We are the energy transformation! Who are “We”? And how?

“Blockchain may be the solution”

Data running down and around a digital globe. Blockchain at Innogy between energy generators and energy consumers may advance the transformation of the energy industry.

How can new technologies and the support of individuals advance the transformation of the energy industry? Professor Jens Strüker, Director of the Energy Industry Institute at Fresenius University. We met up with him at the innogy Energy Efficiency Forum in Dortmund.

Mr Strüker, the title of your address here was “We are the energy transformation!” Who do you mean by “We”?

JENS STRÜKER: That is the burning question. My vision of the future is a real-time energy industry with all participants actively involved – every generator, from large-scale power plant to PV panel or domestic heat pump. But it also includes every consumer and every small device with internet access. That’s what I mean by “we”.

That sounds very much like the “Internet of Things”.

Exactly, in the Internet of Things – or IoT – systems are already talking to one another now. The new dimension would be to harness these devices for energy management too. Assuming, for instance, my neighbour is not at home, my house would be notified and I would automatically be able to receive power – if I need it – from the solar panels on my neighbour’s roof.

The basic idea with the IoT is that transaction and management costs are minimal. It must be simple for it to become a reality, i.e. for ordinary people to become involved – and then we could call it the “Internet of Energy”.

How can each of us advance the transformation of the energy industry?

It boils down to two key words: autonomy rather than autarchy.

By autarchy you mean the ability of individuals to be self-sufficient by supplying their own energy needs via, for instance, solar panels on the roof and a power storage device in the cellar.

Exactly, but what we really should be aiming for is autonomy. What that mean is that I decide myself on a case-by-case basis what I do with the energy: when I consumer the power myself, when I feed it into the grid and when my neighbour is allowed to use my battery. More rather than less interaction is required within the electricity system for true transformation of the energy industry.

But constant decision-making doesn’t sound like the minimal management costs you mentioned...

On the contrary, there is no need for me to make decisions at every turn, because I am not about to become an energy day trader. Instead the whole process will, of course, be automated. That could be based on an algorithm, where I specify the kind of decisions I would make under which conditions. The algorithm would be based on machine learning techniques, which would further refine the decision-making process. As the user, though, I would be aware that I always have the final say.

Professor Jens Strüker at the innogy Energy Efficiency Forum speaking about energy transformation, mechanical intelligence and Blockchain

How will the energy transformation have to be organised?

Currently there is a lack of communication between the plants that feed in the power and the consumers who use it. At the moment, the energy transformation tends to be heading in the direction of autarchy or self-sufficiency. The generation side of the transformation is progressing very rapidly – take wind farms, for instance, which we are building in many places on a grand scale. But what is lacking is the involvement of all market players, by which I mean, instead of having separate silos generating power and others consuming it, everyone should be interacting much more closely with one another. What is needed for that to happen is intensive local activity, similar to the Airbnb model.

I think you need to explain that a bit more, please

It is about maximising under-utilised resources at the local level. Imagine that power is currently available right here. Does anyone need it right now? Or is there a storage device in the neighbourhood that we can feed it into. And independently of that: what are you prepared to pay for it? We have the technology to do this, but what we lack is the right kind of market.

You criticise the lack of an appropriate market – but who needs to pick up the ball? Government, industry, customers or all of us?

Each and every one of us. That may sound trite, but it is true. For it really is something completely new. We still have to try out a whole lot of things to see how it works in practice. And everyone needs to pitch in.

How important is participation by individuals to the success of the energy transformation?

We need clear pricing, so that I can decide whether I want to participate in this new system of generating/trading/consuming energy. The grid fees of the current electricity prices do not take into account the grid load factor. That’s what I mean by having the right market. There is a lack of clear financial incentives to, for instance, purchase a storage device, because I know that I will be able to buffer energy peaks on a regular basis and earn money as a result.

Which technological aids would help boost the “we” mentality?

Potentially blockchain technology. If all of us are communicating and trading energy with one another, we must be able to account for it as well. With today’s technology that is a very expensive process. A central transaction database is always required to monitor and track everything, as well as a clearing system and someone to take responsibility for it.
Blockchain – like the process used with bitcoins – may well be the solution here. It is quite decentralised in approach and needs no facilitator, which allows people to act more quickly and even organise small transactions in a very reliable way.

How is it reliable?

Because each component involved, whether storage device, PV roof panel or electricity meter, is also a computer that registers and tracks the transactions. They all have the same status, which is synchronised every few minutes. The database is visible on all computers and cannot be altered by individuals. In this way, users have a great, direct way to bill one another, for even the tiniest unit of power – and with no facilitator or middle man involved. Any newcomer to the system becomes part of the network and can contribute to its growth once the necessary computing capacity is made available.

That sounds quite complicated at first glance.

It is too – and there are still very many open questions. But, in a complicated way, blockchain technology ultimately does something very simple. It keeps account of all transactions and can track even the tiniest of micro-transactions. Whereas today we have to coordinate millions of people feeding power into the grid from photovoltaic plants, in the not-too-distant future we will have billions of small generators and power-consuming devices to synchronise with one another. And this is precisely where blockchain technology could make a vital contribution.

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