What are the opportunities and barriers for solar that arise from smart meters, smart buildings and smart grids?
The digitalisation of the energy system facilitates the integration of various sectors directly into the energy system, unlocking additional sources of flexibility and enabling ‘solar-connected infrastructures’ – such as buildings and electric vehicles (EVs) – to adapt to the energy system’s needs in order to generate further value. Smart meters, buildings and grids support a more flexible and resilient energy system, paving the way for a solar-powered future.
Smart meters generate extremely valuable data which drives the creation of new and better energy services from solar companies. Smart grids for example, allow for the optimal integration of solar into the grid, be it through incorporating sensors into the grid or through the development of online flexibility platforms. Smart grids also help solve the problem of grid congestion and bottlenecks at more decentralised levels. Therefore, they increase the use of solar generation and flexibility in ancillary and system services, enhancing solar business models through additional market remuneration.
With these benefits in mind, we see a growing appetite from governments and policymakers to understand how they could support the digitalisation of the energy sector in Europe and beyond. This increasing interest led to the collaboration between SolarPower Europe and ASOLMEX to deliver a joint report on ‘Digitalisation & solar in Mexico’ which will be launched at Intersolar Mexico (Workshop: Digitalisation and Solar in Mexico) on the 3rd of September.
How can more digital solar offerings help increase profitability?
Improving how solar power is integrated into the electricity grid means more economic benefits for citizens. It reduces the costs related to grid reinforcement and upgrading, and the costs related to support schemes as more value can be generated from the ancillary markets, both of which directly affect consumers’ bills. Digitalisation could represent up to $1.3 trillion of value to the electricity sector as a whole from 2016 to 2025, according to the World Economic Forum and Accenture.
One example is smart building technology. Whether residential or commercial, smart buildings can be a major driver of increased self-consumption rates, therefore increasing the profitability of self-consumption business models. In fact, the European Commission estimates that by 2025, the volume of controllable smart appliances in Europe will be at least 60 GW which could reduce Europe’s peak demand by 10%. Similar opportunities can be unlocked in Mexico with more digital and solar business models!
Another good example of digitalisation increasing profitability is through the maintenance of solar power plants. Digital technology can be used, particularly for large-scale utility, ground-mounted solar, to reduce operational costs and increase asset performance. The solar operation and maintenance (O&M) sector is already highly digitalised but of course new digital technologies become viable as their costs decrease. Monitoring systems already measure and process a huge amount of data from large-scale solar plants which is used to optimise the operation of the asset at the lowest cost. For example, predictive maintenance uses patterns in temperature and output to predict module degradation, soiling, component failures or system failures which can eliminate some maintenance visits, anticipate others and reduce expensive, unplanned emergency visits. Our report ‘Digitalisation & solar in Mexico’ also gives examples of how digital O&M is already being implemented by Mexican companies.
What will the solar Industry 4.0 look like?
Industry 4.0 is rapidly transforming the energy sector. We are seeing great potential for new digital technologies to increase the deployment of solar in Europe. Digitalisation can make better use of existing grid infrastructure, reducing the need for back-up capacity and the need for the curtailment of renewables. These are critical elements to further promote the deployment of solar. The future will also see more prosumers and demand response, as well as smart applications both in how we generate and consume energy and in manufacturing.
To maximise solar’s industrial value in Europe, Industry 4.0 will play a major part. Digitalisation is key to a future European industrial strategy for solar, acknowledging the tremendous value to be gained from offering high-end, niche and quality products in a commoditised market.
For example, inverter manufacturer SMA successfully implemented a worker information system (WIS) in their central inverter production with the goal of a more flexible and efficient production process. All information relevant for the production process is distributed via the WIS and the workflows are controlled by it. Employees now use a visual presentation of a console instead of printed mounted constructions.
In our ‘Digitalisation & solar in Mexico’ report, we list several new case studies about business models, cost reduction, performance improvements and digital grid integration.
How can Blockchain technology fundamentally change how electricity markets operate?
New digital technologies like Blockchain, in combination with the rapidly falling costs of residential storage, are creating the grounds for “smart” prosumer business models, allowing entirely new solar business models to emerge and improve existing models and make them more profitable. Increased profitability in turn brings retail and wholesale grid parity that much closer. Coupled with the right policy framework, all types of electricity consumers – from tenants to industrial consumers – will be able to generate and consume their own solar power.
Blockchain technology is well suited to the management of flows within a grid-connected solar microgrid, determining when generation assets within the asset should be powered up or down. This technology can also, if applicable, govern transactions within the microgrid. Providers can also give customers extra value from their solar PV installations with cryptocurrencies based on Blockchain technology. The service provider can allocate the customer with cryptocurrencies designed to apportion additional value to solar or renewable electricity, such as SolarCoin, GENERcoin and EnergyCoin. These cryptocurrencies are usually allocated per MWh of solar electricity produced and can later be converted to Bitcoin and hard currency.
How can governments enable digital solar through innovative policymaking?
While digital solar and storage technologies that enable solar prosumers are available at an affordable cost today and are constantly and quickly becoming more sophisticated. However, they need the right policy frameworks to tap into the full potential of solar prosumers. For example, SolarPower Europe’s ‘Go Digital Declaration’ published in March 2017 contains the main policy recommendations from our Digitalisation Task Force on what will ensure more digital and solar models in Europe. In our latest ‘Digitalisation & solar in Mexico’ report developed with ASOLMEX, we have gone one step further, adapting and expanding these recommendations to the context of the Mexican market and regulation.
Policymakers will play a major part in ensuring that we maximise the opportunities arising from digitalisation which will increase the cost-efficient deployment of solar and renewables in the world. We need policymakers to accelerate the deployment of smart grids, reform incentives for network operators and reward the speed and accuracy that solar can provide in grid-supported services. We are seeing many examples around Europe where governments have introduced measures to digitalise the energy system. However, non-European countries such as Mexico are already making fast progress and developing pioneering frameworks for the uptake of decentralised solar solutions which are key to the deployment of digital solutions. With our ‘Digitalisation & solar in Mexico’ report we aim to support the Mexican government and solar companies in the transition to a digital energy system.
What are the socio-economic benefits of digital solar?
There are significant socio-economic benefits related to the digitalisation of solar beyond fast-tracking the energy transition. According to Global e-Sustainability Initiative, analysts have estimated that digital grids could lead to €810 billion in extra revenue for renewables between now and 2030. Digital technologies can be used to reduce costs and increase performance at almost every point in the solar value chain, including utility-scale and rooftop markets. Lower cost solar means more solar!
New business models are emerging allowing solar to be installed and shared among consumers. This can already be seen with the deployment of collective self-consumption business models in France (‘Auto-consommation’) and Germany (‘Mieterstrom’) where electricity generated on a shared roof can be sub-metered and distributed to residents of a building. A similar model is under development in Mexico, which could help provide energy to consumers with an inconsistent electricity supply, thanks to Blockchain technologies and energy sharing models.
Beyond clean and low-cost energy security at home or in commercial spaces, smart solar and storage prosumers can provide much needed flexibility services to the grid. Unlike coal or nuclear power plants, energy storage batteries can react very quickly to network constraints and provide a very short-term balancing service. Solar and demand response can be pooled to form aggregated Virtual Power Plants and provide flexibility services to grid operators. The aggregation of prosumers’ loads and batteries can solve two challenges: consumers’ engagement and the access to balancing markets which are usually designed for much larger power providers. Aggregators can easily enter flexibility markets and they can monitor the flexibility of a group of prosumers.
To sum up, digital solar offers vast socio-economic opportunities, that will benefit citizens, businesses and governments alike. We are only at the beginning of the digital age where solar has bountiful potential!
SolarPower Europe’s new report on ‘Digitalisation & solar in Mexico’ will be launched at Intersolar Mexico on the 3rd of September. For more information on attending the session ‘Digitalisation & solar in Mexico’ and the report, please visit the event page here.