Welcome back to the ChargeSync blog.

 

We’re about to start the countdown to one of the biggest transitions in the history of mankind. We’re about to witness the transition from carbon based fuels (namely gas and coal) to a world purely powered by renewable energy.

 

This transition is taking place now as we speak. Solar panels and wind farms have been built and provide the energy you need. While batteries are beginning to be added to the grid to provide the ability to match supply and demand. I believe that the transition will take place in the next 5-7 years, and the power grid will never look again as it does today.

 

The new world is a simple one in many respects. It produces no carbon, and aside from the initial investment has very little ongoing costs.

 

So what are the implications of this future vision?

 

1)      Large power stations are most likely obsolete: Building large power stations has been an expensive (and for those involved lucrative) business for many years. As we move towards smaller and more embedded power plants we begin to match demand needs in a specific location with supply (in that location). Large polluting, or nuclear power plant need to be located away from people, whilst cleaner generation can be integrated into residential areas without a potential human cost, and with a large saving in the transmission network required to support flows.

 

2)      Coal stays in the ground: Coal may continue to be used in the production of steel, but the mining industry is likely to be hit hard as power generation rejects coal as a viable fuel. Coal has always provided a cheap form of energy, but there can be no place for it in the world of tomorrow (nor today).

 

3)      Gas isn’t used for energy purposes, with small use for system balancing… possibly: Large gas companies have always relied on demand from power generation. But in established markets gas generation has increasingly become about providing flexibility to the grid (something batteries may well be better at). Whilst emerging power markets don’t need gas because they don’t need a power grid at all… The future for gas lies elsewhere, but that’s another story.

 

4)      Power prices are set by the cost of cycling batteries: Power prices have been set by the marginal cost of generation for a long time. This means that, having stacked plant in cost order, the last plant required to meet demand’s cost of producing a unit of electricity sets the price for energy in that period. But how can that work when the marginal cost of generation is zero (like wind or solar)? Well something still needs to balance the system (meaning if there is too much generation something needs to switch on, and too little something needs to switch off, else we’ll have sparks). This could be demand (if you turn off your production line right now I’ll pay you X), or in some cases supply (if you run your small generator I’ll pay you Y), or it could be batteries (the future cost of power to replace my charge is Z, and my efficiency is N). In this way the relationship between power prices, battery efficiencies, and cycling costs (how long does you battery last in cycles, and how much does it cost? Divide one by the other to get the cost per cycle that you need to beat to make money through it’s lifetime) are going to become intrinsic. Batteries will provide the new marginal cost, and once that cost is lower than the cost of gas fired generation gas demand for power will be as good as nil.

 

5)      Coordination and optimisation at an embedded level is key: Big power plants are easy to coordinate and control, or at least easier. Microgeneration requires a whole new coordination and control scheme. The internet and cloud based technology makes that possible, but as with all new technologies there are challenges on the way. A greater reliance on the internet for our energy resources makes us more at risks to both high tech hacks, and simple failures of the telephone wires.

 

6)      The market will change to provide prices for all different voltages and locations: Today we have a single price in the power market. Suppliers receive different charges for their different operating zones, and pay costs depending on which voltage they are generating or consuming from/to. To facilitate an open market we need price points for any geography, and for any voltage level which can be accessed by even the smallest generator. In this way if you can switch off demand during the peak hours of the day, then you should receive a benefit for this. Todays market locks value into the suppliers consumption account, we believe this practise is anticompetitive and will change before a free market emerges for micro generation.

 

I’m no prophet, sage nor oracle, but the above in my mind are the likely implications of the new technologies we see in the market today. Which is why we believe market based optimisation of batteries is important. At ChargeSync we’re launching our crowdfunding raise very soon on Invesdor (https://www.invesdor.com/en/pitches/739). You can contact me at matthew.hunt@chargeysnc.com