Grid Software – Sector Watch 6 September 2019

Louis Brasington

Attractiveness

As multi-megawatt flexible distributed energy resources are brought online, there is growing evidence that actively managed distribution software systems can deliver lower-whole system costs to customers and other grid stakeholders. Advancements in AI, edge processing and real-time data control, combined with cloud-based asset management architecture is allowing energy assets to offer increased value onto the grid; such as automated demand response, frequency response and prescriptive control. These advancements are, in turn, creating the rationale for new market participants to enter the energy markets and to deploy renewables. The Smart Grid market is experiencing rapid growth, with a market size of $28 billion and a CAGR of 20.73% over the next five years.

Business models

Innovators are developing products and services to participate in the energy markets – particularly in markets where the regulatory environment is evolving. Load aggregators, while primarily focused on economic optimization, are also helping to enable wholesale market participation and short-term savings. Traditional load aggregators are starting to offer VPP-as-a-service to large C&I customers and utilities, allowing them to control their level of grid response. Next Kraftwerk has partnered with 6 clients to offer this option including TEPCO, Haezoom and Tohoku. DER control innovators are supporting distribution/transmission operators to manage DER and are enabling new forms for transactive energy. Innovators are also starting to offer combined products to support grid response which includes load aggregation and distributed energy resource management. In the developing world, some off-grid areas are utilizing mesh networking and peer-to-peer energy trading, applied to solar-home systems to harness underused electrification within communities.

Frequently, large commercial and industrial customers opt in for grid-side response services in order to maintain a higher level on control compared to load aggregators. In 2018, Aggregate Industries was UK’s first adopter of a flexibility platform optimizing 30 bitumen tanks based on their daily electricity use in response to market signals.

Competitive Landscape

Large energy players such as Engie, Shell, EDF and BP have been very active in both aggregation and control innovation, investing in and acquiring startups to build expertise. Shell has acquired three flexibility providers:

  • Greenlots for vehicle-to-grid
  • Limejump for virtual power plants
  • Sonnen for batteries.

In addition, they have also invested in distributed energy resource management system player Autogrid Systems and peer-to-peer innovator LO3 Energy, both of which are moving into the Japanese market, which is introducing a flexible capacity in 2021. Large corporate industrial players are recognizing the value of distributed energy resources control and are as a result investing in and engaging with players offering and distributed energy resource management control: Schneider Electric, Sumitomo, Marubeni and Itochu have all invested in distributed energy resources control innovators this year. Both innovators and corporates are capitalizing on the opportunities of grid software, the market will experience rapid growth as energy targets continue to drive the need for innovation.

Leap is a developer of a distrubuted energy exchange platform (VPP) for DERs.

Opus One Solutions is a developer of real time control and optimization solutions for generation, storage, and electric vehicle resources.

Smarter Grid Solutions is a developer of large scale DER management software with real time, autonomous, deterministic technology.

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