A Seriously Cool Hot Topic: Helping Energy Utilities to Save the Planet
By: Jennifer Major
Tags: Artificial Intelligence, Blockchain, Hackathons, Innovation, Renewable Energy

Photo by Riccardo Annandale on Unsplash

Energy supply and demand — a changing world

The whole process of electricity supply and demand is changing. This is leading to a fundamental change to the way in which Energy Utilities need to use data and analytics to balance supply and demand.

And this in turn is leading to a lot of new applications being developed to support the real-time data capture, analysis and decisions that have to be made in the new paradigm of variable supply.

By ‘variable’ supply, I mean that we currently do not have perfect knowledge of when the wind is going to blow or the sun is going to shine. Nor do we know exactly when domestic users are going to be using the energy that they are generating from their PV panels, or when they are going to have excess power that they feed directly into the power grid.

But let me begin at the beginning, so I can build up to the point that I’m trying to get to around the what I mean by ‘new applications’. If you can’t be bothered to read my scene-setting, feel free to skip to the last section of this blog.

What is electricity?

Simply put, it is energy that has been converted into an electrical current that can be transmitted through power lines to the point of consumption. For most of us, that point of consumption is represented by the power plugs in our buildings and summed up by our electricity meters.

The traditional model that we have been using for years is where large power plants are set up to generate electricity to supply consumers and businesses.

As technology has evolved, we have learnt how to convert a wider range of energy sources into electricity. This is done by converting kinetic energy (the energy created by motion) or chemical energy (the energy created by chemical reactions) into electricity. Electricity is a flow of electrons that can be transmitted from one place to another through conductors (power lines).

One of the claims for the first public power station is in the USA. This used a coal fired steam engine to drive a generator which powered street lighting for Pearl Street in New York.

In the UK, Godalming claims to be the first town in the world to have electricity made available for the public to purchase. In this instance the source of kinetic energy was a water-mill on the river Wye.

So it’s evident that from the very early days of electricity generation, both fossil and renewable energy sources were being used.

How is electricity demand and supply changing?

There are two new factors that need to be managed — which the traditional operating models of energy utilities were demonstrably not designed for.

Buying and selling electricity

The electricity market was originally designed for big power stations to generate electricity which big retailers then sold and distributed to the consumers.

In most countries, electricity utilities started as state-owned enterprises, managing the whole electricity supply chain — from generation to transmission to distribution to retail.

Over the past 30 or so years, energy utilities have increasingly been split up into their constituent parts, with separate companies operating each of the stages. The primary driver of this has been to increase efficiency by introducing competition, especially in the areas of generation and retail.

But now it seems, almost anyone can become an electricity generator. It might be a landowner switching some of their fields to solar farms, or business and domestic premises with solar panels and/or small wind turbines. And when these prosumers[i] generate more electricity that they need, they are paid to feed the excess into the supply network.

The usual model was for the energy utilities to act as the go-between and buy this excess electricity to then sell on to others.

However this model is changing. New paradigms, such as blockchain, are making it easier to create markets where the buyers and the sellers can deal directly with each other.

Balancing electricity supply and demand

Electricity is expensive to store[ii] This means that it has to be produced as and when it is needed. Put too much electricity into the network and it can become unstable — leading to supply having to be interrupted while stability is restored. Too little leads to the same impact; the lights go out.

The established model of balancing the electricity network sits with the transmission network operators. They work with the power stations to balance supply with demand, by increasing and decreasing supply to match demand deviations from what was forecast (and planned) for.

This is relatively easy to do if you have power stations where supply can be readily increased or reduced. Not so easy when you are dealing with renewable sources such as wind and solar.

Now add to this the proliferation of micro-generation; millions of premises attached to the network, reducing demand by meeting (some or all of) their own electricity needs, and increasing supply when they generate more than they need. This is difficult to forecast (especially at a network level) and even harder to control.

Enter ‘Demand Side Response’ (DSR).

As it becomes increasingly difficult to predict or control the amount of electricity being fed into the power grid, focus has shifted from supply to demand. If you can create a mechanism whereby power consumers can either increase or decrease their demand to meet supply, then you have more flexibility to balance the power grid.

This is easy enough to do with significant consumers of power. For example, large cool-storage facilities can be paid to kick in their back-up generators when supply is low.

Or heavy industry may have the flexibility to increase their power usage at times when there is excess capacity from renewable generation.

There are many trials to test the feasibility of nudging domestic usage from peak demand periods into lower demand periods. For example, some retailers will offer ‘free’ electricity at certain times of the day or week, to encourage people to use those off-peak hours to do their laundry.

But most people and organisations will tend to feel that the effort involved in actively managing their energy consumption for small rewards just isn’t worth the effort.

And this has created a whole new opportunity for energy aggregators to step into the market. They may act as the sales agent for multiple renewable generation installations, thus reducing the variability of supply through aggregation. They may act as agents for DSR by providing mechanisms that enable industrial, business and domestic consumers to automatically reduce or increase power consumption. Again, by aggregating the responses of many different energy consumers, and fine tuning the incentives for participation, they can deliver reliable Demand Side Reponses.

New software applications to support the changing energy market

And so back to my initial point; the times they are a-changing (to quote Bob Dylan), and the technology that we need to run energy utilities is also changing.

Increased retail competition, the shift to renewable generation and the resultant increased complexity in energy balancing all lead to the need for more proactive management of electricity supply and demand.

And to be proactive, you need to be able to predict with some certainty what is likely to happen, and what you can do to influence it. I’m talking about predicting supply and demand, and furthermore, identifying the things that you can do to influence and optimise both.

In the first instance, we are seeing new applications coming to market that are helping to automate the new ways of working.

Meridian, the largest Energy Utility in New Zealand, experimented with the concept of turning energy into a commodity, where you could choose how much to stock up on and when, based on market prices. Powershop, the resulting brand along with the enabling software, was subsequently sold to other markets, including Australia, Japan and the UK.

Octopus, as a challenger retailer in the UK, developed a customer billing platform (Kraken) which provides flexibility and agility in the way in which customer tariffs, billing and interactions can be managed. The Kraken platform has subsequently been sold to a number of energy retailers globally, including E.on (Europe) and Origin (Australia).

Origami Energy, a Cambridge start-up, built a platform to support energy aggregation. Companies such as Smartest Energy — who began in the UK as an aggregator for renewable generation to then sell ‘green power’ to business- have stepped into the DSR space using Origami.

Why am I so excited about this?

SAS have been working with hundreds of Electricity Utilities around the world for many decades. We’ve helped them adapt to competition by understanding and serving their customers better. We’ve helped them adapt to changing demand patterns and squeezed margins by forecasting short, medium and long-term energy demand more accurately.

We’ve helped them plan optimal trading strategies based on those forecasts, so that they can buy the right amount of electricity at the right time for the right time horizon to minimise costs.

And now we’re helping them create applications that enable them to make the right decisions in real time to optimise generation and balancing costs, and to support new ways of buying and selling electricity.

And even better, they can not only reap the benefits to their business, but they can also make money by selling those applications to other Electricity Utilities.

For SAS, what excites me is the prospect of organisations being able to benefit from our analytics platform for these new applications, without having to invest in the effort of building IP from scratch.

This is something that we have been working towards for years, but it feels like the all of the required enablers are finally there.

1) SAS Viya 4 was released in November 2020. This is a complete re-engineering of SAS’ Data Management, Advanced Analytics/Artificial Intelligence/Machine Learning (call it what you will), and Decision Management capabilities to make the most of cloud architecture. Technically and commercially it is now much easier for anyone anywhere to access SAS capability via cloud deployments. Business users can access the analytical capabilities that they need without needing to go through the expensive process of liaising with internal IT departments to set up hardware and install and manage software. The SAS Viya platform is designed to make it much easier to create production-ready models for deployment into operational processes.

2) SAS in the cloud provides a microservice-based architecture which makes it easy for organisations to build — and sell — applications which use advanced analytics which are designed to solve specific business problems. The SAS heritage of over 40 years of providing advanced analytics means that the modelling, segmentation and decisioning capabilities are designed with the framework and governance to make it easy for business insights to be deployed into operational applications.

3) Agile development makes it far quicker to develop, test and deploy new capabilities. Hackathons are becoming a popular way to test out new ideas. This is a fabulous way of developing demonstrators to illustrate the art of the possible, which can then be developed to become production applications. SAS has created a new division, #HackinSAS, specifically created to support this type of innovation.

This was all brought to life for me at our SAS Nordics Forum. KPMG, Proteqnic (a subsidiary of Vattenfall) and SAS presented the results of a hackathon where we worked together to demonstrate the potential of continuous monitoring of wind turbine health. It showed how drone images could be used to classify and monitor the defects on wind-turbines. This provides the far more proactive monitoring and prediction of turbine health than the once a year inspection and engineers report which is currently performed in line with regulatory requirements.

So why am I so excited, really? It comes down to this:

All of this is supporting the move to renewable sources of energy. Which means I can proudly say that SAS is contributing to the drive to reduce the harmful impact of carbon emissions to our precious planet.

That’s it. It puts a smile on my face and makes me proud.

Does this excite you too? Read on.

#HackInSAS are running a global Hackathon to bring teams together to test big ideas and demonstrate innovation. If you have some data and a cool idea of how it could be used to create new insights and services, have a look at the details on SAS’ Global Hackathon and see if it might be of interest to you.

You can register your interest in participating from 17th December 2020 until 15th January 2021.

If your focus is on serving energy consumers, you might also be interested in this eBook on automating intelligent decisioning in the Energy & Utilities industries.

[i] A Prosumer is an entity that both produces and consumes power

[ii] There is a lot of research into the battery technology to reduce the cost of storing electricity. Until that is sorted, it’s still generally cheaper to spill excess energy than it is to store it.