Digital transformation podcast - Series 1, Episode 4: Energy tech | Technology and efficiency in a revolutionised energy sector
In this episode of our Digital Transformation Podcast Series, we continue our focus on the risks and opportunities presented by digitisation in a range of industries by focusing on the latest cutting-edge innovations in the energy sector.
This second instalment of our discussions on energy tech is introduced by Dino Wilkinson and hosted by Richard Power, a specialist in energy law. Expert contributor Nigel Brook, head of Clyde & Co’s resilience and climate risk practice, discusses how data collection and analysis, artificial intelligence (AI) and smart contracts could aid the transition to electric vehicles (EVs). The episode considers the challenges involved in powering a network of EVs within current infrastructure, potential solutions presented by emerging technologies, and the legal issues and barriers to overcome.
EVs have a huge role to play in decarbonisation with the UK Government planning to ban the sale of petrol and diesel cars by 2030, and global sales of EVs predicted to rise to 58% of all vehicles by 2040. However, Power kicks off by outlining the complex problems caused by introducing such a huge number of EVs, including a significant rise in demand for electricity and charging points. This demand could create voltage imbalances and bottlenecks in a market with a strong need for a reliable renewable energy source.
“The issue is that, as you decarbonise more of the grid, you have more reliance on intermittent wind and solar,” says Brook. “So, from the electricity perspective, it’s how to keep lights on – managing both supply and demand.”
This is where emerging technologies have a critical role. The episode considers how they can be harnessed to map supply and demand across the energy network and distribute power to where it is needed. We learn about vehicle-to-grid (V2G) systems, whereby the EVs themselves act as batteries to discharge electricity back into the system when not in use. Or alternatively, microgrids, where EVs sell surplus electricity to other vehicles in the local area, thus taking pressure off the central energy infrastructure.
“Studies have shown that 90% of cars are parked at any given time, outside of the peak usage times, and at those times, the batteries can be charged,” explains Power. “But when they’re fully charged and just sitting idle, they can be used as batteries to discharge energy back into the system.”
These concepts may sound futuristic, but they are already in use. Power gives the example of Octopus Energy, which is already trialling the first vehicle-to-grid systems, with the prediction that they could save up to $40bn by 2050. Meanwhile, Dominion Energy in Virginia has developed electric school buses, which act as aggregated batteries to plug energy back into the system outside of school drop-off and pick-up times.
The potential is huge, but there are legal barriers; most prominently, the cyber security and privacy risks of collecting and processing huge volumes of data from the public. It boils down to what Brook calls “right to privacy, versus the commons, where there are huge benefits if people aggregate their data.” The issue requires a solution where generic data can be pooled in a controlled way that does not infringe on personal privacy.
Another legal issue, raised by Power, is whether in V2G or microgrid scenarios, EVs would be considered energy suppliers and, if so, whether they would need a licence. He says: “Ofgem [the UK energy regulatory authority] have confirmed that electricity supplied to an EV is not a supply to premises under the electricity act, but…. that supplying electricity to a charge point is… and would require a license. So, none of what we’ve talked about today is going to happen if that can’t be solved.”
As in numerous other sectors, it appears that legislation is falling behind the pace of technology. While energy reform is on the Government agenda, the question is how quickly it can be pushed through. As Power concludes, none of these technologies exist in isolation, and a whole range of issues need to be worked through to ensure that new laws are fit-for-purpose now and remain future-proof in the years to come.