Even before coronavirus, the durability of centralised energy networks designed for the last century was being seriously questioned.
But fluctuations in energy demand, brought on by lockdowns combined with the national commitments to hasten the switch to renewable energy, have tested the reliability of traditional grids further and in some cases found them wanting.
In the UK, the National Grid has struggled to keep the power system stable and has recently issued warnings of stressed supply margins to meet peak demand, owing in part to power station outages and closures and the intermittency of renewable power. In South Africa, “rolling blackouts” and planned outages — known as “load shedding” — have been exacerbated by the pandemic, with similar patterns repeating elsewhere.
“The huge disruption caused by the coronavirus crisis has highlighted how much modern societies rely on electricity,” according to Fatih Birol, executive director of the International Energy Agency. He has argued that the disruption caused by the coronavirus can provide an opportunity to fast forward the development of current — sometimes straining — energy systems by ten years.
Matching the growing supply of intermittent renewable energy sources to expanding global demand for electric power is the challenge.
Investment in new, more efficient methods of energy storage is providing part of the solution. Between 2013 and 2019, annual global capital expenditure on energy storage quadrupled from $338m to $1.3bn, according to Wood Mackenzie, an energy consultancy. This is expected to rise to $10.5bn in 2025, driven by strong demand for localised electrification.
The bulk of this electrification will happen in local grids, say analysts — often in locations where power supplies are now limited or unreliable. Cambodia, India, Kenya, Rwanda and Tanzania were listed as five of the top eight countries for fastest gains in electricity from 2010-2018.
A move away from the traditional model of monolithic national grids systems offers the chance to make gains in carbon efficiency, says Simon Daniel, chief executive of Moixa, an energy storage company with projects in the UK and Japan. “Most of the technology at the grid edge is low carbon, whereas the ageing central grid is fossil fuel, where it converts that fossil fuel into energy and then transports it into the home. So you have two-thirds of that energy lost in design, first in the power plant and then the transmission losses.”
By the end of the decade, the IEA predicts as much as 80 per cent of global growth in electricity generation could become renewable, creating a significant market opportunity for new networks, storage and technology companies that will be needed to deliver it, working alongside older utilities.
Decentralised grids, or “smart grids”, are localised energy networks based around the principle of bringing supply closer to demand.
Responsive technology is used to “match” energy flow with demand, rather than relying on large stations to disperse power at fixed costs. It also harnesses home technology, such as solar panels and electric vehicles, allowing both providers and consumers to circumvent traditional utilities.
Backers of local energy say they help to stabilise energy supply in the renewable age.
“By having generation and storage embedded locally, you have a system which is inherently more robust and resilient,” says Patrick Erwin, policy and markets director at Northern Powergrid, an electricity network operator. “The money is moving about to where the market sees the growth future.”
In the past month alone, several energy companies have made moves into the US storage market: the acquisition of grid software company AMS by Fluence; Enbala Power Networks by Generac; and Hanwha Q Cells purchase of Geli.
Despite the stated intentions of countries to pursue a cleaner, greener recovery in the wake of Covid-19, regulatory challenges remain a barrier, as does a lack of co-ordination in global efforts and a shortfall in funding to finance the transformation of power distribution systems.
“The speed of the response to the climate emergency will dramatically increase [this shift],” says Mr Daniel. “The UK has lots of technology companies playing a key part in this. But at this point, we are still waiting for a conductor and overall policy to bring this all together as a managed recovery.”