By using a number of different metrics, decision makers are better able to get a fuller picture of the energy system and how to effectively decarbonise
MODERN METRICS How energy was measured previously is no longer applicable in a 21st Century system that incorporates, for instance, distributed energy resources and active prosumers
DATA OWNERSHIP Who owns the data and who collects the data differs market by market, complicating decision-making and knowledge sharing
KEY QUOTE There will be an abundance of energy at some point in time, so it will not be a matter of counting the electrons, but measuring when energy is needed at what point in time and where
In 2009, in the wake of the crippling global financial crisis, economists Joseph Stiglitz and Amartya Sen published a report investigating its causes. The authors suggested that governments had been overly fixated on increasing each country’s gross domestic product (GDP)—the total market value of all the final goods and services produced.
They argued that focusing on this single key performance indicator ignored other issues affecting citizens and therefore the economy—contributing to the 2008 recession. Speaking to the New York Times newspaper at the launch of the report, Stiglitz said: “What you measure affects what you do. If you don’t measure the right thing, you don’t do the right thing.”
This thinking can also be applied to the world’s energy systems and its decarbonisation efforts, especially as the sector takes advantage of the higher levels of data processing, digitisation and the new business models this creates. No longer can the sector focus on just the one or two metrics such as demand levels or carbon intensity.
Although more data helps decision making, a range of different metrics also need to be used to create a fuller picture of the energy system, so network operators, utility companies and decision makers can better navigate the market towards a decarbonised economy in a sustainable, just, and financially viable way that avoids catastrophic climate change.
“The issue is you have a multidimensional space. If you look at it from any single viewpoint certain aspects of that space will be obscured by what’s in the foreground. People tend to go for very simplistic metrics which, if they also get coupled with policy, can drive the market into really silly places,” says Bill Bordass, an expert on energy performance in buildings.
Digitalising the energy sector has resulted in huge amounts of data becoming available for utilities, grid operators, generators, governments and consumers. To decarbonise effectively, these organisations must not focus on one sole metric or data point but use the tools provided by new technology to create a multi-dimensional picture of what is happening. It is about making use of a host of different measurements, which is where the rise of information technology can make an impact.
“Europe is obsessed with primary energy [use],” Bordass says. “Primary energy is [measured from] what emerges from the well-head or the wind turbine. That’s fine if you have a set of energy supplies that are fungible but actually, they’re not. A large fly in the ointment is primary electricity. A kilowatt-hour of primary electricity out of a wind turbine is certainly not fungible with some black glob out of tar sands,” he adds.
DATA AS INFORMATION
Successfully decarbonising the economy by mid-century, as required by the Paris Agreement, depends on using the correct data. “What’s important about data is that you can turn it into information,” says Benjamin Beberness of German multinational software corporation SAP. “Having that data is great, but then how do we turn it into the information to make the right business decisions? That’s where analytics will become more and more relevant.”
Products backed by digital tools are being developed to help provide better insight on the market. Thierry Mortier, from business services firm EY, says the digital technologies being applied today will help to support this transition. “The three emerging technologies that are crucial to making that architecture happen are: Internet of Things (IoT)—so every single device is somehow connected to the cloud set at different levels; distributed ledger technology such as blockchain—basically technology that will allow you to administer or capture and then process them; and then artificial intelligence (AI) and the algorithms and smart sensors, that make the right decisions at the right time with a level of certainty.”
THE RIGHT DATA
However, the sheer amount of data collected—plus the multitude of data points and metrics being measured—make it difficult to determine the correct conclusions. As Stiglitz pointed out with the economy, it is important to ensure the correct data, to our best knowledge, is being measured and that it gives as full a picture as possible of the situation. Is the energy sector measuring the correct data and interpreting it in the right way in order to decarbonise effectively?
“Yes and no,” says Pierre Pinson from the Technical University of Denmark (DTU). “Yes, because this is what it’s about at the end of the day. There are these resources and you want to understand how much of these resources are being used, what are the losses on the way when you convert it. All the metrics we are using today are useful.
“Do they fit what we want to do in terms of changing our way we look at the energy system and do better with decarbonisation or adding more flexibility to integrate renewables? In a way, no, because we need to also rethink metrics so that they are adapted to our new objectives for the way we want the energy system to be operated,” he says.
“The change of metrics is ongoing. I don’t think the new types of metrics have been set. It might be healthy that in a data-rich environment we might be more flexible or agile in updating our metrics before they were set in stone. Today, people have realised that we have the chance to update metrics much more easily because the world has become much more transparent,” Pinson adds.
The modern energy system will need to consider more data points and look at them in different ways in order to decarbonise to create a fuller picture. “If you look at the energy system in the past it was all about reliability, long-term forecasting, and measuring actual volumes. The new characteristics of a distributed energy resource (DER) system adds some new characteristics to this equation, such as flexibility, peak loads and so on. That’s probably the shift we need to make,” says Mortier.
By recording a greater array of metrics and having a higher resolution of information accessed by more people, greater transparency is possible. “You’ll have this data so everything can be accountable. You will be able to write statistics, to re-simulate simulations to see if it’s the right thing to do. You’ll be able to benchmark, and do [bill] settlements,” Pinson says. But transparency requires an element of data sharing, something the energy market is not renowned for.
In Europe, this is muddled further by the introduction of the General Data Protection Regulation (GDPR) covering data protection since 2018. “In Europe, you cannot avoid the consequences of GDPR. Energy data falls inside GDPR because it says something about your behaviour when you look at electricity data,” says Bo Nørregaard Jørgensen of the University of Southern Denmark (SDU).
Ownership of the data and who is responsible for collecting consumer data also differs market by market, complicating decision-making and knowledge sharing. “In Denmark it’s the distribution system operator (DSO) that has the metering point and is responsible for collecting the consumption data. And then it forwards this data to a central hub where the retailers can access the metering data for their customers only in order to bill them,” Jørgensen explains.
“In Germany, it’s the retailer who actually knows the energy consumption which they use for billing and the DSO really doesn’t know what happens on its grid because it doesn’t have the hourly data. How the electricity market is organised has a huge influence on who owns the data and who has access to it for optimising grid operation and optimising pricing schemes.”
This issue could be partly resolved by increased standardisation of metrics. One of the challenges facing the energy sector is agreeing on the same definition of metrics to ensure everyone is being measured against the same benchmarks. “We have to have a standard,” says SAP’s Beberness.
“If you look at how you, as a company, report your sustainability numbers versus how I report them and we’re not following the same standard, then we’re going to generate numbers that make us look like we’re making progress.
“As I talk to the industry one of the things I hear consistently is how do we define that standard? How are we going to measure that? That’s something I don’t think I’ve seen established yet,” he says.
AMOUNT OF DATA
The more data gathered, the deeper the understanding gained, but increasing the volume of data should not be an end in itself. “Obviously, it’s always nicer to have more data so we’re sure of what’s going on, but we should not make it an excuse to wait to rethink all the metrics or how we use the data. I think we have enough already,” says Pinson.
“There’s been this overwhelming passion that we should have more data and measure more and more things. But people have not actually thought about what we really want to measure, how difficult that would be and what would we use that [data] for,” Pinson adds.
EY’s Mortier says the amount of data will necessitate a change of metrics. “There will be an abundance of energy at some point in time, so it will not be a matter of calculating or counting the electrons, it will be a matter of measuring when energy is needed at what point in time and also at what location.”
The liberalisation of the energy system is forcing market players to change their operational procedures and relationship with it. No longer will energy flow be controlled from the top down by transmission system operators (TSOs) reacting to demand.
Each stage of the system, from generators to consumers—that are increasingly becoming prosumers—via the system operators, will be able to change their behaviours according to what their data and metrics are telling them. The role of TSOs and distribution system operators (DSOs) are set to change dramatically.
“[Grid operators] come from a world where they have been owning, maintaining the assets and, to an extent, some system operation but not that much. A lot of our DNOs and DSOs are going on a journey to become real system operators by implementing advanced distribution management systems, to have market operator platforms and also to build customer capability in a much stronger way.
“We foresee some steering and planning at the top for the system, for the TSO and DSOs, but then you can imagine that within a community, a house or a building, there will be domains where data will be captured and algorithms will make the decisions in a smaller parameter and make the decision there,” says EY’s Mortier.
Bordass agrees there will be a shift in where the decision making on the grid takes place. “There’s a lot of real impetus for trying to develop bottom-up, instead of top-down standards because the bottom people are more agile. At the top, change is necessarily slower. Though of course the whole electricity network has to be agile, because it’s all in real time.”
Increased digitalisation allows for more real-time management of the network. This brings its own challenges. “For the network operator, they need to have much more real-time data on their grid in order for them to be able to manage it when the grid becomes more dynamic as the grid is going to become more unpredictable to some extent. If people behave the same way they’ve always behaved and you have a slow adoption of EVs and PV, then there will be a longer time for DSOs to adopt but then we need data to see where they need to make the first changes. They need data to show where they need to do grid reinforcements,” says Jørgensen.
“The decentralisation of the energy system [will mean that] electrons will flow in a different direction from a one directional way to an almost multi-directional way, requiring a traffic system,” Mortier adds. “There’s actually more and more need for an equivalent data flow to almost mirror that flow of electrons, or eventually even gas molecules. That’s basically where a lot of the grid modernisation and the digital aspect of the energy transition is all about.”
Whatever metrics are used and how the digital products react to that data, ultimately it is still human innovation and intervention that needs to dictate the removal of greenhouse gas emissions from the economy.
“If we feel that digitalisation alone can help decarbonisation, this is totally wrong. Digitalisation has to come with the right people who say we know how we want to use digitalisation to help go towards decarbonisation. But if you let it go by itself in a very liberal approach you cannot be sure where it’s going to go,” says Pinson. •
TEXT David Weston – ILLUSTRATION Clara Terne
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