Thriving During the Energy System Transition

Today’s energy system is ripe for disruption. Whoever designs the next generation of energy systems will own the platforms that will enable tomorrow’s products and lock in the emerging consumer base from the developing world.

This disruption will be as great as the shift from whale oil to rock oil, altering the energy landscape permanently. The line between producers, distributers, and consumers of energy will blur. Billions of people will have access to affordable power for the first time. The development path of humanity will change.

The choice of how to prepare for this transition will decide the fate of utilities, power producers, petroleum producers and processers, and large energy consumers. Will they follow the path of last century’s forward-thinking oil barons or the whaling captains dragged down by a commitment to stranded assets?

Batteries Can Unlock New Potential

Today’s shift mimics the energy transition to rock oil, occurring because of a perfect storm of new technology and new needs. The development of the kerosene lamp enabled the shift away from burning animal fats, just as today’s renewable energies provide an option for low-cost cleaner power. But it took the additional technology advances in oil drilling to make the use of rock oil widely available, and cheap. Today, that catalyst technology is next-generation batteries—intelligent batteries that have improved power, energy density, and lifespans—integrated with software.

Intelligent batteries hold the key to integrating renewables on the supply side and optimizing usage on the demand side. This will fundamentally change the consumption of resources on personal and macroscopic levels. Energy storage will seamlessly integrate into the grid, homes, vehicles, and mobile electronics because of new advancements in sensors, software, cell design, and data handling. These advancements will enable the monitoring and predicting of users’ behavior, market energy prices, and the surrounding environment—including weather and expected local demand.

Businesses, municipalities, and homeowners will optimize their costs by cycling fluidly through the use of a mix of locally and centrally generated and stored energy. One can imagine a home or business energy storage system that is controlled by algorithms to predict the likely energy demands for the building based on weather and occupancy information, plus auxiliary energy uses such as electric vehicles that may require fast charging. Combining these demand projections with expectations about production from a local solar array and projections of grid energy prices will enable decisions to optimize energy storage system use. The consumer system could also communicate its availability to utilities to participate in ancillary services markets, if that would be the highest value use.

Integrating Smarter Technologies

Utilities risk being sidelined as a combination of regulatory price caps and renewable subsidies enable wealthy and middle-class customers to detach from the grid to use solar and wind power for more and more of their needs. But utilities and large power end users can embrace the shift to renewables and help shape the grid of tomorrow by coming together to design, build, deploy, and own the future energy system. They can create the generation, transmission, distribution, energy storage, and end-use technology infrastructure capable of integrating high levels of renewables onto the grid.

The connection of energy storage systems to sensors, grid-level data, and control algorithms will provide end users with reliability. It also will provide utilities with a system that better optimizes peaker plant lifetimes and utilization. Users will be able to squeeze every ounce of value out of systems by combining predictive modeling of grid use, weather conditions, and battery degradation with real-time input of costs, solar and wind farm output, and energy application usage.

Minimizing Risks of New Technologies

The challenge for utilities and large power end users comes in deciding what system to build. Because of the integrated nature of the energy system of the future, pivoting on infrastructure once it takes hold will be difficult and expensive. Those who embrace the transition early and who can discern the optimal set of options for each application and the optimal combination of technologies will win. They will draw the most value from storage technologies and associated systems.

Many technology options exist for each system component—sensors, software, chemistry, and hardware. Battery chemistries are particularly difficult to value because new claims about energy density, power, lifetime, cost, and safety arise nearly every week. Finding technologies that will maximize value requires understanding component interactions.

The risk of choosing sub-optimal technology can be lessened by a deeper partnership between private industry and public research institutions. The public sector has more than two decades of experience working at the leading edge of energy storage research with technical experts around the globe. Public research laboratories provide access to multidisciplinary research teams and the best energy storage research and development tools. Private industry has the infrastructure and business know-how to integrate and commercialize innovations in the energy sector.

While a disruption to the energy system of today is coming, opportunity exists for large and small businesses to participate in the disruption and ultimately profit from it. ■

David Schroeder is deputy director, Argonne Collaborative Center for Energy Storage Science (http://access.anl.gov) and associate professor in the Department of Technology at Northern Illinois University.

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