From the discovery of X-rays in the 19th Century to Uber and Netflix, disruptive innovations continue to change the trajectory of industries. ‘Disruptive innovation’, a term coined by Clayton Christensen in the early 1990s, refers to innovations that create a new market and value network while disrupting existing market and value networks.
Over the years in the energy sector, we have seen a few disruptive innovations. Of course, LED lights easily come to mind, but one segment ripe for innovation is the electricity grid. Over the past century, the energy supply has consisted of large power plants connected to a central grid. This can be traced to the late 19th century. As electric lighting became increasingly preferred over kerosene/oil lamps, utility companies created a centralised power management system to generate and distribute power. The result is the large-scale generation and transmission of energy through high-voltage transmission networks. This system accelerated the scaling of power distribution and helped fuel massive industrialisation over the last century.
As demand for electricity increases at levels not seen before, the challenges (not envisaged during design) facing this system become even more pronounced. Challenges with the current grid system range from poor network design to inadequacies in supporting the huge energy demand. The long-distance transmission of energy also has its drawbacks as overall system efficiency is sacrificed. Furthermore, for many existing power grids, integration of renewable energy is not an option as the addition of renewable energy was not considered during design. For these grids, a total overhaul of the grid is needed to enable the clean energy transition.
Distributed Energy Systems (DES) is the disruptive technology that is set to displace conventional grid systems. Distributed Energy Systems utilise small power generators and storage systems distributed across an area to provide electricity for communities, homes and businesses. For example, DES could be connected to a central grid or a localised microgrid that allows consumers to receive energy from or deliver it to the grid. Generation sources are largely renewable (solar and wind) with energy storage systems to store energy during periods of excess generation.
These distributed systems increase power supply efficiency since energy losses are minimal, especially when coupled with smart technology that enables real-time energy management. The smaller system also means that maintenance is easier, and disruptions in one system won’t affect the central system. This system is flexible as modularity ensures easier integration of new DES; this is essential, especially as renewable energy generation costs become cheaper than conventional sources.
The Grid of the Future
Advances in battery technology are increasingly making DES a reality. Batteries like the Tesla Megapack (a 3MWH individual battery connected up to 1GWh capacity) can power a city for as much as 6 hours when fully charged. Increased connectivity creates a new structure where customers and energy companies create cleaner and more reliable grid networks. Homeowners with off-grid energy systems actively become energy producers (prosumers) as the interface between DES and the centralised grid becomes seamless. As selling energy to the grid (during periods of excess production) and buying (when generation is low) become absolute, we would see more of these DES across the globe.
Not every day one gets to see a disruptive technology, not to speak of one that will have a profound impact on our collective battle against climate change.