Would you believe that one day, the energy industry will run on subscription and sharing economy business models? This transformation has already begun, thanks to significant developments in renewable energy and maturing disruptive technologies like IoT and AI. According to REN21’s Renewables 2019 Global Status Report, renewable energy will become the main source of electricity generation worldwide. The installed capacity for renewable energy has reached 1,246 GW and currently makes up 26% of the total energy generated globally.1 By leveraging the IoT, AI, and blockchain, renewable energy is reinventing the conventional electricity grid, pushing renewable energy towards becoming the world’s primary power source.
Cellular IoT Creates New, Flexible Business Models for Power Suppliers and Consumers
In the 1990s, Australia began to promote energy liberalization. Today, thanks to advancements in energy IoT, Australian consumers can choose their own electricity provider. This freedom allows for a more flexible energy supply contract between power suppliers and consumers, and creates new business models such as energy packages and subscriptions.
For example, the Australian online green energy retailer Powershop uses smart meters with cellular IoT connections, allowing the meters to be checked at any time. This enables Powershop to gather data to determine usage patterns and adjust rates based on peak hours. Customers can monitor their power usage in real-time through a mobile app, helping them better understand their power usage and needs. Based on their needs, they can elect to purchase energy packages offered by Powershop that offer discounted rates for buying power in advance or for reducing energy usage during peak hours and fulfilling certain energy-saving requirements. Because the smart meters can track energy usage instantly and accurately, Powershop can also offer customers other types of packages, such as green energy packages that offer power generated from a more eco-friendly source.
AI-powered Virtual Power Plants Enable Intelligent Energy Storage and Distribution
After the Fukushima Daiichi nuclear disaster in 2011, Japan began to actively encourage renewable energy development. Between 2003 and 2012, Japan had a meager 5-9% average growth rate for renewable energy. But after 2012, Japan experienced a renewable energy boom and the average growth rate reached 26%.2
As more renewable energy became available, the Tokyo Electric Power Company began to collaborate with Toshiba Energy Systems & Solutions. The two parties connected renewable energy power plants distributed all over the country with energy storage systems empowered with IoT technology and AI. In 2019, they set up a virtual power plant in Yokohama. Based on weather forecasts and historical energy usage, AI is used to help decide when to store surplus power in storage systems. When electricity demand increases, the system can release stored power into the smart grid. This not only cuts down on non-renewable energy purchases, but also generates additional income by selling excess power.
Another example of incorporating smart technology with energy storage systems is supplementing conventional power plants with green energy and virtual power plants. When conventional power plants face increased demand for electricity, virtual power plants can supply green power stored in power storage systems.
Blockchain Disrupts the Conventional Buyer Supplier Relationship
Lition Energie and LO3 Energy are newly-established energy trading companies in Germany and the US, respectively. They are unique in that they created a trusted energy transfer and trading platform based on blockchain’s key advantages: decentralization, transparency, and security. Consumers can choose to skip the aggregators and instead purchase energy from greener or more cost-effective providers. Blockchain enables this by simplifying the transaction process and providing transaction traceability and security. In the future, consumers can even set up contracts with small energy providers near their homes.
Though many possibilities are on the horizon, the current challenge is that renewable energy still relies on government subsidies to drop costs to remain competitive with traditional energy providers. In Germany, one of the main reasons electricity bills increased significantly over the past few years was the addition of a renewables surcharge: a cost originally subsidized by the government to support renewable energy development. While this change raised public awareness of the need to save energy, the increased power bills resulted in higher costs for industrial operations and daily life. Now, by incorporating mature smart technologies into their operations, renewable energy providers can have new ways to connect to both cost- and eco-conscious consumers.
1. REN21, Renewables 2019 Global Status Report, Paris, REN21 Secretariat.
2. https://www.re.org.tw, Renewable Energy Information Knowledge Center.