Crossing the chasm: digital lessons from COVID-19 crisis in energy

What are we learning from from COVID-19 crisis?

How will the World be after this segregation, physical emargination and emptiness?

More than 1 billion people, 15% of the Earth human being, are living this dramatic situation, as we are touch by this pandemic.

The reason why we resort to these preventive measures is that we want to stop contagion and to protect our families and ourselves.

Although the crisis plan is on 15 days sight, we will need much more time before COVID-19 won't be a threat anymore. But since this kind of crisis happens once in 15 years, we need to strengthen our defenses and to learn how to prevent its broad diffusion and how to react in front of it.

those who will be keen to adapt will come out stronger, for the others it will be a though future

We need to get used to change:

• our social interactions, as from now they might become much more virtual;
• the way we work together, less social or bound to meeting or events;
• the manner to live working spaces: more smart-work or home work. Yet meeting rooms are virtual individual spaces where workers connect to;
• the equipment: more mobile tools (i.e. smartphone, two-in-one or tablets) to bring about the concept anywhere anytime;
• the routine: either we work from home or from anywhere else, there will be less working hours, so that we will get used to schedule more flexibly and adapt to intersect more with family and work mate needs.

the change will be in quest of new disruptive business models, mostly digital and in real-time, but much more client centric

Finally, we are required to develop new soft skill to adapt to this social and organizational disruption.

Our lives will adapt to the new digital evolution, in only few weeks, to survive or to die. The world will not be as before: so it will be more likely that those who will be keen to adapt will come out stronger, for the others it will be a though future.

Someone foretold the end of globalization. Rather, I would suggest, the change will be in quest of new disruptive business models, mostly digital and in real-time, but much more client centric.

consumers have become more and more active in the energy market, despite of their size, because they saw opportunities and advantages in investing on a cleaner and more sustainable consumption

New era for service: the energy sector

Energy is one of the most traditional and lest disrupted by digitalization, at least from consumer stand point. But it is changing for two reason:

• Regulators requested incumbent players to open new opportunity in markets, beside of the initial resistance;
• Technological scenario and end user needs themselves have fostered DERs (Distributed Energy Resources) adoption, which have then solicited a different governance and distribution system.

Regulators triggered for more competition and participation on electricity market to achieve IEA Sustainable Development Goals.

Mostly consumers have become more and more active in the energy market, despite of their size, because they saw opportunities and advantages in investing on a cleaner and more sustainable consumption.

The problems from consumers stand point:

• we are asked to pay a monthly bill, right? but what do we pay for? The answer is a provision of our consumption [*] and 50-70% of this bill is for ancillary costs and taxes [**]. Still there is a lot to do in terms of transparency and fairness;
• this huge percentage is due to previous investment loan (despite the fact the investment was not issued for your local Grid) and increasing governance cost for Power System Operators;
• still production mix heavily relies on fossil fuel (e.g. coal, gas), which we need to import, that still makes our carbon footprint bad. As consumers, we have too few opportunity to opt out for green and fair generators.

[*] In Spain, Distributor Service Operator can validate end user consumption within 11 months time frame. In Italy, within 61 months. Is it crazy?

[**] IEA defines capacity or ancillary services products safeguard against unforeseen changes in demand or available supply (primary and secondary reserves), as well as products that support the quality of power (reactive power, frequency regulation and inertia). They provide revenues to sources that, even if not essential for the adequacy of the system, support the reliability of supply and quality of power delivered.

the more renewable sources and batteries will be adopted as local solution to generate energy, the more a circular and proximity market will be spurred, as complementary of centralized production

The opportunity for the present and for the future:

• Smart metering deployment to all our houses was already attained (at least in Spain and Italy), but they are 10-years-old models, not complying with consumers' needs of immediate response and information. Technology pushes for a huge digitalization disruption;
• Consumers pretend to participate more and to get value back from their action and investment: so, the best cost-effective solution for them is the Demand Management market, at first, more suitable for industrial and commercial ones, as it allows them to be rewarded for energy flexibility [***];
• Self consumption and energy storage: both allows prosumers to reduce their energy cost (in between 30% and 40%, depending on ratio consumption installation versus generation equipment). It pays off investing in renewable sources system or batteries to reduce dependence from Energy Grid. The future trend will be zero-energy building for residential and commercial consumers;
• Decarbonization of economy and sustainability: the more renewable sources and batteries will be installed, as local solution to generate energy, the more a circular and proximity market will be spurred, as complementary of centralized production;
• Finally, new governance is needed to orchestrate large power plants (inheritance of old botton-down generation pattern) with DERs, to mitigate local grid congestion and supply shortage, as well as to keep Grid balanced.

[***] It is “a modification of generation and/or consumption patterns in reaction to an external signal (i.e. a change in price, a supply shortage) to provide a service within the energy system” from Flexibility and Aggregation Requirements for their interaction in the market

New challenges for incumbents

As the market is not anymore monopoly of few big player, new opportunities are arisen by outsider, despite of their size. They mostly are technology-push solutions which leverage on new business models.

BeChained and Tecnalogic push to disrupt Demand Management market with a Demand-Side Response (DSR) platform:

• based on a patented method, Artificial Intelligence and blockchain, it aggregates consumers (in Energy Community) and orchestrates their energy flexibility; and it makes it available to Balance Service Providers (BSP) and Balance Responsible Party (BRP) for that market;
• it brings real-time information about consumption to both side of the market, Demand-Side and System Operators;
• as well as it guarantees transparency and security of each energy transaction within the platform, as well as for consumers participating to Demand Management market and those at the marketplace of electricity from renewables;
• it is able to balance Demand (consumption) and Response (supply) in Grid with AI algorithms, boosting its evolution to neural grid.

As BeChained and Tecnalogic want the dreamers to become climate change doers, they push the consumer to the center of the market, and enlighten them about the bright future to get out from the COVID-19 tunnel stronger and with more sustainable consciousness.

Noteworthy to mention that there are a lot of other players in the sector who have pushed for a different business model, as:

• Flexidao keeps track of green energy;
• Power Ledger, D33p and Envelio (fostering P2P from renewables in Energy Community);
• Omega Grids and Hive Power optimizing Smart Grids;

and many others, who soon will challenge incumbents and contribute to change the paradigm of generation, distribution and consumption of energy.