A US-based smart energy systems start-up company – backed an Australian government fund – predicts the future of grids may lie in distributed solar generation and battery storage, and where the energy is pooled in cloud-based systems.
Ken Munson, the head of Sunverge, says his technology has the ability to bring together multiple units – up to several hundred or more – that can provide a “virtual” pool of energy that becomes a controllable and dispatchable resource.
This, he says, has huge advantages for energy utilities – if they can get their head around the new business model – and for households and businesses who can then extract maximum value from the systems they have installed.
And it would not – or at least should not – result in the disintegration of the established grid. But it should – or could – accelerate the adoption of solar and wind, and the rollout-out of electric vehicles. The key is recognizing that generation and storage at the place of consumption is key.
“Our goal is the opposite to helping people get off the grid,” Munson tells RenewEconomy in an interview during a visit to Australia. “We want them to strengthen the relationship with the customers.
“The electricity grid is essentially a social good. It should be made stronger and made more resilient, and this is a way that can achieve that.”
But technology is one thing. To embrace it – and to keep their customers – energy distributors need to rethink their business models and their tariff structures.
Last week, Sunverge sealed a $15 million “series B” financing round that was led by Southern Cross Ventures, which has funds allocated by the Australian Renewable Energy Agency and a leading Chinese investor.
The other funders were the venture capital arms of German energy services giant Siemens, and French oil and gas giant Total, which has a controlling stake in US solar company SunPower, which is also expanding into storage.
Munson says his technology can deliver benefits to multiple groups. Homeowners and businesses receive more reliable power at a lower cost, utilities reduce grid management and energy delivery costs, electricity retailers increase revenue and customer retention by bringing value-added products and services to market, and society as a whole accelerates the adoption of clean technologies.
“One of things that has been missing in the market is the corporate interest that is complimentary to the overall development of distributed and edge of grid market,” he says.
Sunverge is also trialling its technology in Victoria, but details remain confidential.
The key to Sunverge’s technology appears to be a cloud-based management system that uses advanced software to calculate the best way to use the energy that has been stored, or is being generated.
Hundreds of systems, installed in homes and offices, can be linked into a “virtualized pool of energy” Munson says. This way, the best value for each kWh can be obtained, and customers and the utilities can share the benefits.
“The consumer needs to receive a clear and compelling benefit, and the utility needs to be able to make money.”
One option may be for a utility to deploy the system in an area which has frequent blackouts, so providing back-up power could be a key selling point. Alternatively, the utility can deploy it to bid excess power into markets and deliver the benefits to consumers. Or they could use it for ancilliary markets such as voltage regulation and frequency.
The key, Munson notes, is trying to work out what financing and ownership models work best. Its systems have been used by New Zealand’s Vector for the rollout of leased solar plus battery storage units for households in Auckland. It now has a “virtual pool” of 2.5MWh that it can deploy when needed.
Munson says it may be that the utility would want to place such systems into their regulated asset base, or on their balance sheet, or use a structured finance model such as the 3rd party leasing popular in the US.
And, Munson says, the system can be repurposed. “If a utility or a consumer had invested in single purpose technology, then they would be locked in for considerable period of time.”
That is risky, given the change that is about to sweep the world’s electricity markets, and the uncertainty about how that will pan out in terms of tariffs, business models, and ownership.
Munson has a background in private equity and teamed up with an expert in technology, switching gear and automation. The idea was conceived in 2009 and the software developed in-house.
“We saw an opportunity as renewables grew on the grid, particularly in places like Australia and California with solar,” Munson says.
“We saw a potential emerging problem of network operations … and we saw energy storage as a means to address that. We also saw that with cloud based technologies, you have the opportunity to do a couple of things.
“You can use the power controls and the energy source more intelligently. You don’t have to throw large amount of solar or battery to solve a problem. You can optimise the asset that you are using. And you can allow multiple stakeholders to partake in that stream.”