If we want to fully decarbonize the grid and establish e-mobility and modern heating solutions on the mass market, we can no longer rely solely on traditional grid regulation on the production side. Instead, electricity demand should be intelligently managed on the end user side (demand-side management). As an essential aspect of the energy transition, this change must be implemented quickly and in an all-encompassing manner.
This blog looks at the regulatory status quo, how this new technological challenge can be implemented, and what opportunities it offers for companies and end customers.
What is Smart Demand Management?
Unlike fossil-based power generation, renewable energy sources bring with them the challenge that electricity can't be generated evenly, but rather can fluctuate. With the expansion of renewable energies, there are increasing discrepancies between production peaks and consumption peaks on the demand side. Massive electrification in the private sector, for example through electric cars and heat pumps, reinforces this effect. In addition to the development of modern electricity storage systems and the expansion of storage capacities, what is needed above all is intelligent, digitalized and automated management of electricity demand on the consumption side, both in industry and in private households.
This is not only a completely new technological challenge for the energy industry – it also has to be implemented in record time in order to achieve the climate targets of the Paris Agreement and comply with the corresponding EU requirements.
For new energy market participants, this challenge also represents an opportunity to tap into completely new markets: intelligent home energy management, vehicle-to-home and vehicle-to-grid, time-variable tariffs and so-called flexibility trading. Companies that expand their hardware or service business to include these offerings can offer their customers an all-round energy package.
What are the advantages for end customers?
End users need solutions that give them easy access to the new energy world. They want to contribute to climate protection and achieve savings at the same time.
By optimizing their self-consumption with the help of a home energy management system (HEMS), users can already save up to €800 in electricity costs per year. Building on this, vehicle-to-home (V2H) can be made possible for them in the future. V2H means that EV drivers can use their cars not only for clean transportation, but also for home storage, increasing their degree of self-sufficiency and reducing their residual electricity purchase costs.
- Here you can learn more about the added value that a HEMS can offer: kiwigrid.com/en/article/the-value-pool-that-only-a-hems-can-unlock
- Here you can find all details about V2H: kiwigrid.com/en/article/vehicle-to-home-and-hems-a-star-is-born
- Here you can learn how Kiwigrid enables charging contributing to grid stability: kiwigrid.com/en/article/kiwigrid-enables-affordable-grid-optimized-ev-charging
In addition, time-variable tariffs, which are already partially available in Germany, can be provided. Here, electricity consumption is intelligently optimized against electricity production and grid stability. In combination with a HEMS, this optimization can take into account other parameters such as the desired departure time, the energy to be charged from the EV, the PV yield forecast, and the desired room temperature. For end users, this brings financial benefits in addition to increased comfort.
Another exciting aspect of smart demand management is flexibility trading. End customers can make their flexibility – i.e., their stored energy – available to the balancing energy market and earn money with it. In this context, the term vehicle-to-grid technology (V2G) is often used. If electricity from EVs can be fed back into the grid, this will help transmission system operators to keep the frequency and voltage in their grids constant and ensure grid stability without having to use conventional gas and coal-fired power plants as they do now.
Learn more about how charging that contributes to grid stability works here: https://kiwigrid.com/de/artikel/kiwigrid-ermoeglicht-guenstiges-und-netzdienliches-laden-von-elektroautos
What are the advantages for companies?
New energy market entrants that are already building customer relationships through a hardware business or services can use smart demand technologies to generate additional, recurring revenue. For example, car manufacturers can offer a matching charging tariff in addition to traditional car sales and the sale of EV chargers. Solar equipment manufacturers and installers can enter the market through self-consumption optimization and time-variable tariffs. Heat pump manufacturers have this opportunity through smart switching of heat pumps. In this way, the entire value pool of smart demand opportunities can be gradually tapped.
Regulatory status & market potential in Germany and Europe
Although smart-demand management use cases are much discussed in the energy industry, they are currently still in a very early market phase at the low-voltage level. Nevertheless, the leap to the mass market is not far off, because without them, decarbonization of the power grid as well as the mass use of heat pumps and the exclusive use of renewable energy sources will simply be impossible.
For this reason, the EU Green Deal also supports the development of smart demand management technologies with regulatory guidelines for member states as well as financial resources.
The key programs focus on the following:
- The expansion of renewables to decarbonize the European power grid
- The electrification of mobility and heat supply
- The development of smart grid infrastructure including flexibility trading and local energy communities
The aim of the program is to maintain grid stability, avoid unnecessary and expensive grid expansion, and increase self-sufficiency, energy efficiency, and individual and international energy independence.
Challenges for the technology
Creating a legal framework in record time is one thing. However, creating the technological prerequisites for smart demand management applications in the company is also a challenge that should not be underestimated. Many companies wonder whether and how they can tackle this by themselves.
In order to establish smart demand technologies quickly, a solid and standardized energy IoT substructure is needed.
What is needed is an Energy IoT platform that:
- is open and standardized to be scalable and guarantee integration with adjacent systems,
- can handle the complexity of interfaces, protocols and firmwares, and
- is robust, available and safe.
Building such a platform requires years of experience in integrating and controlling energy devices, as well as an understanding of typical failure patterns and manufacturer-specific issues.
Prerequisites for building a future-proof smart demand business
Due to the complex technological challenge, it is recommended that the vast majority of companies build on an independent platform rather than attempting to build and maintain the complicated infrastructure associated with developing and operating an Energy IoT application themselves.
With 220,000 connected energy devices, 7 billion data points processed daily in 16 different European countries and a platform availability of at least 99.5%, with KiwiOS X Kiwigrid offers a solid platform that meets all basic requirements for the successful implementation of smart demand technologies .
Smart demand management requires the networking and optimization of devices in the home. This intelligent home energy management must be established now on a highly scaled basis in order to be future-proof. The customer relationships established through the hardware or service business can be easily continued, so that the period up until the new use cases are marketable can be bridged without any problems.
Kiwigrid already offers specific APIs for this, optimized for PV/hybrid inverters, electricity storage, charging infrastructures, heat pumps and meters. In combination with the Energy Manager VoyagerX in the field, these APIs provide turnkey connectivity to a broad portfolio of devices from market-leading manufacturers. Building on this, companies can implement new use cases in a modular fashion and roll them out in tandem with market and regulatory development without risk and large initial investments.
How to implement smart demand management use cases without risk
Kiwigrid works on dedicated APIs for smart tariffs and flexibilities and develops turnkey energy management algorithms via an optimization API (Cloud Optimization). These functional blocks are offered as PaaS for maximum development speed. This means that companies can connect their own energy applications to KiwiOS X via standardized APIs and enrich them with more data and functions. Thanks to the individually defined APIs, companies only pay for those API calls whose device domain or application is actually connected in the field. This device- and application-specific pay-per-use principle enables step-by-step scaling because companies can implement use cases in a modular way.