Every bit counts - toward an electrified planet

Two technical revolutions are shaping the dawn of the 21st century: the development of the Internet and the transformation of the global energy system to achieve decarbonization. Since the 2015 G7 summit in Elmau in southern Germany, the world has focused on a common goal: turning away from fossil energy in favor of electricity as a universal energy source, with the aim of achieving complete decarbonization by the year 2100. With the advent of the Internet of Things, these two revolutions are rapidly converging. In the end, we'll have an Internet of Energy.

Decarbonization, decentralization and digitalization are transforming the energy world. The combined impact of these three global trends, which we refer to as the "3D energy model", is reshaping how we produce, distribute, and consume power. As a result, the conventional energy landscape – with a few large power plants and central downstream systems – is disappearing.

Our accelerating shift toward renewables requires a completely new systemic approach. The millions of small, distributed generating units that are being added to the energy system must be organized and managed in a new way. Moreover, prosumers are emerging – those who produce and consume as well as sell and buy electricity.

In the resulting transformation process, networking technologies will take on new importance. In the future, the power grid will be responsible for more than simply transmitting and distributing on its way to becoming the Internet of Energy.

Why this is happening: Growing demand for clean energy leads to complex solutions

According to a report from the UN initiative Sustainable Energy for All, more than one billion people on earth live without access to electricity. Regions that are particularly affected by this include sub-Saharan countries that are experiencing rapid population growth. According to UN estimates, the global population is projected to increase by nearly two billion people by the year 2040. This growth will primarly take place in developing countries. Political leaders, industry, and aid organizations all agree that providing all people with access to electricity is morally imperative and economically necessary.

Yet not everyone is aware of the dilemma this poses: What issues would we face if this segment of the world's population were to adopt our lifestyle and consume energy as we do? How would our environment change if roughly half of the power consumed was obtained from fossil fuels – not only in the developed world, but also in those regions?

At the very least, such a trend would put the international community's ambitious climate protection goals at risk. Most of all, it would immediately endanger the objective of limiting global warming to a maximum of two degrees.

It is now undisputed that the consumption of fossil energy is directly related to global warming. Anyone who believes that there is no correlation between rising temperatures, especially ocean temperatures, and the frequency and intensity of natural desasters is simply denying reality.

The transport sector is an example of what would happen on a global scale if everyone were to follow the example of developed industrial countries. Traffic-related emissions are around 60 percent higher today than they were in 1990 – mainly because of the drastic increase in the number of vehicles in developing and emerging countries. In China alone, the number of vehicles more than quadrupled within the last decade to roughly 200 million.

Demand for electricity is also growing worldwide. Experts expect the amount of electricity that is generated to increase by around 80 percent by the year 2040. This is not just a matter of the pent-up demand in developing and emerging countries; it's also about increased demand for electricity due to the growing use of information and communication technology in industrialized countries.

The consequences of these developments are clear: The world needs electricity for everyone – preferably, power that is generated from renewable energy sources in a manner that is as climate-neutral as possible. Moving away from fossil fuels and a central supply of power from just a few power plants and toward numerous, distributed, and renewable sources of energy such as wind turbines and solar systems will not occur overnight. Beyond the political and economic issues, this radical shift presents us with tremendous technical challenges.

Managing increasing complexity

In terms of time and space, the generation of electricity is being decoupled from its consumption. This decoupling results in a system that is noticeably more complex. Raising the number of distributing units that are integrated into the energy system increases the complexity even further.

With nearly 100 percent availability, the German power grid is considered a role model for industrialized countries. The energy transition, however, has left its marks on Germany's power grid. In recent years, for example, there has been a massive increase in the number of times that network operators were forced to intervene in order to stabilize the German grid.

According to a preliminary review of last year, TenneT said that it had to spend almost €1 billion on emergency interventions to stabilize its network in 2017. Via the so-called grid charges, the costs of such interventions are allocated to the electricity price and end up with the consumer.

Digitization provides smart ways to handle the intricacy

To cope with the energy system's complexity, we need to tap into digital capabilities in order to make power grids smarter. Each individual producer represents one member of a complex overall system. All must be connected in a way that ensures a reliable power supply and stable grid.

The fragmentation of energy supply means that systems and process boundaries that were once fixed, such as the walls between public utilities and consumers, are breaking up. New networks of producers and consumers are developing into new types of market players and service providers. And they're creating completely new business models for buying and selling energy. These changes have led to many ideas for a convergence of industries, technologies, value chains and commercial processes.

Digitization is also a lever for increasing the competitiveness of renewable energies. In Germany, for example, the contracts were recently awarded for the first large offshore wind farms that can do without public funding and can finance themselves from the market price for electricity. This advance was enabled by efficiency gains that wouldn't have been possible without digitization.

Digitalization drives efficiency. Efficiency drives competitiveness. And the competitiveness of renewables helps combat climate change.

Exploiting mountains of data

Dealing with ever-increasing volumes of data across the overall energy system is the challenge facing the industrial sector. The growing complexity of distributed energy landscapes is a major contributor to the growth of this overall data volume.

The number of networked devices provides a benchmark here. In 2003, the global population was 6.3 billion people and there were 500 million devices connected to the Internet. According to forecasts by the U.S. company Cisco, this figure is expected to increase to 50 billion by the year 2020. The overall volume of data is growing at the same rate. According to a recent study published by IDC, a market research company, the worldwide data volume is expected to rise from its current level of 16 zettabytes to 163 zettabytes in the year 2025 – a tenfold increase.

Artificial intelligence and quantum computing can do the impossible

We have to be aware that we can't meaningfully exploit these huge amounts of data with the technologies available today. The industry must, therefore, break new ground and adopt technologies that were still within the realm of science fiction just a few years ago. One of these technologies is artificial intelligence, which is already being used in many developmental projects and products today.

Gas turbines from Siemens provide an example of how this works. Artificial intelligence in the form of machine algorithms helps achieve longer service intervals for gas turbines. Algorithms automatically analyze operating data, environmental conditions and component properties better than humans experts could.

Quantum computing is another groundbreaking technology that industry is already exploring intensively. Quantum computers employ an architecture that differs fundamentally from that of the conventional counterparts: They rely on operating principles that are based upon the properties of quantum theory. Quantum computers directly use subatomic particles and harness their quantum properties for data storage and data processing. So every little bit counts.

This world made up of the tiniest of particles will help us to solve the problems of the larger world around us. And we'll need these capabilities as power generation for our planet becomes increasingly renewable, the global population continues to grow and the supply of electricity extends to more and more people.

Drawing conclusions: New technologies can help meet our energy challenges

As has been the case with communications and the Internet, every new participant in the energy system increases the possibilities and opportunities for the overall system. The value of the system grows when a simple power grid evolves into a comprehensive energy network and surplus electricity can provide a basis for generating other forms of energy by coupling sectors. When electricity is converted into heat or used to extract heat, when it serves as the basis for providing mobility, or when it is employed to produce hydrogen or methane, completely new and flexible sources of energy become available.

Networking technologies will gain new meaning in this transformation process. In the future, the energy network will be responsible for more than simply transmitting and distributing electricity. It will further expand its role, competencies and functions, and continue to increase its value as participants are added. In the end, the power grid will develop into an energy network: the Internet of Energy.