Renewable Energy Requires New Business Models and Digitalization

renewable energy

Germany is a leader in renewable energy thanks to its aggressive attitude toward climate change, and the country’s electric power industry is about to embark upon a brave new world of digitization.   The proposed enhancements, if successful, might one day serve as a model for the U.S.

Why the Renewable Energy Boom Requires Enhancements

Renewable energy now accounts for a whopping 33% of Germany’s power sector, and is expected to generate 50% of the country’s power by 2030. This creates the challenge of matching weather-dependent clean energy sources – like wind and solar – to demand without the need to fall back on traditional ‘dirty’ generation sources.  In other words, new and flexible ways of matching supply and demand must be developed.  And these changes go far beyond simply installing smart meters.

Emerging digital technologies may encompass a variety of forms:

  • Internet-based Blockchain platforms that enable consumers to buy and sell electricity like energy traders
  • Digital interfaces that connect appliances to internet-based networks
  • Electricity storage batteries, and other forms of decentralized distributed energy, will proliferate
  • Utilities will introduce weather-based pricing
  • Sensors will read and communicate power flow in real time
  • Artificial intelligence will be developed to better analyze and predict weather patterns in order to optimize demand requirements
  • Cloud-based “virtual power plants” will be able to flexibly move power around the grid from a network of physical plants

IT and communication interfaces will drive these enhancements, and the utilities deploying them clearly have their work cut out for them.  Utilities will have to manage new regulatory requirements, new business models will be slow to mature, and the development of methods to harness massive amounts of data is a huge challenge.  Read this article for an extremely detailed overview of the details that still need to be worked out.

The bottom line is that Germany will serve as a fantastic case study for the future of renewable energy in the U.S.  I, for one, will be watching it closely.

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