PARTNER NOW

The Energy Internet: IoT Tech’s Potential to Address Climate Change

Posted by Tom Barbereau on October 2018

As part of our new series Framing Industries in which Next Big Thing AG ventures operate, we’re kicking off the first installment with nrgen, a startup ready to shake up the energy sector. We’ll look at green energy democratization and grid decentralization in the context of business opportunities, especially in response to climate change.

We believe a key part of overcoming fossil fuel dependency will involve developing a digitized Energy Internet, where data-driven businesses can find opportunities to generate profitable and sustainable business models.

The challenge: overcoming fossil fuel dependency

In July 2008 oil prices peaked at $147 a barrel on world markets. This rocked the world and delivered a mighty blow to the global economy. “This was the earthquake. The financial collapse 60 days later was the aftershock,” claims economist Jeremy Rifkin in a lecture for VICE earlier this year (video on right). “Why the earthquake? Because the entire industrial revolution we [have] gone through is all dependent on the carbon deposits in previous periods in history. [...] It's all about fossil fuels.” 

 

To see it from a scientific angle, NASA reports that 17 of the 18 warmest years have occurred since 2001. When at its yearly minimum, the Arctic sea ice is now declining at 13.2% per decade, relative to the 1981-2010 average. At the 2014 UN Climate Change Summit, US President Barack Obama emphasized the urgent threat of climate change, claiming that it is an “issue that will define the contours of this century more dramatically than any other.”

Changing the way our society produces, manages and consumes energy is a challenge due to the sheer complexity of the current centralized market.

While the Trump Administration has withdrawn from the Paris Climate Agreement and is currently rolling back Obama’s signature climate rules, on the east of the Atlantic, gradual steps are being taken by the European members states to adhere to the goals agreed upon in the Paris Agreement.

Under the leadership of Chancellor Angela Merkel, the German Federal Government designed a bold, long-term energy strategy set to transition from the current energy system to one of the most energy-efficient and green economies in the world by 2050.

In developing the Energy Concept - for an Environmentally Sound, Reliable and Affordable Energy Supply (published by the BMWi), the Chancellor and her ministry were encouraged by Jeremy Rifkin to “take the communication internet and connect it to a totally digitized green Energy Internet.”

clouds-energy-fog-33493

The vision: a digitized sustainable Energy Internet

To offer some background, Rifkin is an economic advisor to the European Union’s long-term third industrial economic vision and also advisor to the People’s Republic of China (Rifkin was the main architect behind the 13th Chinese five-year plan, the first under President Xi Jinping). He is also a trusted advisor to Chancellor Merkel and lead strategist of the German energy transition.

As author of the books, The Third Industrial Revolution (2011) and The Zero Marginal Cost Society (2014), Rifkin proposed an ambitious strategy to solve the problem of our economic dependency on fossil-fuels. In his plan to transform the German economy, Rifkin describes five foundational pillars to reach the renewable Energy Internet. (See the complete plan published by the Federal Government):

  1. Make the transition to renewable energies through feed-in tariffs and other incentives that, in the long term, will reduce the marginal cost of energy close to zero. Tariffs will also guarantee a premium price above market value for renewable energies that are generated locally and sent back into the electricity grid (making the consumer a prosumer).
  2. Upgrade buildings to become more energy efficient while also transforming them into micro power plants that collect renewables on site. The energy produced can then be consumed on-site or get traded back to the grid.
  3. Embed storage technologies into infrastructure and vehicles in order to manage both the flow of intermittent electricity and the stabilization of peak / base loads.
  4. Use digital technology to transform the power grid from ‘mechanical’ into an energy-sharing intergrid that acts just like the Internet”. This will allow prosumers (energy consumers who are also energy producers) to bargain with the grid, and companies to find profitable business opportunities.
  5. Transform the mobility infrastructure (via parking lots, gas stations, trains, etc.) to allow electric vehicles to interact with the smart energy grid.

The German Federal Government is actively embracing the notions of these pillars as described by Rifkin in his books, as well as in the previously mentioned strategic plan. As the German government is implementing strategies to transition towards a self-sufficient, green and smart energy market, entrepreneurs benefit from the opportunities to develop profitable business models in the energy sector.

 

The opportunities: data-driven business models for corporations and SMEs

As the giant, vertically-integrated energy-generating companies come to grips with the reality of democratized energy, they are adapting their business models to accommodate the Energy Internet. Examples include EnBW’s 2020 strategy and E.ON’s SolarCloud project. However, instead of solely supplying households with energy, corporations maintain control over customer energy usage while mining big data across the value chain. In return, the generated data can then be used to create algorithms and applications to increase their clients aggregate energy and productivity, and ultimately reduce marginal cost.

For small- to medium-sized enterprises, many business opportunities lie in developing products and services supporting the infrastructures developed by the aforementioned companies. Examples include managing the energy distribution to automatic trading marketplaces, and from arbitrage trading to balanced group optimisation.

As new markets around data emerge, data-driven businesses can choose to expand towards customer-focused services, process maintenance or other products and sustainable business models.

2018_06_13_NBT_©E.Gross_58

Among the ventures brave enough to tackle this is NBT’s venture, nrgen. Headed by Frank Brehm (left), they are developing a digital infrastructure to enable automated energy procurement and management for the energy market of tomorrow. nrgen caters to energy producers, consumers, and prosumers alike, in order to address diverse needs such as selling excess energy, meeting energy supply demands, and trading load-shifting potential of devices on future smart energy markets.

The venture will provide a platform for decentralised energy markets where software agents will trade energy and flexibility automatically. Jointly with its partner EXXETA, the venture is currently setting up a demonstrator (a service or merchandise that potential buyers can test) for a decentralised energy market. By doing so, they are address some of the above-mentioned pillars.

Stay tuned for more progress updates from nrgen via the NBT social channels.

 

Follow the series

To learn more, make sure to subscribe to the NBT Thing Tank. See you soon on Medium for our second installment of our Framing the Industries series on data security, with the NBT venture, Weeve.

Tags: Blog