#22 Smart Grids
#22 Smart Grids
The green transition requires an updated grid
Read time: 3 minutes
In this week’s issue you will learn about the importance of the electric grid in reaching a net zero scenario: Smart Grids
“Investment in smart grids needs to more than double through to 2030 to get on track with the Net Zero Emissions by 2050 scenario” - IEA (International Energy Agency)
Top News 🗞️
Electrification issues: The Netherlands is switching to renewables and increasing electrification rates so fast that the grid is becoming overloaded. The same is happening in other countries.
London’s housebuilding ban: There’s a decade-long waiting list to build in West London due to constraints in the overstretched power grid.
Let’s dive in 🧠
Let’s first take a look at what the electric grid looks like now vs what it’s going to look like in the future.
Today:
Centralized production: A few big plants generate and distribute everywhere through huge wires at a huge scale. Siloed and fragmented energy assets.
Sources: It’s not easy for consumers to know if their energy came from a clean source or not. In most cases it doesn’t.
Consumption: The % of people who sell excess energy is very small.
Future:
Decentralized production: Every house, building, and even car can provide electricity to the grid. Energy plants are still needed but they are not as crucial.
Sources: All energy will come from solar, wind, nuclear and other renewable sources. And people will know that’s the case.
Source: IEA Consumption: Consumers consume and produce. They generate excess electricity they can sell to others.
So what’s the issue?
In order to get to Net Zero by 2050, besides doing other things, we need to do the following 2:
Electrify: Many different industries are going to have to change how they operate in order to use electricity instead of fossil fuels (transport, cooling and heating, green hydrogen, etc.)
Switch to renewables: The electricity to power this whole energy transition will have to come from renewables, otherwise we are still emitting CO2.
Renewables are intermittent and we currently struggle a lot to store the energy they produce. This leads to problems such as the duck curve.
There’s basically a mismatch between when we produce solar and when we need electricity the most. This leads to inefficiencies in the way utility companies provide electricity.
What is a smart grid and how does it help?
It’s like the normal grid but with a thick layer of digitalisation to improve efficiency and reduce waste.
With individuals becoming “prosumers” by turning their houses into power plants, supply of electricity becoming more intermittent, demand increasing rapidly and demand for transparency on the rise, monitoring every aspect of the grid is key.
We need to add many more sensors, information flows and security checks at every stage of the grid (generation, distribution and consumption).
This will help with:
Better matching between electricity supply and demand.
Integration of smart devices to consume clean energy at the right time.
Reduced power outages and grid overloading.
Better inclusion of individual’s power generation assets.
Real-time marketplaces of electricity in micro-grids between neighbors.
And many more things!
Of course, besides being more digital, the grid also needs to update its infrastructure (transmission lines, distribution centers, etc.)
Cons
So what’s keeping us from upgrading the grid?
Heterogeneous market: Each geography has its own configuration, set of regulations, and constraints.
Cyberattacks: The grid will be more prone to cyberattacks and thus the level of security needs to be drastically increased.
Scale: A lot of money as well as coordination between Governments, companies and citizens is required to effectively implement the technology of smart grids.
Top Companies 💰
Powerledger🇦🇺: Founded in 2016. They leverage blockchain to create products around energy trading and traceability, flexibility trading, and environmental commodities trading.
Plexigrid🇪🇸: Founded in 2020. Their solutions enable Distribution Grid Operators (DSOs) to run their grid more efficiently and become drivers of the transformation required for the energy transition.
Octopus Energy🇬🇧: Founded in 2016. 3rd largest UK energy company and present in 19 countries. They develop a cloud-based smart grid platform to provide cheap green energy.
Besides these ones, check out the deep dive I linked in the section below. There you have many more players divided by area of the value chain :)
❗Extreme knowledge area❗
Full grid deep dive: A fully detailed (but easy to understand) explanation of the grid market with all the different issues, actors and companies from the POV of a Climate Tech VC.
The duck curve: The phenomenon of the duck curve explained in detail and in a very visual way. It’s going to become increasingly important to take it into account.
That’s it for today, 1 climate tech topic in under 5 minutes.
Next week… Food Waste! 🤯
If you enjoyed today’s issue, the best compliment you could pay me would be to share it with one person who you think would benefit from it :)