The shift to digital technology presents many challenges for the energy sector, but it could also create new opportunities with the emergence of micro-grids and private networks. Network spoke to Ibrahim Cobanoglu, digital lead for ABB Power Grids, to find out more.
Q. What are main challenges in the energy sector right now?
A. It is very clear that a revolution is underway in the energy sector. We are seeing more and more distributed energy resources come online, along with the growing uptake of electric vehicles (EVs) and other flexible solutions, such as storage. For many utility companies, revenues are under pressure from increasing renewable integration and their traditional business models are also under pressure. We are also seeing more people generate their own energy and non-traditional competitors coming into the market. Plus, the regulatory models are also starting to change. Ofgem is putting more pressure on utilities to facilitate new models. But if energy companies play the game right, they can still be part of these new emerging markets. We have also started to see more discussions around a whole-system approach. With the introduction of new technology, cyber security has become an important topic.
Q. What will digitalisation mean for the energy sector and new developments in the market?
A. We will see more interconnections between different power grids. With the change in the distribution networks, DSOs will become facilitators for system balancing. In order to do this job, they need digital solutions to facilitate the new business model. New assets will come with embedded sensors which can measure the operative conditions and alert operators to any issues.
Q. How can digitalisation help energy companies meet these challenges?
A. We are starting to see the emergence of microgrids, private networks and the rise of local energy partnerships where communities are taking charge of their own energy. The more generation evolves, then the more energy companies will build community microgrids or manage grids, or make connections available. And as we have got more and more participants in the emerging markets, energy companies can also use new software to allow energy trading. One area is peer-to-peer trading. Other technologies, like blockchain can also facilitate this type of trading.
Q. Do you see blockchain playing a big role in energy generation?
A. Blockchain or ‘distributed ledger technology' is an interesting technology. There is a lot of hype around it, but adoption remains very limited at the moment. However, we do see the potential for significant benefits for businesses. One example is in peer-to-peer trading and smart contracts, where there is a place for this kind of technology. You could also use it for digital passports to ensure better records of every single product in the company are being kept. The technology is developing, but deployment is still not 100 per cent there. But when the time is right, blockchain will play a big part in energy.
Q. Will artificial intelligence have a growing role in grid management?
A. Definitely. We still have the SCADA (Supervisory Control and Data Acquisition) systems, which date back to the 1980s to manage and control grids. Currently, this is often managed in the control room with human supervision if something needs to be done. But with increasingly complexity, companies will need additional support and that could involve artificial intelligence. We could see more of semi-autonomous systems in the future and eventually fully autonomous grids. There are artificial-intelligence based systems being developed around cyber security, energy storage and energy efficiency, as well. There are huge opportunities to apply this technology and help operators manage grids.
Q. How important is it for energy companies to invest in digital technology?
A. Surely, the question should be can network operators afford to not adopt digital technology? There are driving forces from different sides. We see the government and regulators are pushing low-carbon solutions, so energy companies need to provide and facilitate and do more than just distribute energy. It is also a question of whether they want to be part of this new world. I believe this is the reason why most of the utilities are discussing this internally and have their own digital transformation departments. You can see traditional oil and gas companies, like Shell are interested in EVs, because their businesses have a big link with transport. They have made several acquisitions in this area. Big technology companies have also started to show some interest, because when EV and storage start to take up, we will see a place for more software and digital orientated companies.
Q. How important is it for energy companies to start preparing for the mass take up of EVs?
A. There are a couple of challenges. If you look at the issue of EVs in a traditional way, then loads will increase tremendously. That could mean we have to enhance the network, but we will need to look at flexibility models and digital solutions for demand side management, as well as other flexible solutions, like storage and how we can use it effectively. They need to look at how other additional distributed energy sources can help to avoid additional investment. The other area companies need to look at are digital solutions to allow them to create a marketplace for the future. The other key is to look at all the generation options and make optimised decisions to meet the growing demand for energy.
Q. To what extent will digital technology change the relationship between suppliers and consumers as well?
A. I think the tipping point for this relationship will be when EVs become a mainstream transport option. That will be when consumers will turn into prosumers and create their own energy, trade energy and so forth. Through smart meters, consumers will be able to see and control their bills, see how much energy they will use or when they can sell energy back to the system. It will be an opportunity to create a new platform for consumers to tap into trading, telecoms and even other services. That could change the relationship fundamentally.
Q. What is ABB doing in the area of digitalisation?
A. Within the power value chain there are today a lot of digital technology and software solutions that have been deployed and we have lately digitalised both high voltage equipment and transformers. More digital substations are also being commissioned across the globe. In addition, grid edge solutions like microgrids, but also predictive and preventive maintenance solutions and digital enterprise software provides unified communication. We are also partnering with key industrial players and academics to really foster innovation and bring about innovation. We have got a partnership with Imperial College in London for the development of future grids and they also have a demonstrator at Imperial College. We are also working with ICL to fund the academic studies over there for the future grid. We are working with both academics and the private sector to ensure future networks are covered by all aspects of innovation. We want universities to challenge technology and help everybody by continually developing new ideas.