I shared a stage recently at Solar and Storage Live, with Mark Coyle (Utiligroup), Tom Jennings (Kiwipower), Elizabeth Allkins (OVO Energy) and Giulia Privitera (UKPN). We talked about new business models that arise as the energy system becomes increasingly digitised, and I was asked to comment on platforms; in particular the need for a new digital operating system to enable the fully distributed and decentralised energy grid.
I have a background in the energy industry, having been Smart Metering Programme Director and Innovation Director for one of the major energy retailers. At that time I had a major interest in technology, including blockchain IoT and distributed energy; in particular I was interested in how the energy system needs to change to embrace new technology and business models that put people at the heart of the system in a distributed and decentralized way to ensure our impact on climate change is as small as can be.
For the last 4 years I have been working, in start-ups and as an adviser, on topics such as blockchain, ai, distributed energy, digital identity, and payments, helping business and governments make sense of this, develop real-world use cases and business opportunities and take practical action.
Energy is coming Back to the People
According to Bloomberg/NEF, Utilities, globally, invest in the region of $710bn on energy assets, every year. They predict that, by 2030, this will be turned on its head and the major source of investment in energy assets will come from people (in the form of PV, batteries, electric vehicles, community energy etc) – by a fact of 3X! (c$ 2100bn). This will be truly transformative and evidence that power really is coming “back to the people”. In this world, people will not stand by passively and simply buy energy from suppliers, based on the pass through of costs + margin from wholesale through grid to retail; they will expect full value from their devices and assets in ways that support their lifestyle.
These Customer-owned assets will be able to interact in ways that we didn’t think was possible both individually and in aggregate to secure value through
- Optimising the performance of the home / building through independent action
- Transacting with neighbours in communities to optimise performance through sharing
- Transacting in new flexibility markets at various levels in the system
- Transacting through responding quickly to network constraints
To truly optimise for net zero carbon, the future energy system will need to be massively distributed, able to facilitate the interactions between multiple devices / assets, able to track the provenance of their carbon footprint, able to transact and settle those interactions across multiple platforms without the need for complex intermediary processes and third parties to substitute for the lack of trust and confidence.
A New Digital Operating System for Energy
This will need a completely new digital infrastructure to deal with such transactions, based on a foundation of open standards, open data and single (not multiple) digital IDs for assets: A Decentralised Digital Operating System.
That infrastructure will need to be:
- Connected to real-world physical devices, with unique digital IDs
- Open-source and interoperable
- Publicly accessible everywhere to harness global innovation
- Based on smart contracts.
- Decentralised and secure; governed by a known community to secure the transactions and protect the integrity of the code base.
A mistake would be to:
- Impose roles and boundaries within the energy system, based on assumptions regarding current economics and physics surrounding size and cost of asset; economics will change and networks will transform.
- Impose roles and boundaries based on the top-down mindset that prevails at present where risk is placed in the hands of centralised 3rd parties.
- Support lock-in through technology and platforms that do not interoperate.
This is at the heart of the design and implementation of the global non-profit community of the Energy Web Foundation Decentralised Digital Operating System and, in the UK, this is fully consistent with the Energy Data Taskforce (EDTF) and the stated strategic outcomes for Ofgem.