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Integrated Energy

The market forces for smart grids are shifting

Most countries are just beginning to digitalize their energy supply or are testing this in pilot projects. Germany is already a bit further ahead. And that is not necessarily helpful.

28 Nov. 2017
Michael Triadan
The market forces for smart grids are shifting (picture: Bloomberg)

In its whitepaper " Digitalization of energy systems ", Bloomberg New Energy Finance (BNEF) forecasts significant technology shifts by 2025: digital technologies will shift towards decentralized renewable energy services, i.e. smart grids and "prosumers". Industrial companies with their own combined heat and power plant or their own solar plant are also seen as such a cross between consumers and producers. According to BNEF’s analysis, this is where the changes will start earlier and faster - simply because larger systems are easier and more worthwhile to integrate into smart grids than, for example, households are. Digital new installations will be accompanied by retrofits, and the focus will shift from hardware to software.

That in turn means that the beneficiaries of this change are not necessarily the classic major utilities, but also IT firms, including innovative startups. BNEF expects partnerships between stakeholders to be crucial in the initial phase and assumes that "the sector will undergo rapid consolidation and innovation before clear winners emerge". The study commissioned by Siemens estimates that the total value added of digital energy solutions will amount to $64 billion in 2025. For example, for the Netze-BW substation in Niederstetten where high electricity demand from industry meets fluctuating feed-in from regenerative energy sources, Siemens has already set up a decentralized regional controller that identifies faults on its own and can even automatically rectify them.

According to BNEF Germany is nevertheless not one of the top ten national markets - unlike the USA, Italy and France or Mexico for example. Although there is an active startup and investment community in Germany, Germany is being slowed down by "the current overcapacity in the energy sector and the relatively young hardware fleet that is not due for any renewal measures (nor any digital retrofits) in the foreseeable future."