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Communities: Challenge or chance for established utilities?

We have so many Lego pieces and parts at home that my kids and I love to (legally!) download building instructions and construct some of the really big models. Most times we have all the required parts to hand, but with regards to their correct color we typically have to make some – well – extended compromises. Our very own Star Wars Death Star (one of the biggest models ever!) looked quite funny in a million colors (incl. our girl’s favorite pink pieces which we had to add) and with Harry Potter and Batman mini-figures inside firing the dangerous laser gun…

Wow, now let’s see how this again connects to the original blog’s title that made you click the link: While working in the energy sector, I have spent a number of years in the world of big data. There’s a concept in that domain known as “data democratization”. This basically means providing everyone with access to data when and where it is needed, aka: let everyone play around with it as they wish. While I immediately liked the concept, I saw so many folks in so many industries who thought this was a terrible idea: For an expert to whom customers turn in order to make sense of their data, data democratization threatens control. Potential anarchy! Once upon a time though, I had one of those holy sh%$ moments when I saw a potential parallel with energy and I invented the term “energy democratization”. I subsequently searched the term and I had to admit that a number of people around the world had been quicker than me in seeing that analogy. I know, unbelievable, but true.

However, no matter if I was first or not, it is a fact that the number of individuals getting involved in energy generation, consumption, and storage is on the rise. These prosumers have the potential to massively disrupt the traditional energy system as we have known it to date. As an example, it was recently reported that there are approx. 52,000 operational storage systems serving PV installations in Germany providing approx. 300 MWh of capacity. A related trend which I believe might have an even greater impact in the short- to mid-term is community energy. This is where a coalition of stakeholders—consumer groups, local governments, businesses—come together with a joint agenda and an action plan for a localized energy system. Here, the community entity exists as a multiplier and accelerator of single individuals jumping on the renewables train. For example, over 5000 community energy groups have sprung up around the UK since 2008, providing over 60 MW of renewable generating capacity.

And so, people like you and me, become involved in the energy business. This is energy democratization. The reaction of utilities might be, like some of my colleagues in the face of data democratization, to fear the chaos – not least because chaos is a threat to the security and efficiency of power supply. Utilities and regulators only need to look around them at other industries, to know that democratization is a highly disruptive, 21st-century reality. You’d better get ahead of it, rather than resist or ignore it. The good news is that according to our research, Power to the People, there is a clear role for utilities. Keeping the lights on is not as straightforward as driving a car or renting out your apartment. While communities might become energy savvy, they are not energy experts. This is particularly the case when it comes to information about the system and yet, communities told us that they see information as a critical success factor for their initiatives.

A major goal for communities is to better understand their local energy system, from generation through to consumption. Armed with this understanding, communities also seek to evaluate the economic value that is created and distributed within the system. This increases transparency as a basis for discussion between different stakeholders.

Communities say that continuous aggregation, consolidation and analysis of data is essential to optimizing operational efficiency in the system and identifying areas for further improvement.

While communities are generally small (in terms of relative demand requirement/supply capacity), they often take a broad perspective on all aspects of energy resource when they determine their goals. They aspire to a more holistic, integrated view bringing together, for example, electricity, gas and water, plus also heat, storage and electric vehicles.

Even though many utilities are still learning about data management and analytics, they remain far better equipped to know what to measure and analyze than the community. As I have said before, grid analytics requires close collaboration between data scientists, IT experts and power engineers; a skills requirement often too great for a community. Additionally, in a one-to-many model where the utility offers services to multiple communities, they can potentially hone the techniques and tools that are scaled and tailored to a community’s needs. Finally, by potentially pooling data from multiple community energy programs—and extending the data set—utilities can more accurately identify those interesting correlations that drive efficiencies in the community system. 

Established utilities are in the pole position to proactively approach these energy-interested stakeholders today and guide them towards the new energy era because many of them are (still) their customers. Nevertheless, other actors with less experience and expertise will quickly claim that they can help provide the services and intelligence communities seek. The democratization of energy will initially be a challenge, but utilities need to rise to that before it becomes a missed chance. 

Coming back to the Lego “re-construction projects” I mentioned in the beginning: Biggest challenge is that my kids never want to stick to the building instructions, start playing with the mini figures, get creative and don’t care about achieving the original model – in the blog’s picture, for instance, you see the all-new “Death Star Clone Trooper Fitness Center” ;-). You see, I have to put increasing effort into keeping them focused on how I want to build it (i.e. in line with the instructions, of course), but they simply don’t care about what I want. If we don’t find a shared approach the kids stop playing with me and quite simply start a different game without me…

BTW: This sounds like “Lego Democratization”. Google search results: Zero. Yesss! Finally, I am the first with this game-changing concept ;-)