The power sector is the biggest contributor to carbon dioxide (CO2) emissions, so many energy consumers are getting more active in reducing demand and managing energy by installing their own renewable generation.
They are not driven by pure economics, but by environmental issues. Without government infl uence on rates, mandates or subsidies, the actual number of consumers who will implement energy technology will be restricted to those environmentally concerned and fi nancially enabled. But even a relatively small number of “environmentally energized consumers” will have a disruptive effect on the energy industry, challenging traditional utility energy management and network operation models, and transforming relationships between energy utilities and energy consumers – the “consumerization of energy.”
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The consumer implementation of energy technologies (energy effi ciency systems, renewable generation and storage) and their connection to utility networks is analogous to IT consumerization (the introduction of consumer-owned IT technology to corporate IT networks) which the IT industry learned to live with and utilize. Most utilities see residential generation as irrelevant (when off the grid), competitive, inconvenient or problematic (when connected to the grid with the expectation of billing credits). CO2 abatement programmes and political endorsements will force utilities to embrace consumer-owned energy. Rather than fi ghting energy consumerization, utilities should learn from IT consumerization and embrace a strategy to deal with changing consumer energy attitudes.
To ensure the balance of supply and demand, energy policy-makers are already encouraging demand response programmes that increase pricing visibility and the use of intelligent metres to provide both time-of-use billing and demand-response switching. Add renewable energy and we empower consumers to create transformation. This evolution has come in three waves:
- Demand-side management. The supplier manages end-user consumption by reactively restricting access (shedding load) during energy shortages or by demand dispatch, e.g., smart thermostats that enable the utility to remotely control energy consumption.
- Demand response. Using price signals to change consumer consumption patterns, technology is installed at residential and commercial/industrial facilities to reduce and shift energy use from peak hours to lower energy use times.
- Consumer energy management. Combining renewable energy sources, storage technology and access to market pricing information, end users interact, via an IT solution, with utilities and decide to consume, produce or store energy based on real-time pricing. This customer-driven, atomistic and decentralized approach will have a big effect on the energy distribution networks’ control structure and on the relationship between utility and consumers. Virtually all technologies are available and are becoming affordable for residential, commercial and industrial customers. Consumers will become an “active part of the grid” not “go off the grid”, and will integrate with, not replace, centralized generation and distribution.
In most power markets domestic consumption is approximately one-third of the total power load and is highly variable depending on the time of day and season, leading to power companies’ constructing generation plants known as “peaking plants” which might only be used some hours of the day. This signifi cant capital investment and environmental impact can be lessened or even removed by the use of a widespread domestic power storage (of cheaper off-peak power) and local renewable generation managed by intelligent systems at the consumer end.
In most cases, consumers will retain control by alternating among consumption, generation and storage options based on pricing and availability of primary energy sources (wind or power). An alternate mode is where the consumer delegates control to the utility (or an aggregator) to become a part of an overall utility dispatchable generation portfolio.
In either scenario the power company will retain its role in central power generation of the “base load” which is more easily planned, environmentally managed and more effi cient. By enabling two-way communications and variable pricing, the utility can negotiate with consumers to reduce demand when prices are high and capacity is limited. In the event of a serious long-term crisis, the utility can turn off selected end users or ration power and let customers trade their rations. A further contribution to this scenario may come in the form of “plug-in hybrid vehicles” which can provide mobile localized storage. This may not be as environmentally optimal as renewable generation since any net power drain on the hybrid vehicle will need to be made up by a relatively ineffi cient and polluting petrol-powered motor when next used.
Adoption will come when consumers choose to pay for individual storage and management power to avoid peak tariff periods, or may come when a centrally managed grid chooses to subsidize the consumerization of energy as an alternative to peaking plant construction. In either case we will see a user-friendly home appliance, storing and managing power in the most economical balance for the consumer. An easy-to-use and convenient appliance has the potential to become the iPod of energy management.