7 Ways Energy Suppliers can Maximize Profit With Innovative Technology
The game is changing for Europe's leading energy suppliers. Centralized carbon-based markets and consumers are co-evolving towards nascent decentralized, cost-intensive clean energy. So what does this imply for the energy business? Recently, I observed a trend among the NRAs. These regulators are devoted to ensuring zero emissions by 2050. For example, in countries such as Denmark, renewable energy projections show this objective to be achievable way before 2050. As a result, full-scale transitions are becoming a certainty, which will reshape how profit is realized.In energy pricing, Directive (EU) 2019/944 recommends a standard to price setting ensuring that equivalent margins are applied to consumers. This means that suppliers have to find a way to adaptively sell cleaner energy while maintaining modest pricing.
With respect to this, I will be discussing innovative solutions that energy suppliers can adopt/implement to generate more returns.
1. Hybrid Investment Solutions Featuring Microgrids.
One approach to profit-making is by increasing the accessibility of a product. This means bringing energy to the doorstep of underserved and unserved areas. To do so, suppliers need to consider investing or developing microgrid and mesh grid development.
How it works;
Microgrids can function independently from the primary grid and can be used to service remote areas. They can be disconnected from the main grid during off-peak periods to save energy or reconnected seamlessly to either inject power or draw from the primary grid. Microgrids can be powered by multiple RES, prosumer culture and demand response management can be self-sufficient. Investing in microgrid development is a ploy for future profit sustainability. For a microgrid, the actualization of ROI projections is based on short term optimization and utilization of operations.
2. Electrified Transportation
Another disruptive approach to the energy business is electrified transportation. Between 2019 to 2020 and 2020 to 2021, global EV sales have tripled and doubled, respectively. In 2021 alone, Over 6.6 million EVs were sold according to IEA, with Europe spearheading this exciting transition. To traditional companies and fossil fuel merchants, this automotive revolution bodes uncertainty. However, Energy suppliers can redesign their infrastructure to accommodate surging demand from EVs and HEVs, and in turn, seize the market for a huge profit.
How it works;
Growth in usage of EVs translates to more grid demand. Efficient grid design will allow auto owners to adapt their charging periods to grid demand situations. In addition, EVs can play a massive role in the security and reliability of the system as they function as V2G hubsthat offer bidirectional supply to households. Also, suppliers can command profit when they create synergetic products that can be sold alongside EVs or accessories.
3. Training Prediction Models
The majority of Europe's energy losses come from unused energy. These losses often occur in transmission and distribution. For example, a 2020 CEER report showed an average 8% loss of energy in distribution across European DSOs, every 1% corresponding to hundreds of million Euros of generated power that was neither bought nor sold. One way to tackle this drawback is to implement bespoke distribution. By training a prediction model using available data, a supplier can forecast what amount of energy is demanded by an area on the grid concerning a particular period of the day/season.
How it works;
A forecaster can use trained prediction models to determine peak and off-peak hours for a utility. It can also link these variables to high and low demand periods in a day/season. Engineers can utilize this tool to balance optimally performing DSOs with consumption.
This means that system flexibility is guaranteed as the load can be directed to optimally performing plants, and energy suppliers can avoid kWh losses. Also, the forecastable variations of solar and wind as vRES ensure that grids largely dependent on them are assured of reliability without KWh losses. Hive Power’s Forecaster is a unique solution based tool that uses deep learning to model predictive outcomes from unstructured data inputs collated from climate and KWh instances. The optimal efficiency of vRES depends on climate conditions gathered through weather APIs.
4. Dynamic Regulation
Consumers are generally unaware of the implications of slight changes in tariffs because energy suppliers and DSOs operate bilaterally through B2B commerce. However, a small price change can immensely affect the profit of the energy business. This is why dynamic regulations are necessary. It involves innovative smart pricing to charge for energy infrastructure based on stochastic market conditions and value-based pricing, not static pricing, which cannot adapt to change.
Smart pricing will strike a balance between profit maximization and ensuring consumers are satisfied because it offers energy as a product whose value is based on real-time market conditions. That way, energy suppliers can avoid peak losses and load congestions.
How it works;
Smart Pricer uses an innovative technique to bring value to end-users and profits to the energy market. It functions as hourly simulations that generate market-based prices. Profit markers are created daily and cross-referenced with optimal peak and off-peak hours for the energy supplier.
5. Artificial Intelligence For Loss Prevention
An inherent benefit of digitalization in the power sector is overseeing utility functions remotely. Even so, most of these remote operations are still carried out manually. With artificial intelligence (AI), suppliers can retrofit their existing power system designs.As part of a grid's digital solution, AI helps to process data from smart meters without supervision. It can store and process this data to make precise and agile decisions for load switching and load balancing. As a result, a series of actions that previously would require the commitment of dozens of system engineers can be done by a single intelligent dashboard.A few setbacks to AI implementation are;
- Cold feet due to fiscal implications
- Loss of data/data privacy
- Complexity in integration
- Most power system engineers have no practical exposure to AI operation.
- Outdated power system design
6. Blockchain technology
The application of self-executing smart contracts stored on blockchain technology can now be considered an innovative step towards renewable energy commerce. I broached this subject in 2017 here in this article. From P2P energy commerce to automated demand response management, energy suppliers can deploy smart contracts to replace aggregators in the energy business. This means that suppliers can take or maintain profit schemes in the energy trade as they conduct business directly with consumers.
7. Energy storage
The profitabilities of battery energy storage are enormous. BES are becoming more accessible than ever before. To cover for the erratic nature of RES, storage utilities are employed. This feature will be very useful to commercial setups and offices that rely on 24/7 grid availability.
Maximizing profits can come from investing in future solutions or saving costs through innovative management of resources. For example, investing in grid infrastructures and EVs will shift the prospect of Energy-as-a-service (EaaS) to energy as a product. Energy suppliers can use big data to optimize pricing and monitor delivery. They can also use it to visualize and study load demand patterns. These patterns are useful in identifying grid consumption behaviour which can be used in training prediction models or implementing smart regulations. Furthermore, suppliers can perform automated actions using AI integration, invest in low-cost renewable options or incentivize prosumer actions through blockchain technology.