The Digital Energy Roadmap : Social Innovation : Hitachi

THE DIGITAL ENERGY ROADMAP

Digital Energy Roadmap

“FOUR GAME CHANGERS HAVE EMERGED THAT WILL HAVE THE BIGGEST IMPACT ON THE DIGITAL ENERGY ROADMAP: ENERGY STORAGE; SMART METERING; ELECTRIC MOBILITY; AND DISTRIBUTED ENERGY”

The past five years have seen digital technologies proliferate and mature to the level where IoT solutions can provide the infrastructure for the new energy future and bring about the integration of IT and OT. The period to 2025 will see significant acceleration. Amid the complexity, four game changers have emerged that will have the biggest impact on the roadmap to 2025 and will drive innovation and the creation of the sub-trends, technology innovations and opportunities that will lead to the digital energy future: energy storage, smart metering, electric mobility and distributed energy.

THE BOOM IN ENERGY STORAGE
Energy Storage Market Forecast

"Distributed energy storage is a primary enabler to the development of a decentralised, distributed and decarbonised energy sector”

1. Cloud Based Battery Services
2. Storage Communities and Microgrids
3. VPP Aggregation and Trade
4. Utility Rollouts as Grid Assets

In order to meet higher levels of renewable energy integration, grid networks require tighter control over grid balancing. Smoothing, congestion management and frequency regulation are three of the most important applications of battery energy storage (BES) in renewable energy integration. Use of utility scale systems is accelerating dramatically, and annual installations of large BES will grow from 1.5GWh in 2016 to over 10GWh per year by 2025.

Rapid advancements in battery management systems and cloud-based analytics have also enhanced the value proposition of residential, commercial and industrial battery storage solutions.

The sales proposition of energy independence is quickly progressing to one of value generation for the customer through significant cost savings and income generation. Coupled with third-party ownership or financing models that reduce or remove upfront costs, this will drive mass-market adoption of residential storage beyond 2020.

New lithium-ion chemistries provide dramatically extended product lives, storage capacities and slim form factors, and advanced battery management systems are maximising cost savings through tariff price point tracking and arbitrage services. Cloud-based analytics have opened new value streams for customers through aggregation of distribution storage units into virtual power plants for trade of excess storage capacity as ancillary services to the grid.

Distributed BES allows maximised self-consumption through access to a cloud-based community of excess storage capacity under peer-to-peer trading models. These communities will be accessed not only from homes, but also from electric vehicles, allowing cheap and green charging from charge points along the grid.

We’re seeing new value propositions and income streams for consumers, the retraction of feed-in-tariffs (FiTs) and net-metering as subsidies for distributed renewable power, and grid volatility from high renewable penetration levels. By 2025, residential storage will be an integrated and essential component of all renewable energy projects from utility-scale developments to residential PV-kit systems, with IoT capabilities driving new levels of integration and efficiency.

BEYOND SMART METERING
Smart Meter Market Forecast

Smart metering will move beyond automated meter reading to deliver better customer engagement, demand response solutions and remote building control”

1. Demand Response Solutions
2. Customer Engagement Tools
3. Remote Building Control
4. Centralised Programming

Smart meters are among the fundamental building blocks of the smart grid and digital energy network. They also generate huge amounts of data that can be leveraged. A growing number of users connected via smart meters opens the door to digital retail services such as tariff optimisation, customer engagement, relationship optimisation, and the IoT control and connectivity of electric vehicles.

With IoT technology, smart meters are also becoming the gateway into services at a consumption level, such as demand response, remote building control, home energy management, centralised programming and energy optimisation for commercial and industrial customers.

Of the 1.9 billion households with electricity meters today, about 36% have smart meters installed, and this will increase to 65% by 2025. Already over 100 million smart meters are being installed per year and many major markets, such as Japan, France, the USA, the UK, Malaysia and South Korea, will invest aggressively in smart meter roll-outs in the years to 2025.

In Europe, where there is strong regulation from the EU on smart meter installation, countries such as Sweden, Italy and Finland have already reached close to 100% penetration of smart electricity meters and are seeing the benefits in terms of customer engagement and active energy management initiatives. The states of California (USA) and Victoria (Australia) have reached similar positions and many more will follow as smart metering becomes a critical platform for the next generation of value addition.

THE AGE OF ELECTRIC MOBILITY
EV Market Forecast

"E-Mobility will form an integral component of energy networks of the future, through vehicle-to-home, vehicle-to-grid, and advanced lithium technologies”

1. Vehicle to Home (V2H) Solutions
2. Vehicle to Grid (V2G) Solutions
3. Low Price Lithium
4. Fuel Cells and Advanced Lithium

The electrification of mobility is one of the biggest transformational trends driving change in the energy industry. Growth in electric vehicle (EV) adoption is accelerating rapidly and 2017 will be the first year to see over 1 million electric cars sold globally. The whole automotive industry—which is inherently customer-centric and fast paced—is now embracing the changes and irreversible momentum has been built. The market is forecast to show enormous growth, amounting to almost 20 million new vehicles per year by 2025.

Recent announcements by governments setting targets to ban combustion engines, such as France, the UK and Norway, will heavily drive this market, resulting in fundamental shifts in R&D investments into electric vehicle technologies. The market momentum is driven by innovation on the supply side, changing strategies of automakers and enhancements in battery technologies, including increasing battery energy density, improving battery capacities, and rapidly falling battery costs.

The convergence of e-mobility and energy is clear. On the one hand there will be opportunities to address the need for charging infrastructure and grid balancing, while on the other hand the deployment of millions of EVs will create a network of distributed energy storage points. The convergence of EVs, solar PV generation and home energy storage is driving the emergence of vehicle-to-home (V2H) concepts.

V2H solutions maximise the energy efficiency and cost savings achieved by the user through management of power generation and storage solutions as part of a holistic unit, leveraging variable tariff prices, maximising renewable energy consumption, and opening up income streams through trading excess capacity for grid services. Collaboration between energy companies, vehicle and battery manufacturers and IT integrators is already becoming common.

Beyond 2020, aggregation and trade of excess storage capacity from EVs for grid services will extend beyond the home and into commercial facilities and public charging infrastructure. By using IoT connectivity, vehicle-to-grid (V2G) services will represent a core value offering to electric vehicle owners, mitigating the challenges of high upfront costs through contributing to the lifetime net value of the vehicle.

DISTRIBUTED ENERGY 2.0
Distributed Energy Market Forecast

"Global distributed generation annual capacity additions will surpass centralised capacity additions after 2022”

1. Prosumers Become Pro-Users
2. Advanced Microgrids
3. Price Point Trade and Maximising RE IoT
4. Virtual Power Plants (VPPs)

The historic model of generating energy centrally and distributing it to users is changing fast as more energy is produced closer to the point of use. Rooftop PV has shown enormous growth over the past 10 years, but it has been restricted to the availability of government incentives and connection policies by utilities.

The self-generation or PV-with-storage market requires no support and limits distributed generation growth only in the ability of consumers to pay. In combination with rapid price declines of battery systems, the cost effectiveness of self-generation is being spurred on through digital innovation in peer-to-peer electricity trade and distributed electricity aggregation into VPPs.

Cloud-based analytics platforms, allowing for the trade of excess generation from prosumer markets, are driving value streams for customers not simply via fixed-price FiT policies, but via competitive spot market trading with energy markets for ancillary services. Battery management systems are enhancing the cycle life and effectiveness of storage through maximising the charge/discharge value and significantly increasing RoI for customers.

Digital progression in the development of energy management systems and microgrid controllers is driving the adoption of distributed microgrid systems that offer a hybrid generation mix that is more reliable, cheaper and self-sufficient than traditional alternatives.

Distributed renewable energy is fast becoming the ‘new normal’ of the energy landscape and by 2023 distributed generation capacity additions will surpass centralised capacity additions as the leading global energy market. Total installed capacity for distributed energy is expected to reach 1,062 GW in 2025, led primarily by investments in distributed solar PV and ushering in the dawn of dominance for new DG business models.

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