Forecasting trends in the development of information technology in the energy sector

Reznikov R.B., Postgraduate Institute of industrial economics national academy of science of Ukraine

Резников Р.Б., Аспирантура Института экономики промышленности НАН Украины

Summary

Forecasting trends in the development of information technology in the energy sector

Reznikov R.B., Postgraduate Institute of industrial economics national academy of science of Ukraine

The analysis of basic scientific methods of basic economics, and especially their use in modern terms.The development of information technology ensures the emergence of new concepts in the energy sector which will make it possible in the future to substantially reduce the costs of production, consumption and redistribution of energy resources between economic agents.New information technologies will provide a permanent cost reduction and will ensure the growth of the efficiency of energy systems and power grids.

Key words: energy sphere, information technologies, energy trends, methods in power engineering, digital energy.

Problem statement

The development of alternative energy sources, information technology, small generation systems has led to the emergence of a large number of independent electricity producers. The consumer electricity market has also undergone significant changes. Digital technologies have led to the development of new tools and methods for managing the grid, the emergence of new principles of regulation of production and consumption of energy. Information technologies have led to the emergence of a new term - “digital energy”. But, in addition to increasing the efficiency of using various ways of generating electricity, digital technology allows for the implementation of fundamentally new functions in the power system.

Analysis of scientific research and publications

The scientific literature on digital energy is covered in many studies that distinguish different concepts at the intersection of the energy sector, the financial sector, IT technologies and innovation. Recent studies at the intersection of information technology and energy sectors are the works of V.D. Bilodid, K.V. Taranets, S.P. Denysiuk, D.S. Horenko, A. Dyskina, V.V. Kaplun, O.P. Kravchenko, V.V. Vasilenko, S.S. Makarevych, O.V. Kyrylenko, S.P. Denysiuk, S.Ye. Tankevych, T.M. Baziuk, M.M. Kuzmina, O.I. Stasiuk, L.L. Honcharova, S.M. Boiko, O.M. Sinchuk, Yu.M. Shmelev, O.A. Chyzhevska.

Research findings

The development of information technology ensures the emergence of new concepts in the energy sector which will make it possible in the future to substantially reduce the costs of production, consumption and redistribution of energy resources between economic agents. Today, the main areas of implementation, integration and development of information technologies in the energy sector are electrification, the integration of the market of alternative energy sources with the blockchain technologies, automation and digitilization, artificial intelligence, the use of information technology in the financial sector with their simultaneous integration in the energy sector (Figure 1).

Fig. 1. The main directions of implementation of information technologies in the energy sector

Source: compiled by the author.

One of the most rapidly developing areas is the use of blockchain technology in power engineering. The main trends in the development of projects at the intersection of the blockchain and the energy sector can be considered the following: the activity of giant companies, increase in the energy efficiency and investment in energy saving technologies, transformational changes in the wholesale electricity market, trade in energy resources using digital currency (tokens) (Table 1) [1]. For example, in the 2^nd quarter of 2017 - the first quarter of 2018, $300 million was invested in block- chain projects. In January 2018 only, $150 million of investment was attracted. Data of Wood Mackenzie and GTM Research show that 122 companies are currently working on the development and implementation of blockchain platforms in the energy sector, 40 projects are implemented as of March 2018 [17; 21; 29].

The technological revolution has led to the emergence of intelligent power grids based on Smart Grids, Smart Metering smart meters, Smart Appliance and new electrical technologies, operating elements and control tools: Electric Vehicle (EV), E-Mobility (electric transport), Electric Vehicle Charge Station (EVCS), Vehicle-to-Grid (V2G) (electric charging station, electric vehicle interaction and power grid), Demand Side Response (demand management by consumer), Energy Storage, Blockchain, Big Data, which have revolutionized energy systems, have changed the strategy and behaviour of the market participants, led to the emergence of new economic agents, rules and standards regulating their activity [13].

Creating energy resources in “digital” assets that can be sold using blockchain technology can open up new opportunities for investing and trading in the energy sector, enabling small players in the energy market to engage in energy sales. For large companies, the blockchain can simplify trade and record keeping. As a result, technology enables the development of new asset groups, such as crypto tokens assigned to oil or renewable resources.

So far, today there are projects that actively implement blockchain technology in the energy sector: the Australian Power Ledger platform (sales of electricity on the basis of blockchains mainly from renewable energy sources), Grid Singularity (decentralized platform of blockchain-based energy resources exchange), Grid +, an Energy Web Foundation and The Energy Web Blockchain platform, the Enerchain Project, the Usizo platform.

Usizo is a South Africa blockchain-based platform, which allows anyone to help pay electricity bills for community schools. Donors can track how much electricity the school uses to calculate how much energy can be purchased with financial donations directly with Bitcoin digital currency.

The decentralized energy exchange platform Grid Singularity [24] is a technology of green block chains that develops an open decentralized energy exchange platform under the auspices of the energy web fund. The platform uses the technology of transferring renewable energy sources from one building to another buildings using blockchain technology [24], and based on the new market model for managing the D3A network (D3A - a decentralized autonomous area agent), which allows coordinating the activities of small energy producers, carry out a wide range of energy market transactions and control the load in an open decentralized grid.

Energy Web Foundation (EWF, Web Energy Fund) [22] is a non-profit organization operating in Berlin to intensify and accelerate the revolution of the blockchain technology in the energy sector, and develops a decentralized, democratized and digitized energy system. Thus, one of the trends in the energy sector is the development of digital business models based on the blockchain technology and intelligent control systems of blockchain platforms, the introduction of decentralized and distributed intellectual grids. Intelligent power grids are open scalable blockchain platforms, specially designed for the regulatory, operational and market needs of the energy sector. They serve as a fundamental common digital infrastructure for energy market and blockchain players.

Another example of the blockchain implementation is the innovative product of Solar Change SCTree [33], which allows decentralized electricity generation. SCTree uses state-of-the-art solar technology that ensures continuity, safety and efficiency of power generation. The new combination of modern technological components (management, storage, energy generation, nanosolar technology) of the product with cost-effective engineering provides maximum efficiency [33].

Figure 2 shows the business model for distributing SCTree product by SolarChange.

Figure 2 reflects the business model of the distribution of the SCTree product of SolarChange.

They intend to distribute the product of SCTree through an advanced business model based on the use of social contacts.

Figure 2. Business Model of the Distribution of the SCTree Product of SolarChange Source: compiled by the author based on [33].

Due to the active use of blockchain technology in the currency market, a new digital currency - SolarCoin (SLR) - emerged, aimed at promoting renewable energy sources, which serves as an economic incentive for solar energy producers. Consequently, SolarCoin is an economic incentive for accelerating capital spending on the production or purchase of solar energy. It is believed that an additional $10-20/MWh of remuneration is a useful economic incentive. In some parts of the world, solar energy is produced at the level of $2330/MWh. In these prices, 40-70% of solar energy costs can be offset by the SolarCoin digital currency users network.

As of November 2018, it is estimated that there are around 20 million solar installations with a capacity of 500 GW in the world. Taking into account the 4-year average age and power generation estimates, the economy which used 100% SolarCoin could bring together 20 million participants in power generation and 2.62 billion SLRs in circulation. The price for SolarCoin on the basis of the above model, according to expert estimates, will vary from $ 7.63 to $ 38.16 per SolarCoin [26].

Table 1 shows the main trends of energy block- chain projects development.

Table 1 The main trends of energy blockchain projects development

Source: compiled by the author based on [7].

The growth of the scope of concept can radically change the transmission and sales of energy. The block-chain technology and the TransActiveGrid platform allow counting and recording each unit of energy. Special software called Smart Contracts generates energy units in the open market that are bought and sold by households in the local community, while transactions are conducted through PayPal. Users can determine their energy needs by choosing places of purchasing energy resources. In the future, the process can be automated through an autonomous protection control system.

At the present stage, the costs are minimized through the reverse process - spread of capacities of both industrial and energy industries. This process has led to the development of new ideological principles of management and marketing in the field of energy services. At the same time, the intensive development of information and network technologies, microprocessor and power electronics has led to significant progress in achieving maximum efficiency of energy consumption by facilities powered by several competitive sources. Both these processes, economic and production, have become the prerequisite for the emergence of a new sector of power engineering - intelligent power engineering based on the concept of intelligent grids - SmartGrid [28]. These grids are automated systems with their own generation, monitoring and distribution of electric power flows, taking into account the consumer's requirements for achieving maximum efficiency of energy consumption. According to this concept, the operation of the energy sector is ensured through both centralized and decentralized distributed energy resources (DER). At the same time, there is an increase in the number of power resources that are spread in a certain territory or local facility and united into a single microsystem, thus forming MicroGrid.

MicroGrid has advantages over centralized power supply systems, as there is no need to build new generating capacities, long power lines and distribution networks, which in turn requires significant investment and results in additional power losses. Electricity supply system in MicroGrid is organized by integrating low-power energy sources and maximizing their adaptation to power consumption regimes. Creation of such systems allows radical changing of the attitude of consumers to managing generation and distribution of electricity [14].

The basis for MicroGrid is FREEDM (Future Renewable Electric Energy Delivery and Management) [25], based on the concept of building a universal energy router (ER), which should dynamically control the distribution of energy between local sources and consumers [8; 34].

The introduction of information technology in the energy sector contributed to the development of the energy prosumer's activity. Today and in the future, apart from classical suppliers (producers) and consumers, small and medium-sized energy, including renewable energy, producers will increasingly develop their business. And such changes in the energy market (in particular Ukrainian market) will require regulatory changes: access guarantees and opportunities for the functioning of small and medium-sized energy (in the first instance, renewable energy) producers [10].

The reliable operation of the power system requires an ideal balance between demand and supply in real time. This balance is difficult to achieve, given that the supply and demand level can change quickly and unexpectedly due to many reasons such as forced disabling of generating plants, switching off the transmission and distribution lines, sudden changes in load. The infrastructure of the power system is very capital-intensive. That is why a demand response (DR) concept emerged, which is one of the cheaper resources available for operation of the system in accordance with the new philosophy and concept in the energy sector [20].

Demand response can be defined as a change in electricity consumption by end users in contrast to normal consumption conditions in response to changes in electricity prices over time. Demand response ensures a balance of generation and consumption in the energy systems of many countries by loading generating capacities and reducing consumer load when it is economically sound. The demand response mechanism has been actively developing since the 70's all over the world, but in the first place - in the United States. According to the analytical company Navigant Research, in 2015 the DR market amounted to $ 2 billion, and by 2023 it will grow to $ 12.8 billion. Of the world-wide DR-capacities of 39 GW (Navigant Research's forecast for 2016), 28 GW (72%) are operating in North America. Today, not only industrial and commercial consumers but also households (about 25% of capacity) provide their capacities for the demand response market in the USA. In addition, united distributed consumer resources are used.

So, in January 2017, the California state energy company held its first auction of capacities involving DR capacities of consumers. This was done in order to enable the participation of a wide range of distributed energy resources - from storage systems (electric batteries) to electric vehicles - in the wholesale market. According to the System Operator of the United Power System, the DR market in the European Union fully operates in France, Belgium, Switzerland, the United Kingdom, Ireland and Finland. Partly its elements are introduced in Sweden and Norway. The launch in Germany, Denmark and Poland is being prepared. The DR programs are also being implemented in Australia and New Zealand [19]. For example, in Australia, contracts of energy companies with large industrial consumers to increase energy consumption in non-peak hours are wide-spread. Consumers get a positive economic effect due to cost savings, and the grid as a whole gets a more even schedule of generation and consumption.

One of the trends in the energy market is the development of VPP - virtual power plants that provide competition and consumer choice in the market. Virtual Power Plant (VPP) is a structure that combines elements of three types [2]: distributed generators (wind turbines, photovoltaic plants, mini- and micro CHPs, etc.); consumers - regulators of loading (domestic and industrial); energy accumulation systems [5]. It is a computer system that manages generation and consumption of its connected energy market operators, providing a balance of power within the community. This concept is now actively promoted to the market by Siemens, which has developed the DEMS system, which can be the basis for the creation of virtual power plants.

The virtual power plant forms the digital community of decentralized generators based on renewable energy sources (biogas, wind power, solar and hydroelectric power plants) and other decentralized power generators.

The business of virtual power plants is actively developing in Europe. At present, dozens of virtual power plants operate in Germany alone. The boom of their development is due to the widespread use of renewable energy sources and decentralized generation on their basis, accompanied by relevant innovations in the field of deregulation of energy markets [3]. In 2017, the Next Pool facility owned by German Next Energie GmbH grew by 1.35 GW. Germany provided 1 GW of growth (of which 540 MW was provided by solar power), and 350 MW was provided by seven European markets. According to the results of 2017, Next Pool united 140 generating facilities with a total capacity of 4,020 MW [30].

The new player in the energy market is electric vehicles and their manufacturers. The introduction of Vehicle-to-grid (V2G) technology in electric vehicles in the future will radically change the market, play a new role in balancing the power system, accumulating, storing and re-energizing the grid. It is forecasted that electric vehicles will achieve cost parity with gasoline/diesel vehicles in 2020, and in 2035 they will account for 35% of the global fleet. Accordingly, in the long run (by 2050), the world's electric power industry will be radically reformatted into a super-smart network [13].

In modern power grids, when the integration of renewable energy sources (renewable energy sources, RES) into the grid increases, uncertainty in the available generation is also increasing. In particular, the greater the share of RES in the grid, the more dependent the electricity generation on weather conditions, and in turn, electricity generation becomes more unpredictable. This uncertainty also affects demand, as electricity consumption also depends on weather conditions and each kWh generated should be consumed. To solve this problem, a system for forecasting renewable energy generation (RES Forecasting) was developed [23]. RES Forecasting provides for the introduction of the RES generation forecasting system by involving energy market participants in order to avoid creating imbalances and assessing new projects and operational planning of power modes.

Grid CIM Modeling & Transparency is one of the pilot projects and technologies based on Smart Grid technology, which will provide the creation of an integration platform for collecting production information from the grid. This platform will show the cost of a new connection and the power quality metrics in a particular region of the country.

The integration of renewable energy sources (RES), which is the main objective of the EU energy and climate policy for 2020 and beyond, will influence the existing grid infrastructure, market transactions and operation of the electricity market. In connection with the active introduction of information technology, power grids will work more efficiently in the future. To do this, we need to ensure uninterrupted and effective information exchange at different stages between an increasing number of companies: system operators, distribution operators, generators, etc. Therefore, it can be predicted that the policy of governments in many countries in the energy sector will be aimed at the integration and deregulation of the industry [18].

Embedded generation control (distributed generation control systems and built-in generators implement a new paradigm in the power industry and change some assumptions on which grids have been developed and operated, in particular regarding voltage control and protection. Growing power needs and competition in utilities and energy markets mean that the number of generators connected to the subtransmission and distribution networks will increase significantly. Wide area measurement systems (WAMS) - transient monitoring systems - that are new direction of scientific research in the system of monitoring and optimization of electricity supply in the power engineering will also be implemented.

Wide area measurement system (WAMS) [11], thanks to the use of functionally-oriented microprocessor devices in the system, opens up the opportunity of conducting synchronous measurements of a set of parameters in different segments of the distributed power supply network, as well as measure the voltage angles and current phases with binding to a single astronomical time. The development and implementation of such technology has become possible due to the widespread use of the GPS system, which allows the synchronization of measuring devices with an accuracy of up to hundreds of nanoseconds. The set of such primary parameters is registered at one time in different segments of the power system and give a qualitatively new level of knowledge about the properties of the grid and features of the flow of dynamic processes, as well as the ability to conduct direct monitoring of the dynamic characteristics of the grids.

information technology energy economic

Conclusions

The rapid transformational changes in the energy sector around the world change the structure of the energy market. Due to the information technology, consumers of the energy market become active users, the market is being able to generate energy resources and sell them through blockchain technology, smart grids and control systems. Adaptive digital grids enable partnerships between consumers and companies to form new power grids, power systems. Power exchange with the help of digital economy has the potential to monetize, in particular due to the emergence of digital currencies, exchange platforms for energy resources without intermediaries. Information technology allows investing. The Internet energy is being formed - the ecosystem of energy consumers and producers, in particular renewable energy sources, integrated into the new infrastructure and being able to exchange and redistribute energy resources. Over the next ten years, one can predict the formation of new technologies and the emergence of a new energy market, which will include electronics, smart grids, technologies of production, storage and distributed intelligent management. The change in the energy sector is driven by design and simulation, high-tech blockchain technology, smart contracts, decentralized autonomous organizations and networks. New information technologies will provide a permanent cost reduction and will ensure the growth of the efficiency of energy systems and power grids.

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