Consumers Drive Technological Change Within Energy System Transitions

By Veryan Hann

September 2018

Introduction

Energy systems in OECD countries are transitioning towards decentralization. This shift is due to energy policy and climate policy pressures, changing consumer preferences, and drive to decentralized generation and storage, and this transformation is also driven by technological advances such as the ‘internet of energy’ of which includes smart grids. This article offers an insight into this socio-technical change from a sociological perspective; the challenges for policy makers, and the challenges for energy networks, through the lens of an Australian smart grid pilot.

Australia serves as an interesting case study in relation to energy system transformation. Australia has one of the highest per capita residential solar PV installations in the world; a population under 25M with a current installed capacity of 7.8 GW [1]. Residential battery storage is poised to accelerate deployment in Australia and around the world due to rapidly reducing battery prices [2]. However, the full social, governance and equity implications of this rapidly changing electricity system is not yet known by governments and utilities alike.

Technological change heralds complex social implications; and included among them — issues relating to energy equity; emergent businesses within the energy sector; issues of data privacy; and of increased consumer participation in a distributed energy market. Until now, the management of electricity, from an economic and policy perspective, was as a public good regardless of the type of utility; however, with storage behind the meter, this public good is now treated as a private good and this raises complex governance and policy issues.

Well-considered energy policy is now required to help shape the technological future of energy systems. In a wider view, we can see that the current energy system transformation is an evolving ‘conversation’ between the social and the technical — because after all, we shape our technology, just as our technology shapes the way we live and work. From a social perspective, the existence of technology can be either good, or bad, or neutral [3]. Technology policy is therefore a key tool required for shaping the direction of technology for the social and public good.

The electricity system is a socio-technical system under transition

The electricity system is a socio-technical system as it inherently holds both social and technical attributes [4]. People, as energy consumers could be described as a number one non-technical issue for rolling out new technologies, and we may be reminded by Thomas Hughes’ 1983 seminal book Networks of Power Electrification in Western Society 1880-1930 that technology’s purpose is to serve society. Technology is not a stand-alone problem to solve, and technological progress is not separate from the shaping influences of politics, economics, science, people and policy. To understand these influences at a meta-level, Hughes describes ‘systems thinking’ and he argued that in the late 1880’s Thomas Edison possessed ‘systems-level thinking,’ and this determined successful deployment of new technologies. Systems thinking is beyond perfecting components, but working at a higher, systemic level which shapes technological progress [4,5].

Placing people centrally, rather than technology, in a large-scale socio-technical change is indeed a paradigm shift. The utility and energy network paradigm shift has been marked in recent years in Australian federal-level strategic reports [6], [7] in placing customers ‘at the centre’ of the energy transition.

In terms of large-scale change system change, and using the example of residential batteries, a systems-thinking approach might be exampled by Elon Musk’s Tesla batteries, simply because all the components are housed within the one system, which reduces overall complexity [8]. Telsa, as a ‘plug and play’ reduces complexity and choice for the consumer and the installer. Consumers are driving change, so this reduced complexity as opposed to purchasing inverters and battery management system software separately could have a significant business advantage at a system-wide level. However, the market has significant competition and emergent businesses in the battery installation space, and I suggest that businesses that invest in a ‘whole solution’ will be ahead of the market. Questions remain — We might look to consumers as the main driver of change and ask; Will consumers willingly absorb additional complexity? Might they rather outsource the complexity to emergent players such as ICT companies? Do consumers really want increased agency, or is it an abstract desire, that once realised is a burden? Is cost a greater driver? Tailored and customized home energy solutions will come at a price, both in terms of time to understand and to manage. If consumers have a sense of trust they will trade their active participation in the energy market for simplicity — and new emergent businesses will fill that space. Emergent demand-side management ICT players will provide the service of reducing the complexity of some energy management systems. They will do this with a systems-thinking approach.

Case Study – CONSORT Smart Grid

An Australian smart grid is being trialed through a 34-household smart-grid pilot, known as CONSORT: CONSumer energy systems providing cost-effective grid support, funded by ARENA The Australian Renewable Energy Agency [9]. CONSORT is a multi-disciplinary partnership of industry and academia — comprising computer scientists from the Australian National University; economists from the University of Sydney; social scientists and policy academics from the University of Tasmania; as well as a ‘new entrant’ ICT software start-up; and an incumbent network utility. Located on Bruny Island, Tasmania, CONSORT specifically trials the consumer acceptance, economics, and technical feasibility of employing the batteries as individually responding within a virtual power plant [10]. This consumer-enabled support on the island’s constrained undersea cable is recognized as a service; and the network pays the consumers for the service as it off-sets costly diesel generator use in times of peak demand.

Social science issues are researched in this pilot in terms of deployment success predictors.

The social science factors such as consumer acceptance are demonstrably as important as technical competence in R&D projects for technical deployment success. However, the Bruny pilot is the only ARENA project of 200 past and present projects with a dedicated social science team on a technical pilot or ‘real world’ roll-out. However, technical success of a roll-out may not indicate acceptance; in the past impressive technical and economic feasibility has not necessarily lead to the adoption of a new technology by consumers [11].

The social science (energy policy) PhD on the project observed that coordination of problem-solving between project partners was key — project partners communicated closely in an inter-disciplinary team to solve problems; this provided a bird’s-eye view of the project as a whole. As a team project it provided the systems-thinking perspective. In addition, technical integration and intra-project policy was important. Internal policy was important for consistency and coordination between research partners; and technical integration was important for the system to work — for example, software from the battery management system was adapted so that it would communicate to various brands of inverters, and would override those inverters settings when necessary for the project and the network requirements.

Communication and education with consumers is a key for acceptance, trust, and deployment success. Furthermore, these keys are argued to be principles applicable to other socio-technological pilots, not just smart grids, however policy and regulatory support is required.

Conclusion

Technology and policy are interrelated; consumers are central to technology change and social implications have equal impact for deployment success as technological success. Policy can indeed be both supportive of innovation, and be technology-neutral, but it does require regulatory support. The new energy future requires a clear formulation of possible strategies clearly for policy makers to make decisions. We should aspire to encourage an agreed vision, discussion, networking and knowledge transfer between government and non-government bodies. This level of coordination can be described as a systems-thinking approach.

At a high-level, these questions are governance-related where solutions to policy issues are actor-neutral. The range of actors that should be expected to participate in policy discussion include government itself to incumbent utilities new entrants; and consumer advocacy coalitions. These learnings also relate to wider governance aspects of distributed storage, and other distributed technologies, which currently remains an unsolved key for future policy researchers.

References

[1] APVI “Australian PV market since April 2001” Australian PV Institute http://pv-map.apvi.org.au/analyses

[2] Bellini, E. (2017). Study finds that storage prices are falling faster than PV and wind technologies. PV Magazine.

[3] Kranzberg, M, “Technology and History: Kranzberg’s Laws.” Technology and Culture, 27(3), 544, 1986.

[4] Hughes, T. P, “Networks of Power Electrification in Western Society 1880-1930.” Baltimore, USA: John Hopkin University Press, 1983.

[5] Frank, M. (2006), Knowledge, abilities, cognitive characteristics and behavioral competences of engineers with high capacity for engineering systems thinking (CEST). Syst. Engin., 9: 91-103. doi:10.1002/sys.20048

[6] CSIRO, & ENA, “Electricity Network Transformation Roadmap: Final Report 2017-27.”http://www.energynetworks.com.au/sites/default/files/entr_final_report_april_2017.pdf

[7] Finkel, A., Moses, K., Munro, C., Effeney, T., & O’Kane, M, “Independent Review into the Future Security of the National Electricity Market: Blueprint for the Future.” 2017. Retrieved from Commonwealth of Australia: https://www.energy.gov.au/government-priorities/energy-markets/independent-review-future-security-national-electricity-market

[8] Vorrath, S, (2017) “Tesla launches Powerwall 2, says all solar homes will have storage” Reneweconomy https://reneweconomy.com.au/tesla-launches-powerwall-2-says-all-solar-homes-will-have-storage-53696/

[9] ARENA, “CONSORT: Consumer energy systems providing cost-effective grid support” Australian Renewable Energy website, Commonwealth of Australia, 2016. https://arena.gov.au/projects/consumer-energy-systems-providing-cost-effective-grid-support-consort/

[10] Ransen-Cooper, H., Chapman, A., Scott, P., Hann, V, “Tesla’s ‘virtual power plant’ might be second-best to real people power.” The Conversation Australia, 2018. https://theconversation.com/teslas-virtual-power-plant-might-be-second-best-to-real-people-power-90319

[11] Noll, A. M, “Anatomy of a failure: picturephone revisited.” Telecommunications Policy, 16(4), 307-316, 1992. https://www.sciencedirect.com/science/article/abs/pii/030859619290039R

Veryan Hann is a PhD candidate and recipient of a scholarship from the Australian Renewable Energy Agency (ARENA) to investigate a Smart Grid pilot on Bruny Island, Tasmania, Australia. Her PhD thesis title is ARENA CONSORT smart-grid pilot: Governance, implementation and the utility-community relationship. Veryan has worked in industry and consultancy; and is currently a Lead Country Contributor for Australia in the 2018 Global Status Report on Renewable Energy (GSR2018) for REN21.

Editor:

Dr. Mohamed Elhoseny received the PhD degree in Computer and Information from Mansoura University, Egypt (in a scientific research channel with Department of Computer Science and Engineering, University of North Texas, USA). Dr. Elhoseny is currently an Assistant Professor at the Faculty of Computers and Information, Mansoura University. Collectively, Dr. Elhoseny authored/co- authored over 70 International Journal articles, Conference Proceedings, Book Chapters, and 3 Springer books. His research interests include Network Security, Cryptography, Machine Learning Techniques, Internet of Things, and Quantum Computing. Dr. Elhoseny serves as the Editor-in-Chief of Big Data and Cloud Innovation Journal and Associate Editor of many journals such as IEEE Access, and PLOS One journal. Dr. Elhoseny guest-edited several special issues at many journals published by IEEE, Hindawi, Springer, Inderscience, and MDPI. Moreover, he served as the co-chair, the publication chair, the program chair, and a track chair for several international conferences published by IEEE and Springer.

Dr. Elhoseny is a TPC Member or Reviewer in 30+ International Conferences and Workshops. Furthermore, he has been reviewing papers for 20+ International Journals including IEEE Communications Magazine, IEEE Transactions on Intelligent Transportation Systems, IEEE Sensors Letters, IEEE Communication Letters, Elsevier Computer Communications, Computer Networks, Sustainable Cities and Society, Wireless Personal Communications, and Expert Systems with Applications.