21st CenturyEnergySystem

ImperialCollege|EnergySystemsCatapult|ChallengingIdeas

3CoreProblems

• StructuralCapture:§ Oldfashionedthinking,incumbencycapture,fearofthe

unknown§ Regulationinstitutionalisingoldfashionedsolutions§ Costingthewrongthings

• ConsumerBy-Pass:§ GovernmentiscapturedbySupplyratherthandemand§ Incumbentsdon’ttrustconsumerstomakegooddecisions§ Consumersvictimsofthe“system”

• RegulatoryandBusinessModelAtrophy§ Bigisbest,challengersarefullofrisk§ Newbusinessmodelsarequestionedpolitically§ Regulatorychangeincrementalandindustrycodechange

glacial§ Sellotapesolutionsaddingcostandcomplexity

SYSTEMDESIGN:GridrunningaBentley24/7- 365.Howmuchis“security”costing,isitefficientorarewecapturedbyanincumbentmodel?

SYSTEMICWASTE:ThePowerSystemisonly46%productive.Otherindustriesdeliver4%paproductivitygains.Whynopressureonefficiencyforthesystem?

SUPPLYMODELSLESSEFFICIENTTHANDEMANDMODELS:NotransparencyofREALcost,billedinalanguagenooneunderstands,norelationtousagewithfewoptionstocontrol.

Wasteful,Inefficient&Stupid…ParticularlyEnergy…

SMARTMETERSLEAVINGCONSUMERSCOLD:Canbestupid&UGLYtoo...

CCSOVERENGINEERED&UNDERDESIGNED:Anengineer'sdreamandnotasensiblesolutionforapotentiallyvaluableproduct.

WASTEDWASTE:£2.5bn“Valuable”materialssenttolandfill,wastingassetsandresources.

NEWBUSINESSMODELS:Newservicesonthemarketquestioningsomeofthe“energy”systemsassumptions.Ownershipversusservice

CONSUMERSARESMART:Consumerscanmakeverycomplexdecisionsifgiven“good”information– noneedtobepatronisedbysimplicity

DATAREVOLUTIONS:Bigdata,newanalytics,bigthinkingmigratingtomicrobusinessmodels

OPENUPACCESS:Distributedenergy,localisednetworks,andconsumerparticipationinDemandSideResponseopensupmarkettoactiveconsumersdrivingdowncostanddemandandbuildingaPlugandPlaycapability…

NewThinkingandNewPlayers

CARBONCAPTURE&UTILISATION:Re-engineeringCO2intoproductiveandusefulproduct!

DEMANDSIDERESPONSE:Shoulddeliversignificantsavingstothewholesystembutunderdeveloped!

BLOCKCHAIN:Buildingnewcontractualrelationshipsguaranteeingsystemoptimisation

COLDECONOMY:Refrigerationandairconditioningisoneofthefastestgrowthsectors– currently7-10%- growingby33-fold- canwedoColdSmarter?

NewThinkingandNewPlayers

STORAGE:THEUBEROFENERGY:Optimisationoftheutilityofeveryunitofenergy,democratisedandconsumerproductsdesignedasstores&distributors

INDUSTRIALSYMBIOSIS/CIRCULARITYNewthinkingandWasteBustingthroughoutindustrialprocesses.

ANEUTRONICPOWER– POSSIBLE?:Tri-AlphaEnergystatingtheyareonly10yearsfromwastefreefusionpower!

DC-GRIDS:LossessignificantthroughAC/DCconversionthatassistsGRIDSnotconsumers– systemdesignaroundproductivityattheplugnotthepowerstation

BulkTransportToRegionalWarehouses80%ofelectricitytravelling

through

Abattoirinspections

TheFarm TheMarket

RegionalWarehouse

LargeCustomers– B2B

Restaurants– B2SME

B2C

Supermarkets

LongTermContracts

WhiteVans

RoyalMail

81%ofelectricityproducedby8

majorgenerators

86%ofelectricitybought

through6companies

2010

SingleDirectionSupplyChain

Data

Enablers:• Smartmeters

• Data

• DistributedGeneration

• Storage

• MicroGrids

• CommunityEnergyandpeer-to-peer

• ElectricVehicles

• Smartappliances

• Marketandregulatoryreform

• Demandflexibility

IoT

Electricheat

P2P

Bigbattery

Personaldata

Systemby2030

TheCurrentRegulatoryModel

ConflictingInterestsattheHeartoftheSystem¥ CompetingDirections:ThePushoftheExistingSystemv.thePullof

DemandTechnologies

¥ DominantArchitecture:CentralisedDespatchvDistributedProsumers–andBoth

¥ OldFashionedCostBase:Wearecostingoursystemaccordingto20th

centuryassetclassandinputs

¥ NewRunnersandRiders:Newdominantplayers– isitreallygoingtoUtilities– ordatacompanies,Alexa,appliancesuppliersorEVCars

¥ SmartorjustlessStupid:SmartbeinglaidontopofStupidvsmartdeterminingshapeofthesystem

¥ NotinIsolationoftheIndustrialNeeds:SmartjustintermsofenergydeliveryorsmartforUKcompetitiveness,energycostsandproductivity

¥ GlobalLeadership:UKneedstoownthefutureofregulationandmaintainsleadershipindesignandshapeofcompetitiveenergymarkets

FromthePlugthroughtothePowerStation

◎ AreweincentivisingtheWrongThing?Wearecurrentlyincentivisinggenerationratherthanutilisedenergy◎ DistributedSystemsOperation:Withnewconsumergoods,domesticstorage,digitallycontrolledappliances

willbalancingbeinthehome/factoryratherthanwiththeSO◎ Productivitygains&SystemsOptimisation:With46%powerproductivityweshouldbegettingmorefrom

oursystem- OfwatModelandwhatdoesdistributedgenerationdotooptimisation◎ TechnologicalEvolution:Arewedesigningthesystemaround“transition”challengesratherthanthefuture◎ ResilienceandSecurity:Securityhasbeenbasedaroundcentralisedsupplymodel.Howdoesademand

drivensystemwithdistributedgenerationimpactsecurityofsupplyandresilience.

◎ Simplification:Whyaresomanynewentrantseitherputoffbythesystemormorphintobusinessesthattheydidnotwanttobecome.

◎ OldFashionedAssetClassification:Is“one-sizefitsall”assetclassificationcostingmorethandevelopingdifferentassetclasses&optimisingmoreappropriatefundingmodels

◎ AreWeChargingfortheWrongThing?:Withthemarginalcostofenergyarewechargingforthewrongelementoftheenergysystem?Optimisationanddispatchpossiblywherethevaluereallylies

IoTProSumer

Automatedsupply

GoldService

SilverService

Bronzeservice

Vanilla

FreeEnergyBundled

FreeEnergywithEVcar

Personaldata

Data

NewProductsandServices

FoodAnalogyThefoodsystemchangedwhenhomeshadrefrigeration– storage.Withaproliferationoffoodproductsandsupermarketshavetostockjustintimebasedonbigdataandinventorytechnology.Supermarketsdonotasktheconsumertomanagethesupply– butstillrespondtoconsumerdemandCostof“outofseason”orimportedproductsincreases– peak/intermittency.Howisthequalityandsafetyoffoodregulatedacrossbigandsmallretailersincludingrestaurants&masscaterersSomebuyingredientstocook,othersbuyeasymeals

EnergyConsumers

Data

MultipleServiceRequirements

LocalEnergyMarket

FoodAnalogyThefoodsystemchangedwhenhomehadrefrigeration– storage.Withaproliferationoffoodproductsandsupermarketshavetostockjustintimebasedonbigdataandinventorytechnology.Supermarketsdonotasktheconsumertomanagethesupply– butstillrespondtoconsumerdemandCostof“outofseason”orimportedproductsincreases– peak.Howisthequalityandsafetyoffoodregulatedacrossbigandsmallretailersincludingrestaurants&masscaterersSomebuyingredientstocookothersbuyeasymeals

Bigbattery ElectricHeat

Call in the Cavalry! FoodAnalogyThefoodsystemis5meals

awayfromstarvationandthatcanbeacceleratedbyanyfood

scare.Whataretheemergencyresponsestohorsemeat,supplycrisis,supplier

bankruptcies.Howresilientisthesystem?

Andhowmucharewepreparedtopayforsecurityof

supply?

TheUKhasthemostexcitingopportunitytoshapeatrulymodernenergysystem– withambition,technology,productivityandnewthinking

AncientorModern?

Willourregulationandsystemdesignholditback?