What will the energy market look like in the coming years? That is a debate that is currently raging on in the United States. Will President Biden’s massive infrastructure plan invest in the existing market structure, pouring money into the grid, dominated by a handful of utility corporations? Or, will the future of the energy market be more decentralized, fuelled by incentives for off-grid, wireless power?
If I had the exact answer, I would be an extraordinarily wealthy and famous woman. However, considering recent trends, along with the costs and benefits of both grid and off-grid solutions, it ultimately seems that off-grid, wireless power will become the new norm.
What Does Decentralization Look Like?
What do we mean by making the energy market “decentralized”? Well, not all our power has to come from power plants and the grid controlled by select utility companies. Instead, rooftop solar panels can be installed anywhere to provide local sources of off-grid power for households and neighborhoods, removing the hassle of expensively expanding the grid. Maybe you get your power from your own rooftop system, but you might also be connected to neighboring systems to form a mini distribution network. This way, if one local system has an outage, it doesn’t affect the entire state. The bottom line is that you do not get your power from the centralized grid but from local renewable sources.
When the power went out in California last year, household rooftop solar panels helped restore some power while the grid was down. One model that is becoming more common is the Decentralized Energy Exchange (Dex), which has been successfully implemented in Australia with solar panels installed on more than 1.6 million rooftops. In the Dex, consumers can also participate in the market as suppliers. Their rooftop solar panels allow them to provide power back to the grid. Examples such as these demonstrate the potential of a decentralized energy market.
The Key Role Of ‘Smart’
A common misconception is that clean energy solutions predominant in a decentralized market model (such as rooftop solar panels) cannot produce enough energy to reliably serve high populations to make this market model scalable. However, when combined with smart technology, decentralized energy can be scalable.
Smart technology leverages data and artificial intelligence (AI) to make better decisions about how to efficiently manage decentralized systems. In this way, these energy solutions can be made highly energy-efficient, making sure the energy is stored and allocated as efficiently as possible. With innovative energy storage and more efficient battery management, energy generated from solar and wind during off hours can be saved for consumption down the road. As well, through smart technology, operating costs will be reduced, and reliability will increase substantially.
Forecasting The Future Market As A Decentralized One
Although the grid will not disappear anytime soon, decentralized energy solutions such as rooftop solar panels are going to become increasingly prevalent. Clean, decentralized solutions such as the Dex will be an essential piece in the energy transition.
The UN Sustainable Development Goals (SDGs) are a set of policies which outline strategies for ending poverty and establish prosperity for all. One of these strategies is SDG 7.1.1, which outlines the need to provide universal access to electricity. The use of decentralized energy methods such as off-grid solar will be critical in delivering universal access to electricity, as laid out by SDG 7.1.1.
To be able to deliver reliable electricity to remote regions without grid access, massive expansions of the grid will be too costly, and therefore decentralized infrastructure that can be easily installed anywhere will bring us closer to achieving this goal. Achieving universal electricity access will only be possible through decentralized clean energy.
Moreover, decentralized energy solutions will bring a range of benefits to consumers. In the current model, electricity is monopolized by a few major utility conglomerates who require high fees. These monopolies have been offering the same solution for decades, and have no incentive to provide new, valuable innovations. On the other hand, decentralized energy markets nurture innovation, and strive to provide valuable new solutions which benefit consumers. A decentralized energy system that encourages the growth of new innovations will be the only way to reach more people and achieve SDG 7.1.1, to provide universal electricity.
The Need For Investment
The benefits of a decentralized energy market are numerous. However, to make it possible, significant investment is needed. Massive investment in battery storage and software technology will be crucial for getting the decentralized market off the ground. With this investment, the major consumer benefits offered by the decentralized energy solutions can be realized.
Overall, we are undergoing a significant energy transition and it’s important that investors put their money into it. At the forefront of this transition is the shift from a centralized energy market to a more decentralized model, whereby solar and wind provide localized power supply. This model offers major benefits to consumers as it nurtures new innovations and technology that add value to the market, making universal electricity possible. With the addition of smart technology, the decentralized energy market has the potential to transform the energy sector.
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