21 st Century Energy System. Imperial College Energy Systems Catapult Challenging Ideas

Transcription

1 21 st Century Energy System Imperial College Energy Systems Catapult Challenging Ideas

2 3 Core Problems Structural Capture: Old fashioned thinking, incumbency capture, fear of the unknown Regulation institutionalising old fashioned solutions Costing the wrong things Consumer By-Pass: Government is captured by Supply rather than demand Incumbents don t trust consumers to make good decisions Consumers victims of the system Regulatory and Business Model Atrophy Big is best, challengers are full of risk New business models are questioned politically Regulatory change incremental and industry code change glacial Sellotape solutions adding cost and complexity

3 Wasteful, Inefficient & Stupid Particularly Energy SYSTEM DESIGN: Grid running a Bentley 24/ How much is security costing, is it efficient or are we captured by an incumbent model? SYSTEMIC WASTE: The Power System is only 46% productive. Other industries deliver 4% pa productivity gains. Why no pressure on efficiency for the system? SUPPLY MODELS LESS EFFICIENT THAN DEMAND MODELS: No transparency of REAL cost, billed in a language no one understands, no relation to usage with few options to control. SMART METERS LEAVING CONSUMERS COLD: Can be stupid & UGLY too... CCS OVER ENGINEERED & UNDER DESIGNED: An engineer's dream and not a sensible solution for a potentially valuable product. WASTED WASTE: 2.5bn Valuable materials sent to landfill, wasting assets and resources.

4 New Thinking and New Players OPEN UP ACCESS: Distributed energy, localised networks, and consumer participation in Demand Side Response opens up market to active consumers driving down cost and demand and building a Plug and Play capability CONSUMERS ARE SMART: Consumers can make very complex decisions if given good information no need to be patronised by simplicity NEW BUSINESS MODELS: New services on the market questioning some of the energy systems assumptions. Ownership versus service DATA REVOLUTIONS: Big data, new analytics, big thinking migrating to micro business models CARBON CAPTURE & UTILISATION: Re-engineering CO2 into productive and useful product! DEMAND SIDE RESPONSE: Should deliver significant savings to the whole system but underdeveloped!

5 New Thinking and New Players COLD ECONOMY: Refrigeration and air conditioning is one of the fastest growth sectors currently 7-10% - growing by 33-fold - can we do Cold Smarter? STORAGE: THE UBER OF ENERGY: Optimisation of the utility of every unit of energy, democratised and consumer products designed as stores & distributors BLOCK CHAIN: Building new contractual relationships guaranteeing system optimisation ANEUTRONIC POWER POSSIBLE?: Tri-Alpha Energy stating they are only 10 years from waste free fusion power! INDUSTRIAL SYMBIOSIS / CIRCULARITY New thinking and Waste Busting throughout industrial processes. DC-GRIDS: Losses significant through AC/DC conversion that assists GRIDS not consumers system design around productivity at the plug not the power station

6 81% of electricity produced by 8 major generators Bulk Transport To Regional Warehouses 80% of electricity travelling through Long Term Contracts Large Customers B2B Abattoir inspections 2010 White Vans Restaurants B2SME Regional Warehouse Royal Mail B2C The Farm The Market Single Direction Supply Chain Supermarkets 86% of electricity bought through 6 companies

7 P2P Data IoT System by 2030 Personal data Enablers: Smart meters Data Electric heat Distributed Generation Storage Micro Grids Big battery Community Energy and peer-to-peer Electric Vehicles Smart appliances Market and regulatory reform Demand flexibility

8 The Current Regulatory Model

9 Conflicting Interests at the Heart of the System Competing Directions: The Push of the Existing System v. the Pull of Demand Technologies Dominant Architecture: Centralised Despatch v Distributed Prosumers and Both Old Fashioned Cost Base: We are costing our system according to 20 th century asset class and inputs New Runners and Riders: New dominant players is it really going to Utilities or data companies, Alexa, appliance suppliers or EV Cars Smart or just less Stupid: Smart being laid on top of Stupid v smart determining shape of the system Not in Isolation of the Industrial Needs: Smart just in terms of energy delivery or smart for UK competitiveness, energy costs and productivity Global Leadership: UK needs to own the future of regulation and maintains leadership in design and shape of competitive energy markets

10 From the Plug through to the Power Station Simplification: Why are so many new entrants either put off by the system or morph into businesses that they did not want to become. Old Fashioned Asset Classification: Is one-size fits all asset classification costing more than developing different asset classes & optimising more appropriate funding models Are We Charging for the Wrong Thing?: With the marginal cost of energy are we charging for the wrong element of the energy system? Optimisation and dispatch possibly where the value really lies Are we incentivising the Wrong Thing? We are currently incentivising generation rather than utilised energy Distributed Systems Operation: With new consumer goods, domestic storage, digitally controlled appliances will balancing be in the home / factory rather than with the SO Productivity gains & Systems Optimisation: With 46% power productivity we should be getting more from our system - Ofwat Model and what does distributed generation do to optimisation Technological Evolution: Are we designing the system around transition challenges rather than the future Resilience and Security: Security has been based around centralised supply model. How does a demand driven system with distributed generation impact security of supply and resilience.

11 Data Energy Consumers IoT Automated supply Gold Service Bronze service ProSumer Personal data New Products and Services Vanilla Silver Service Free Energy with EV car Free Energy Bundled Food Analogy The food system changed when homes had refrigeration storage. With a proliferation of food products and supermarkets have to stock just in time based on big data and inventory technology. Supermarkets do not ask the consumer to manage the supply but still respond to consumer demand Cost of out of season or imported products increases peak / intermittency. How is the quality and safety of food regulated across big and small retailers including restaurants & mass caterers Some buy ingredients to cook, others buy easy meals

12 Data Local Energy Market Multiple Service Requirements Food Analogy The food system changed when home had refrigeration storage. With a proliferation of food products and supermarkets have to stock just in time based on big data and inventory technology. Supermarkets do not ask the consumer to manage the supply but still respond to consumer demand Cost of out of season or imported products increases peak. How is the quality and safety of food regulated across big and small retailers including restaurants & mass caterers Some buy ingredients to cook others buy easy meals

13 Call in the Cavalry! Big battery Electric Heat Food Analogy The food system is 5 meals away from starvation and that can be accelerated by any food scare. What are the emergency responses to horsemeat, supply crisis, supplier bankruptcies. How resilient is the system? And how much are we prepared to pay for security of supply?

14 Ancient or Modern? The UK has the most exciting opportunity to shape a truly modern energy system with ambition, technology, productivity and new thinking Will our regulation and system design hold it back?