Climate change and meeting the rising demand for energy: Why energy solutions are increasingly distributed rather than centralized

Friday, November 8, 2019 12:27 pm EST


Cedrik Neike, CEO of Siemens Smart Infrastructure

Editor’s Note: The original version of this post appeared in the most recent Siemens Energy Stories.

The Industrial Revolution, which is now already entering its fourth stage, continues to progress swiftly around the globe. Its technological innovations have transformed society and massively reduced poverty while substantially increasing life expectancy. Nevertheless, it is becoming increasingly clear that the fossil fuels on which these rapid advances have been dependent until now are precipitating potentially disastrous climate change. Burning these energy sources produces greenhouse gases, including carbon dioxide and methane, which contribute to endemic global warming. From 1970 to the present day, global CO2 emissions have almost doubled—from 15.9 megatons to 36.2 megatons per year in 2017.

Now, at the gateway to the Fourth Industrial Revolution—which is driving the digital transformation of our society and economy—climate change and decarbonization have become the key constraints on our activities. At the same time, the world’s population is growing, leading to a global need for continuous economic growth. By 2050, earth will be home to nearly 10 billion people, 70 percent of whom are likely to be living in cities. Although our resources are dwindling, all these people will need a clean, hospitable environment to live in. Meeting these challenges will require efficient means of transportation for people as well as a reliable supply of water. Most of all, it will require a way to supply the lifeblood of the 21st century: electricity.

Convergence of sectors is bringing new ways to meet challenges

When the Industrial Revolution started, the generation of electricity was very decentralized. Then power generation changed, and there was a stage of big, centralized power supply. Today, we’re going back to the roots. But this time, our methods will be sustainable, with a holistic approach. Indeed, building owners, energy producers and distributors are now facing challenges of greater complexity—but they also have outstanding opportunities, especially when we consider that buildings, including the related systems, account for roughly 40 percent of the energy consumed worldwide.

Siemens’ Smart Infrastructure business has picked up on these trends and will offer solutions for meeting these important demands by intelligently linking the energy system with building solutions to create environments that care. Combining these sectors will establish an ecosystem of smart infrastructure for grids, buildings, and industries—an ecosystem that will intuitively respond to people’s current needs while protecting the planet for future generations.

The increasingly complex energy system is enabling new roles and business models

These ecosystems—or environments—are increasingly using decarbonized and decentralized energy. For example, the role of buildings in the energy market is gaining importance: today, many new buildings are already generating their own energy, with a growing percentage of renewable power. However, new solutions are needed to meet the rising demand for electrical energy, which is expected to more than double over the next 10 years.

At the same time, we’ll need to compensate for fluctuations in the availability of renewable energy sources. In power generation, meeting these demands could involve, for instance, on-site storage and sector coupling for establishing connections between buildings and the charging stations that are needed for electric vehicles.

In the future, buildings and infrastructures must be able to manage their energy consumption intelligently by combining decentralized power generation with storage of surplus electricity, and with capabilities for accurately forecasting both energy demand and the mix of resources required to meet it. Such measures will optimize demand while reducing costs and boosting availability. In addition, in order to ensure smart management of not only the buildings themselves but also the grid that supplies them, it will be necessary to maintain a continuous exchange of information across all components involved.

A key component driving convergence: distributed energy solutions (DESs)

The possibilities for connecting the energy-generation ecosystem with the energy-consumption ecosystem are more than numerous. They range from intelligent control of the grid and the locally installed system to smart storage solutions, and from building automation and control systems to switches, valves and sensors. To explain what the convergence of energy supply systems with buildings and industries will look like, let’s take a closer look at one vital element that is driving this new ecosystem of smart infrastructure: distributed energy solutions (“DESs”).

The rise of DESs is leading to a more heterogeneous and dynamic energy supply with multiple players and multi-layered flows of energy, information, and money—operated autonomously and/or in islanded mode, but also connected to a larger grid.

Experts foresee high growth rates for the technologies associated with DESs. For example, the compound annual growth rate for the energy-storage market is expected to exceed 10 percent between now and 2024. Electric vehicle infrastructure is expected to expand by over 30 percent, and it is considered likely that distributed energy solutions in general will grow by about 10 percent.

What concrete benefits can distributed energy solutions offer?

•  Boosting resilience: Opportunities for city and municipality authorities—but also districts and campuses, like universities, hospitals, and industries—to design their own local energy-supply systems. These systems may work in conjunction with the overall grid, but they can also be configured to be completely self-sufficient.

• Integrating renewable energies: Renewables are often distributed (with the exception of hydropower, which is closely related to geography, and large off-/onshore wind parks and utility-scale photovoltaic parks), and distributed energy solutions help integrate them into the overall grid. This change is growing in relevance as buildings cease being mere “consumers” of energy and become “prosumers” that can generate electricity themselves—and turn into intelligent storage systems that can add flexibility to the overall grid. In addition, building operators could sell any electricity surpluses to the energy market or offer their capacities to the energy flexibility market.

• Applying the co-generation principle efficiently: For example, by using heat from nearby production operations to heat or cool buildings or even ice stadiums.

• Saving energy during transmission: Shortening transmission routes or even avoiding them completely can achieve significant savings.

• Raising dependability: Increased reliability of the local power supply, which also helps stabilize the distribution and transmission systems.

• Strengthening communities: Fostering value creation at the local level.

Many of these benefits are certainly not yet reality on a large scale today. But the figures available from DESs projects that have already been realized speak for themselves: an independent study on this topic shows that DESs operators are seeing operational cost reductions ranging between 8 and 28 percent, when compared with “business as usual,” combined with a return on investment (ROI) of three to seven years. Carbon-dioxide emissions are being reduced at a similar scale.

Intelligent environments can offer greater sustainability

We believe that taking advantage of these new possibilities and benefits will enable us to help create environments that are guided by intelligent capabilities to secure three main advantages: sustainability, a secure and reliable supply of energy, and economic benefits.

Ideally, supplying energy on a distributed basis makes a decisive contribution toward protecting the environment and our planet’s climate by consuming power where it is generated and thus avoiding transmission and distribution losses. In addition, using renewable sources of energy can significantly reduce emissions and preserve natural resources.

Distributed energy solutions play a key role here because they have been specially designed to generate, store and distribute green energy. Making good use of these advantages is vital, particularly against the backdrop of the current debate about stopping climate change.

Today, technologies like waste-heat recovery, forecasting algorithms and measures for achieving better allocation of available energy can already deliver significant resource savings. These tangible benefits can be reaped now.


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