatively linear. It’s been a one to one relationship for a very long time. If you refill your car, you can expect to get the right fuel that you need. A ferry can arrive anywhere and get the right fuel. You can turn on the lights and get what you needed. And it came from a centralized source. Some of the key shifts we’re seeing at the moment is the fact that we’re entering a period in which there’s an extremely divergent energy mix and set of energy solutions. And this creates a huge amount of complexity because the range of choice has increased. Do you go for the hydrogen vehicle or the electric vehicle? If you do go for the electric vehicle, do you go for the hybrid? If you do go for the hybrid, what type of engine do you go for and the choices are expanding, which means the infrastructure around it needs to be able to expand. And so that’s creating a huge amount of complexity not just for the consumer, but then how that’s managed back into our transport networks or our energy networks. And we are certainly seeing that trend of electrify everything. That our cars, our homes, any energy system needs to shift urgently away from fossil fuels. And we’re looking for any solution we can to meet that gap or to make that transition. But in that space as we electrify everything that creates a whole set of interesting problems. Because when we do that, and part of the process of electrifying everything is also getting more efficient. So as we become more electricity focused as opposed to fossil fuel, where actually becoming smarter as we do that. We’re getting smart houses, smart cars, smart lightbulbs, smart appliances, that all are trying to optimize the electricity usage. And in that there’s a lot of data being generated. There is a lot of data within the home system and increasing the complexity of the operations with the home. And that’s just one example. We’re also seeing this across buildings and how buildings are being managed in the commercial space as well. And in this ‘electrify everything’, we also need to provide new sources of electricity, new sources that aren’t reliant on fossil fuels, and virtual power plants, the idea that you can have networks, that trade power, within a small localized area, are one of the really interesting examples that are emerging of how to do this within a network or within a small geographical area. But within that context, our energy systems aren’t really set up to manage all that bidirectional flow of energy. And we have been living in a linear system up till now. And so there are questions about well, what is the density that our energy systems can manage? And are we going to be hitting natural constraints to how far we decentralize? Unless we look at some of the big upgrades. But in that decentralization, we increase the complexity of what we’re managing, that prosumer piece that people who are both consuming, and producing their own energy, and how they might want to interact with energy markets, how they might want to interact as a group or collective or even as individuals. And how do energy markets start to manage that many users and that many individual agents is a question that’s still being answered. Not that doesn’t even account for how the data within that system might be managed from a privacy and a legal perspective.

Paul Curnow  16:35

Just picking up on the on that really that intersection of data. Obviously, there’s all the points you made him about having rights to that data, who owns it, the use of it, obviously, privacy, key privacy issues around that. But when you think about what you’ve just described, Noriko, these systems only work with all of that data. So VPPs work because you aggregate all that data around what consumers using in the way you can manage their consumption, they might have their own generation and output. So your data is just so key to underpinning this. If you think about the next generation of ofdispatch across generation and batteries, the algorhythms that underpin this is really what generates the all of the revenue, and is the business case that really underpins it. So it’s a really interesting challenge, because you’ve got the absolute need of that data on the one hand and managing that in a proper way. So I guess maybe, Emma, just to come back about what Noriko’s described, as some of that those key trends. What do you see as some of the particular, you know, what’s the top regulatory challenges you see, that you, if you had to sort of go to Parliament and get at least one piece of legislation fit for purpose and catch up, where would where would you focus?

Emma Butler  17:57

That isa tough questions. I have a long list that I can go down to my piece that I think actually, it’s, it’s back to something that I mentioned earlier and also Noriko mentioned this intersection in terms of different types of technology intersecting different sectors intersecting and therefore the regulation needing to intersect. And I think that’s the issue that we don’t have that in our regulatory framework at the moment, we don’t have something that is broad enough to cover the issues that need to be covered, even if you take it just data as an example, and I think, you know, a good, another good example of that is in relation to automation. So obviously, everything as you say Paul, that the business case here, relies so much on data,alsorelies so much on automation but we don’t have clear rules about how much that should actually play out for our communities. And, you know, it all goes together, the quality of the data that goes into these systems may impact automated decision making, and without some kind of basic rules around how that’s supposed to play out and actually produce better outcomes I think that’s great risk, not only from just a reputational perspective, what participants playing in the space but obviously risks from a consumer perspective. So if I had one thing to tackle, it would probably be some kind of sensible rules around the feeding of data into automated decision making process.

Noriko Wynn  19:31

I think one of the interesting things you raise there Emma is also these days when you buy the technology, you also buy the algorithm and there is sometimes an extremely local and cultural context around how decisions should be made for on behalf of the community, or on behalf of a group. And there is a question that as we import these technologies, because for a large part Australia as a technology taker, we don’t have a large manufacturing base, we’re not really developing these algorithms for fast deployment ourselves, that as we import these algorithms, there is a huge question of are they fit for purpose for the Australian context, or for the context of that country in which they’re being deployed, and whether or not, or how the community should be involved in the development of the algorithms that affect them, and their lives and their decisions, and potentially their livelihoods.

Emma Butler  20:28

I couldn’t agree more with that. And it comes back to actually, you know, the concept of explainability and traceability actually being able to understand how these things work. It’s such a white box, well, for almost everybody, it’s often how they’re designed, and not actually being able to understand even how the process is working to get to a particular outcome. You know, it’s really, it’s a, you know, it’s, it’s a really, for me, personally, to be quite concerning when you think about it from that, that perspective. And I think the community probably as this continues to develop, will continue to cry out for some kind of clarity on that, or at least some kind of sensible regulation around the development of that type of technology and, and those algorithms.

Paul Curnow  21:16

So Emma, I just want to pick up at another point here. You mentioned, obviously, we talked before about the role of contracting and private contracting to, I guess, still manage a lot of these issues. Do you see there’s a point here, where, you know, even even being able to commercially contract around some of these gaps, becomes problematic?

Emma Butler  21:39

Absolutely, I think I think that’s one of the challenges that we see every day, to be honest. Now, I think it’s interesting, because sometimes gaps can cwork for innovation and can work for new business models that sort of give you a little path to sort of squeeze through trying different things. And then at other times, it just creates too much uncertainty, because you don’t necessarily know how, say in the context of regulation, how regulation will be interpreted or applied in the context of new technology. So that obviously can create a lot of uncertainty that can make people very, very nervous. Now, we do our absolute best to contract around those gaps in a in a way that makes sense. And then a way that brings clarity to the people who are negotiating a particular deal at a particular time. But there’s so many different layers that have to be considered in that context, because in the end, we can write something in a contract, but that’s not going to change the way a regulator will apply a regulation to a particular circumstance, obviously. So notwithstanding what we’re writing, it’s still a very real risk that regulation will be interpreted in a particular way that then effectively buoys up a business model or potentially means that it becomes incredibly difficult to deliver certain technology or functionality to the communities. It’s a real challenge and one that, you know, that we focus on quite a lot in the area that I work in.

Paul Curnow  23:11

Yeah, I think we see, we certainly see and in, in some areas, probably not as much to date in the energy space, but you know, this idea of regulatory sandboxing, where you create that sort of space for, for people to play in and play around with what should be, you know, regulations to fill those, there definitely seems to be a role here.

Emma Butler  23:34

Yeah without a doubt. And I think that that will have a really important role because it obviously not only allows innovators to play and see how things work, but also allows an opportunity for the rule makers to see how things are playing out and work out whhere the changes are necessary to benefit the industry and the community at large.

Paul Curnow  23:54

So, Noriko just coming back now to our crystal ball that we’re sitting around here, and staring into, in sort of early tests in the legislative space around using Blockchain as code for laws. You know, and I’m talking here beyond blockchain as it underpins cryptocurrencies, etc. Just keen to sort of touch on that. How do you see the idea of blockchain as code for law as being used or applied in the context of the energy system of the future, particularly if you think about what we’ve just been talking about, the increasingly digitized nature of that system?

Noriko Wynn  24:32

Blockchains are a really interesting topic and it’s one that just really incites really strong opposing opinions. On one hand, you see a lot of groups saying that it is the answer to smart contracts and helping create those decentralized systems. On the other you it’s got a lot of detractors still but it’s a technology looking for an application and for a technology that is based on trust and saying that we build trusted systems, it doesn’t seem to generate much trust in terms of how it can be used. I think there is definitely a space for processes and approaches that help to automate and decentralize the facilitation of contracts through the energy system that helps create better records and better understanding what exactly has happened when. I think it’s still a bit of an unanswered question of whether blockchain is the answer to that problem. And if blockchain will be the answer, and it’s particularly clouded by the fact that Bitcoin and some of those crypto currencies are actually driving up emissions use, and doing the opposite of what we need our energy systems to be doing. So it’s really quite an interesting conundrum, really, that we need more digital technologies to solve these problems, when applying more digital technologies, we actually increase energy demand. And this gets back to the conversation we were having earlier about who creates the algorithm and who owns the algorithm, and who gets to manage the algorithm that makes these decisions, that AIDS these decisions or facilitates these processes. And I think it once again comes back to that context is what are the regulatory things that need to be wrapped around it so that the community can trust in it so that it creates equity across the energy system, because energy is just so foundational to our economies, and that it allows for the flexibility that the future energy market is going to need.

Paul Curnow  

You’ve been listening to Energy Transformed, part of a webinar and podcast series hosted by Ashurst and RenewEconomy on Australia’s energy transition.

My guests today were Noriko Wynn, the in-house Futurist at Aurecon and Emma Butler, Partner in our digital economy transactions at Ashurst. I’m Paul Curnow, global co-head of Ashurst’s energy practice.

I hope you can join me for the next in our energy transformed series, a webinar where we will broaden our conversation to look at the investment challenges and opportunities in energy markets across Asia.

Till then.