Smart Energy review – Transactive Energy Models
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- May 10, 2019
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In my review of the smart energy market I looked at new technological developments and innovations that the industry discussed a decade ago, but that never led us anywhere as successive governments have failed to come up with a smart energy policy for the country and as a consequence we have not seen any of them reaching the market perhaps beyond an internal company pilot.
After my previous blog on Smart Energy Exchanges I will now come back to Transactive Energy Models.
The definition of Transactive energy (TE) is a means of using economic signals or incentives to engage all the intelligent devices in the power grid, from the consumer to the transmission system, to get a more optimal allocation of resources and engage demand in ways that haven’t been possible before. At the core of these models are cloud computing, big data and data analytics. With the progress made over the last decade Transactive Energy Models are rapidly becoming viable options for smart energy management.
Employing the now prevalent two-way information and communications technology, consumers can begin to interact within the electricity system in ways that were not possible in the past. A transactive energy system utilises smart grid infrastructure to send signals back and forth between utilities, grid operators, and individual assets in the grid system, communicating the real-time flow and cost of power.
These systems integrate both utility-owned and third-party-owned resources including power generation, ancillary services, and load management services, in order to utilise the lowest-cost electricity in real time. The key driver of transactive energy systems is the market-based approach, which allows every service provided to the grid to be valued.
This way, those providing the services, whether they are generating power or providing load reduction services or something else, can be compensated, thus splitting the benefits and savings of the increased efficiency of the electricity system between the customer and the utility. This system is a long way from the traditional unidirectional flow of power (from utility companies to consumers) and supply side-focused mindset of the historical electricity sector.
With a host of newly accessible power generation and load management resources on both the supply and demand side and armed with real-time information as to which resources cost the least, utility companies that take the time to explore these new business opportunities could indeed end up becoming more cost effective.
But the concept of transactive control shouldn’t just appeal to economists, utility industry representatives, and engineers. The establishment of such a system will have benefits for consumers, both monetarily and environmentally. While the system may be focused explicitly on grid reliability and economics, the shift to this smarter electricity sector provides significant environmental benefits. Creating a more responsive, resilient grid is a significant step to integrating variable and decentralised renewable energy generation. This would enable clean energy solutions such as wind power and energy efficiency to be brought to the forefront of power sector operations.
Transactive energy demonstration projects are now being used to help understand the challenges and full benefits of such systems.
There have been several large-scale projects, namely in the USA, the results have been that many individual elements of the trials are now used by the individual participants of the pilots. Rather than an overall implementation what we are seeing is that many of the elements are implemented separately. Blockchain is seen as potential accelerator of TE being the facilitator between the various data sets that are part of the Transactive Energy Model, replacing the more complex and more expensive technologies that were used in the earlier projects. AI is also a new element that has been included in these TE projects over recent years.
Monash University Net Zero project is one of the most prominent smart energy projects in Australia using all the elements of TE. The project is aimed at building a smart energy environment at the university’s four Victorian campuses with the outcome of zero emissions by 2030. It will be interesting to see if such initiatives lead to a broader uptake of TE among the power distribution companies in order to provide the benefits to all Australians.
However, without clear government policies no-one is going to make the changes needed for such an energy transformation and nobody is going to make massive investments that will need to support such a national transformation. Even if the next government should finally provide that leadership it will take many years before such a transformation can be implemented. In the meantime it will just be a continuation of the ‘muddling-on’ decade behind us.
There is however no doubt that new business models will play a key role in future energy management with initiatives such as TE, Smart Grid Exchanges, microgrids, smart buildings and smart campuses, consumer-based energy projects and the interconnection with large scale renewable solar, wind and hydro projects. What we will see in coming years will be many stand-alone projects such as the Net Zero project in Melbourne.
Another early starter could be smart energy systems in remote areas that are not connected to the grid, such as mines and Aboriginal settlements . Back in 2010 the UN looked at Australia and in particular to the distributed diesel based systems in Western Australia and the Northern Territory. They looked at the possibility that the transformation of these old systems into smart energy projects could be a catalyst for developments elsewhere. It would be of enormous benefit to countries without proper national distribution networks. Politicians in Australia where at that time interested to see if such systems would be of benefits to some of the South Pacific nations. Very little however has happened since that time.
I will be discussing these developments at the 2019 Energy Forum: “How will the government deliver a smart energy future?” The event is organised by the Warren Centre and takes place on the 16th of May