In my previous post in this series, I talked about the challenges and opportunities of decarbonization, and in this one, I focus on electrification. If decarbonization is the reduction of carbon-based fuels in the electricity generation process, electrification is the consumer transition from fossil-based fuels — used in gasoline-powered vehicles or heating systems, to electrical power — used in electric-powered vehicles, heating systems, heat pumps, and countless other products.
According to the U.S. Environmental Protection Agency (EPA), roughly 40% of carbon emissions in the United States are caused by transportation and buildings (residential and commercial), so electrification has attracted the attention of various regulatory bodies. For example, the U.K. Government has committed to stop the sale of gasoline and diesel vehicles by 2030. The European Union and, in the United States, both California and New York have committed to do the same by 2035. Natural gas heating systems are similarly being phased out, to be replaced by heat pump systems and electrical heating systems. The State of New York has also approved plans to prohibit the installation of gas-burning stoves in new buildings by 2029.
While electrification is a consumer-led transition, it has a significant impact on the energy utilities and could further stress their generation capabilities.
Given the commitments to end the sale for gasoline and diesel vehicles, coupled with the tax incentives provided to people purchasing electric-powered vehicles, there is an understandable growth in the number of electric vehicles (EVs) on the road. In the U.K., 16.6% of vehicles sold in 2022 were EVs, with a further 6.3% being hybrid (electric with a gasoline engine as a reserve). In the United States, with 5.6% EVs, the percentage is less than in the U.K. and Europe, but it is growing.
All of these vehicles need charging. Although networks of charging stations are being built out in most countries, most of the charging takes place overnight, at consumers’ homes. As of June 2022, the U.K. has required all new homes to have an EV charging point. This increases demand for electricity at times that were traditionally off-peak hours, when plentiful renewable energy might not be available.
Managing the Peaks
Renewable energy sources, such as solar and wind, play a pivotal role in electrification. However, their intermittent nature and variability make their integration into the grid a complex task. Although energy utilities can predict peak loads — half-time during a World Cup final when people put the kettle on, late afternoon during heat waves when people turn on the air-conditioning — they cannot guarantee that on any given day the sun will be shining or the wind will be blowing. As a result, on-demand generating capacity must always be available for peak times, and this will take the form of nuclear power stations or traditional coal- or gas-fired power stations. Ideally, this on-demand generating capacity will eventually be retired with advances in energy storage, but for the time being, they are a critical part of the utilities’ generation toolkit.
In the age of electrification, customers want more control over their energy consumption and greater transparency from the utilities. Customers want, and need, detailed insight into their energy usage so they can make informed decisions about their consumption patterns and cost-saving opportunities. Smart meters are at the forefront of empowering consumers with this type of information, and consumers are adopting smart meters at a rapid pace. In the U.S., 80% of all energy customers have smart meters. In the U.K., this number is lower at 57%, but as with the percentage of EVs in the U.K., this percentage is also growing.
In these areas, data and analytics can be a critical enabler for utilities. Energy utilities have access to an immense amount of data from smart and traditional meters, grid sensors, and other monitoring devices. By harnessing this data, utilities can gain invaluable insights into consumption patterns, peak load hours, and grid vulnerabilities. The utilities already analyze historical data, weather patterns, and even socioeconomic factors, to accurately forecast electricity demand. They can also use the wealth of collected data — localized weather data, sensor data from generators, etc. — to forecast generating output from their renewable sources. This would enable them to more effectively match supply with demand. If there is an anticipated “demand gap,” armed with real-time market data, utilities can decide whether to purchase additional supply or spin up one of the on-demand power stations.
We are already seeing the use of data and analytics to empower energy consumers. Octopus Energy in the U.K. has a smartphone app that provides dynamic pricing information to their customers — including the times of day when they will actually pay their customers to use electricity (i.e., when the price point has gone negative). This enables consumers to make informed decisions about their use of costly appliances, such as washing machines or tumble dryers. This saves money for customers while smoothing out the demand curve to reduce the peak demand for energy utilities.
The Modern Approach
The key to harnessing and leveraging energy utilities’ data is a modern data platform, which enables seamless insights from varied and often distributed datasets. The simplistic solution of putting all of the available data into a cloud data warehouse or data lake does not and will not work. It hasn’t worked for the past 30 years, and just adding the word “cloud” in front of data warehouse or data lake will not suddenly make it work. The modern data platform embraces the reality of data being distributed across different repositories, and it enables data engineers to combine this data quickly and easily without necessarily copying it into a central location (i.e., a data lake or a data warehouse).
This is where data platforms like the Denodo Platform come in. The Denodo Platform enables utilities to integrate disparate data from different repositories (databases, data warehouses, data lakes, enterprise applications, SaaS applications, and so on) to provide real-time visibility across their operations without the delays that are invariably added by traditional data replication solutions. Modern data platforms, such as the Denodo Platform, enable utilities to support the consumer-led drive for electrification.
In the next blog post in this series, we’ll look at the challenge of digitalization.