Unlocking the potential of the Brave New Energy World – Part I

The world is going digital – and so is the energy industry. While there are many business opportunities on the horizon, its first and foremost about removing the obstacles blocking the new decentralised energy world. With flexible power sources – such as solar in combination with energy storage – we will be able to unlock the full potential of digitalisation. SolarPower Europe, together with the International Battery Energy Storage Alliance (IBESA), have organised the first Digital Solar & Storage Conference at BMW World in Munich in early December to take a look at the status of the trajectory of this energy transition. Attracting over 200 industry stakeholders, these are some highlights:

Rules & Customers

When asking executive panelists from European technology leaders SMA, Solarwatt, Sonnen and Enel about the key challenges they face implementing ‘Business Strategies in an Energy World Quickly Moving Towards Solar’ during the Conference dinner discussion, they gave two key answers: on the one hand it is about regulatory hurdles that need to be overcome and on the other hand it is about finding the right paths to the new active power customers or prosumers.

Regulatory Challenges

One of the largest legislative packages of the decade currently being discussed in Brussels is the ‘Clean Energy For All Europeans’ package, which is aimed at providing the regulatory conditions needed for European energy system based on renewables. “We are working on the core elements that will create the essential policy framework for future business models to prosper”, stated SolarPower Europe President Christian Westermeier in his welcome speech.

One of these elements is ensuring a 35% renewables target by 2030 rather than the 27% originally proposed by the European Commission in the Renewable Energy Directive, which would set the base for a strong growth of the solar and storage sector in Europe.

In regards to Market Design, the main concerns are mostly about ‘stacking of services’, as well as the ‘fair and free movement of stored solar kilowatt-hours’ that need to be improved in the latest legislative drafts (see slide).

Community Solar – A Win-Win for Everyone

Despite today’s market barriers in Europe, there are already several business models that have proven to work. Take Germany for example, where recent legislative changes now enable on-site community solar solutions, offering both utilities/developers, as well as the landlord attractive profit margins and lower electricity prices to customers living in apartment buildings. “Community solar in Germany is now a win-win for everyone”, said Chris Werner from Chris Werner Energy Consulting.

 

Start-ups – Shortcut to the Brave New Energy World

Pictures of how versatile the Brave New Energy World could look like were painted by several start-ups. “Our vision is a fully decentralised and peer-to-peer market for electricity and flexibility”, said Luc Garnesson, product manager at Conjoule. The company is working on a ‘simplified and open architecture for the energy market of the future’ enabled by blockchain, a peer-to-peer marketplace where consumers, producers and prosumers will be able to transact directly with each other without the need for intermediaries and their associated costs and inefficiencies, according to Garnesson. To realise this vision, energy prosumers can now sell excess generated power to local consumers via Conjoule’s platform. A first pilot was started in early 2017 in two German cities – Essen and Muhlheim.

Started in 2014, Beegy from Munich first began offering solar and storage solutions. From this work, they developed a digital software platform that enables management of power and heat generation systems and EV charging stations of prosumers as well as offering energy services, such as energy supply, commercial energy accounting, load management and energy trading. As of early 2017, Beegy operates as a utility with a white label solution in its portfolio that also now addresses business customers (B2B2C).

Another Munich-based start-up, the Siemens spin-off Caterva, advertises ‘to turn every home into a power plant’ – a business model it offers to utilities. In its product portfolio, it has a storage/solar solution for homeowners and guarantees, via its technology platform, that the customer is supplied with free green power 24/7 over 20 years. With access to the storage systems, Caterva is able to provide peak shaving, balancing power and trades on the EPEX-Spot exchange, among other services. According to Caterva CEO Markus Brehler, customers primarily want safe green power supply from the socket – direct control of the generated power is not really important to them. However, the company’s Caterva App provides ‘full transparency to people’. Caterva has supplied a ‘3-digit number’ of storage systems in Germany so far.

While all these and several other start-ups strive to fully serve energy customers, their comprehensive product offerings are very ambitious – and require tremendous investments, something you would think innovative, large utilities could and would want to grab onto. Indeed, two investors of venture-capital backed Conjoule are power companies – Innogy from Germany and Tokyo Electric Power Company Holdings, Inc. (TEPCO), while Munich-based Beegy is owned by one of Germany’s largest municipal utilities – MVV from Mannheim.

 

 

Some large utilities directly develop digital solar & storage solutions in-house today. Jens Martin, Head of Technology, Policy and Project Lead of B2C Solutions at EON, presented different customer solutions of the Germany utility, including solar & storage systems, operating software, smart meters, heating and EV charging. The biggest news to many attendants was E.ON’s mention of its SolarCloud product (see photo).

While energy sold as a service, maybe even offered as an energy flat, is the final goal, the next generation of energy suppliers usually still earn their money by selling hardware. A good example is storage system manufacturer Sonnen, with its Sonnen Community platform. Sonnen’s revenues today are still coming primarily from its battery system sales.

In the future, when the legislative framework conditions will be adapted and zero-marginal cost renewables together with storage will provide the energy supply baseload, services and data will be the prime money makers. According to a poll of the conference attendants (see top photo) prosumer solutions are considered to be the most attractive future revenue stream, ahead of data.

That’s why Jochen Schneider, newly appointed EVP Energy Services at world leading solar inverter manufacturer SMA, announced during SolarPower Europe’s Digital Solar & Storage Event that his company has opened a new office in Munich with a team developing energy service products.

 

 

 

Author

Michael Schmela

Executive Advisor

 

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