The energy system is waking up and taking the next steps to becoming an energy internet where millions of measurements, actions, transactions, and interactions among a wide range of agents happen on a real-time basis. Everywhere in the electric grid, eyes and ears are popping through the integration of Internet of Things (IoT) devices, advanced measuring infrastructure (AMI), smart metering, and the whole smart energy family: plugs, lights, thermostats, vehicles, chargers, solar plants, batteries and many more. This smartness is linked to measuring and analysing multiple variables, and to the ability to manage and control these devices.
At the same time, the energy system is undergoing a fragmentation of scalewhere small, distributed agents enabled by generation (mainly solar) and storage technology are becoming relevant in an industry traditionally dominated by big players. Although currently most of the distributed agents represent a small fraction of the energy supply, in a matter of years they could become millions of prosumers (as it is happening in Australia), feeding both data and energy in a way that will radically change energy grids and markets.
The Energy Data (ED) Bank is an idea to address transition challenges like the integration of intermittent renewables, smart infrastructure costs, and managing multidirectional and multiscale power and data flows. The ED-Bank will collect, protect and draw value out of energy data to drive decarbonisation, efficiently balance generation and demand, enable demand-side response, promote solutions to energy externalities (air quality, traffic congestion), and provide a platform for energy and e-mobility products and services among peers at the retail level. All these features would stem from a compelling offer for end-users to share their data and participate.
The ED Bank
It is the year 2030, Medellín, Colombia. Ana’s business is taking off, she just finished college and decided the time was right to get a place of her own. She rented a flat and heard the ED-Bank could make her life easier, save her some money on the energy bills and even get her some additional income. She went to its website and found a chart like the following one, explaining what the bank was about.
She learned that, according to the law, all her energy data belongs to her. However, some data are a matter of public interest, and it is her duty as a citizen to share it. The green bar represents data (e.g. aggregated load and solar generation) she must disclose to the system operators to contribute to an efficient grid operation and facilitate the billing procedures.
Beyond the green bar, should Ana decide to sing up, the ED-Bank presents various offers in which she can agree to share additional data from her home energy smart-meter, mobile phone, and electric vehicle (EV). She can also set the preferences for the type of energy supply she wants (e.g. green, communitarian, local), agree to receive requests about her energy-behaviour and appliances, and decide to get ads on energy and mobility products and services.
Sharing additional information beyond necessary energy data is rewarded following the blue Value compensation axis: the more detailed information she shares and the more she agrees to interact with the ED-Bank, for instance, by changing the time of use of appliances, the more value she can generate with her energy data.
The orange section represents the personal privacy limit. It consists of sensitive documents, pictures and information regarding her intimacy that is unethical to be ‘traded’ or accessed; it also sets clear boundaries to the kind of behavioural requests some external entity can ask her. These limits will be part of the global discussion due in the following years regarding how much technology and artificial intelligence can influence human liberties. Law will establish these limits to protect the users’ privacy and free will since energy behaviour is becoming as representative of our personalities and identity as clicks, likes and web-searches are today.
Ana decided to sing up and set up her preferences. She started learning how her energy decisions meant not only savings in the utility bill but also additional benefits. Ana experimented with the different settings to find the right combination for her. For instance, the ED-Bank offered her rewards to let the bank to take control of her flat’s thermostat to increase or decrease the temperature by a few degrees according to the needs of the electric grid or the availability of solar energy. However, Ana is somewhat sensitive to the room temperature, so she didn’t like the system controlling her air conditioning regardless of the reward. Therefore, she disabled that option and set the preferences to only receiving tips and alerts for saving energy. On the contrary, Ana didn’t mind the ED-Bank telling her home energy management system how to regulate the fridge or scheduling her washing machine, so she is rewarded for that.
Besides the smart use of her appliances, there are several exciting options regarding the energy supplies that are available to Ana. She can buy energy from neighbouring homes with solar panels or from a solar community, even decide to buy directly from a friend or a community centre. However, Ana is eager to support the fight against climate change and the development of impoverished areas in Colombia, so she decided to pay a premium energy supply from renewable sources in conflict-affected regions.
Since there are also rewards for mobility decisions, Ana agreed to participate in a charging schedule program for her EV in which she gets rewards for charging in certain hours and stations. Also, through the ED-Bank, she received an ad, promoting a new car-sharing service where she could occasionally rent her EV to other users. The ED-Bank compensate her for sharing her EV, sharing rides and using public transport.
Every month, Ana receives her bill through a mobile app: a balance of her energy consumption and the value generated by her data and behaviour. There are months where the balance is positive; the value she generates surpasses the cost of her power supply. In those months she doesn’t need to pay and gets rewards such as coupons for charging her EV, riding the city transport or discounts in products and services offered through the ED-Bank.
Ana is confident that her privacy is protected, and she tailored the ED-Bank functionalities to the point where she feels comfortable, saves money and knows she is having a positive impact on society. Besides, it’s convenient and straightforward, ED-Bank’s A.I assistant does most of the work; it asks her to set the preferences, then defines and corrects the optimal settings, so Ana does not have to worry about her energy choices on a real-time basis, or understand the complexity of the energy markets. How is this system able to value her individual contribution to such broad and meaningful goals? Ana wonders.
The brain and the value flows
The ED-Bank generates value through its users’ aggregated data and response capabilities. The value created compensates data-owners, generators and makes the bank sound business. The next lines zoom in the synapses that could enable the ED-Bank’s brain to function and create value.
Let us start with the eyes and ears, the input data required for these kinds of models to work. Advanced sensing technology is already falling into place. For instance, London-based company Verv is currently using high-resolution non-intrusive load monitoring to analyse micro-scale patterns in energy use at the appliance level. Verv’s high granularity sensors and its sophisticated algorithm get to the point of predicting malfunctioning in individual home appliances and sending maintenance alerts to its clients.
The ED-Bank would be a gatekeeper, managing and protecting the information from AMI, mobile phone apps, EVs and EV charging stations. The system would need to allow the interoperability of diverse data sources — the different gates — , and then compile, process, clean and analyse massive amounts of data. Pattern discovery and clustering can be applied to understand the real-time detailed energy use, transport patterns and modes and determine the flexibility capabilities of users’ assets (home appliances, EVs, solar panels, batteries) and willingness to modify their behaviour.
At this point, the critical question arises, where does the value come from? Who would pay for the insights and capabilities provided by the ED-Bank and why? When Ana agrees to charge or discharge her EV in certain hours or places, and when she allows the system to control her home appliances, she is offering flexibility or demand-side services to the energy grid. Her decision helps avoid grid congestion or demand peaks that can significantly increase generation costs, threaten service continuity, and even jeopardise the integrity of the grid; hence her service is valuable for the electric system.
In the UK, for instance, the market for flexibility services is estimated to be worth around £2.2bn every year. In 2020, Piclo Flex, an online marketplace for energy flexibility trading in the UK, was awarded £14 million worth of flexibility contracts that included storage, generation, and demand-side response services. In Colombia, the Ministry of Mines and Energy is deploying in 2022 a 50 MW electric energy storage system in the Caribbean region (known for grid instability and frequent blackouts). This project will be the first of its kind in the country, and it opens the door for flexibility services in the Colombian energy sector. The ED-Bank would be a provider of flexibility services to the energy grid by aggregating its users’ assets and willingness to participate (e.g. Ana’s EV and fridge).
But energy flexibility is just the start. Traffic congestion, air quality and GHG emissions are negative energy-use externalities that affect society as a whole. Governments are starting to develop and adopt systems that predict and valuate the economic downsize of these externalities, and the ED-Bank could use these broad needs and use its users base to offer solutions. For instance, in Medellín, illnesses related to air pollution cost the city around 1.4 billion USD every year, the average time spent in traffic during 2019 was 69 hours, and the city has to contribute to Colombia’s target to cut down GHG emissions. The ED-Bank can offer city solutions by promoting and rewarding the right kind of behaviour in its users. The city could tackle these challenges through a smart preventive approach, by engaging its citizens, at a fraction of the current cost of just dealing with the consequences.
The ED-Bank will also function as an audience aggregator to promote energy projects with unique characteristics like solar communities, or generation from conflict-affected or impoverished areas. Digital tagging of energy can open a market for energy supplies differentiated by their non-monetary attributes (e.g. origin, source, social impact); thus this could secure the viability of exceptional projects that otherwise could not work financially. It will also offer a marketplace for products and services related to energy and transport.
The core of the ED-Bank’s brain would be an algorithm that can simultaneously understand the broad signals, assess the user base capabilities, places offers to the big actors and then deliver the service while complying with the individual agreements and preferences of each user. The algorithm will connect general outcomes and individual user contributions as nodes in a network. Each user node has determined settings, assets, and a probability of complying with requested behaviour that varies according to the user’s history. That way, the algorithm would draw some network paths with different degrees of uncertainty that can fulfil the outcome in that specific time. The algorithm assesses real-time capabilities to offer a service and at the same time, prompts each user for the desired behaviour with an estimated reward based on the outcome and the network path characteristics.
Back to reality
It seems far-fetched to think about an entity like the ED-Bank with actual technological capacities, especially in developing countries like Colombia. Paradoxically, it also feels inevitable since the pieces are already in place. Digitisation and the massification of distributed energy resources are imminent. Colombian authorities have started taking the first steps to prepare for energy’s digital revolution. There is a national directive that by 2030 over 75% of urban energy users will have AMI. From the market side, entrepreneurs and innovators are moving along too, NEU — Next Energy Utility — , the first digital energy retailer in Colombia, is already operating. NEU allows its users to buy solar energy from the NEU community and offers energy efficiency tips based on smart metering and the user’s consumption history.
In July 2020, the Colombian energy regulator issued a piece of regulation to establish a new and independent actor in the sector exclusively to manage and protect energy data. This actor will at first monopolise energy data, but only to protect and manage, not to profit from it. Still, in the future, as shown by the progressive liberalisation of the sector, it should recede, establish the ground rules and open the energy data market for ED-Bank-like actors to compete and maximise the value generated for end-users and the system.
Looking at the whole picture, it is unlikely that the ED-Bank would be just one, centralised, omnipresent entity. Instead, it’ll be a series of different platforms competing for the participation of different user segments, just like mobile carriers or energy retailers in liberalised markets compete today (with strict rules dictated by authorities). Also, ED-Banks won’t be limited for residential users. Just like Ana, a cab company can decide to share its fleet activity information. A manufacturing business could agree to participate in an optimal operation schedule program, and get rewards for upgrading to a greener, more efficient equipment. Some ED-Banks could specialise in environmental or social impact; others could provide luxury energy management systems and exclusive transportation services. Some could be massive and represent large segments of the population; others could represent solar communities or small cooperatives; others could act for industrial consortiums or a freight drivers’ union.
What is clear right now is that authorities need to start working on establishing the limits in the energy data graph. Regulators must define what constitutes basic energy information and what data and behaviour can be accessed and traded in the blue value compensation axis (the ED-Banks playground). Most importantly, regulators must contribute to that global and existential definition of the boundaries for privacy and free will. It is paramount that authorities think about this proactively before the market takes over and force it externally. Regulation on the matter should secure the protection of end-users rights: their privacy and their right to be compensated for their data. At the same time, it should make sure not to suffocate a new thriving market that could drive decarbonisation, a clean urban environment, and a sustainable energy sector.
Similar to Yuval Noah Harari’s take on the coronavirus crisis: choosing between privacy and using our energy data to make a sustainable society, is a false choice. We can decide to create a carbon-zero, innovative energy system driven by data not by instituting totalitarian surveillance, but rather by empowering citizens to act.
Article written by Juan Pablo Cárdenas, Juan Manuel España y Santiago Ortega.