Originally published on greentechmedia.com on June 24, 2020.
A collaboration between Vodafone and Energy Web is evidence that an emerging flexibility services opportunity is luring new players to the energy sector, insiders believe.
The mobile giant and the energy blockchain leader last month announced a partnership to use subscriber identification module (SIM) technology as a means to identify distributed electricity system assets on the grid.
“This means that renewable and distributed assets like wind turbines, batteries, heat pumps and solar panels can be integrated with energy grids safely and efficiently,” the companies stated in a press release.
The endgame is to give an even wider range of devices access to future flexibility services markets, according to Energy Web CEO Walter Kok.
“Let’s say you have an electric vehicle and you are charging it at your home address,” he said. “You say to the car, ‘I need to go to the office tomorrow. Make sure I can do that. But in the meantime, when I go to bed, make as much money as possible by providing flexibility to the grid.’”
Using an electric vehicle as a mobile power plant instead of a means of transport could potentially convert a costly asset into a money-making machine, said Kok. “Tesla [has] a real opportunity to give away cars for free if you allow them to participate in the grid,” he said.
The Tesla model
The concept sounds far out, but in May Tesla drew speculation about precisely these kinds of services after applying for a license to become a U.K. electricity provider.
The company has a software system called Autobidder that is described as “a real-time trading and control platform that provides value-based asset management and portfolio optimization, enabling owners and operators to configure operational strategies that maximize revenue.”
Tesla did not respond to a GTM query about whether Autobidder would be used to allow U.K. customers to participate in flexibility markets.
Elsewhere, though, companies have been experimenting with the idea of aggregating distributed consumer assets to help with grid flexibility.
In January, for example, Austrian Power Grid and Energy Web launched a proof-of-concept project to determine whether aggregated battery storage systems can be used for flexibility services.
Kok said the experiment showed the Energy Web platform could allow up to a million consumer batteries to take part in the two-second frequency response market.
COVID-19 pandemic exposes flexibility challenges
The need for greater grid flexibility has become apparent as coronavirus-related lockdowns have dampened energy demand and forced grids to cope with relatively higher levels of renewable generation.
In the U.K., for instance, power companies estimated the country could have saved £133 million ($104 million) through the application of flexibility services that improve the match between generation and demand. Much more will be needed in the future.
According to a future energy scenarios paper published by utility National Grid last July, in order for the U.K. to meet its decarbonization targets, it will require 13 gigawatts of flexible resources from commercial and industrial customers on the grid, up from around 1 gigawatt at the moment.
While there are no comparable forecasts for domestic demand-side response, there is considerable scope for consumers to take part in the market, said Oliver Archer, senior analyst at Cornwall Insight, a U.K. energy consultancy.
“Smart technologies entering the domestic market, including heat pumps, electric vehicles and batteries, are creating a network of relatively high-load controllable assets suitable for the provision of [demand-side response],” he said.
“There is also growing interest in upgrading existing ‘dumb’ appliances to provide flexibility services. Electric space and water heaters are being replaced with smart versions or retrofitted with smart adapters to provide flexibility through real-time response to external signals.”
A key challenge for building flexibility services using such devices is that the grid operator has to know the identity of each device involved. That’s where companies such as Vodafone come in, since mobile SIM cards can act as device-specific identity tags.
Vodafone already manages connections to 19 million assets in the utility industry worldwide, said Philip Skipper, head of machine-to-machine business development at Vodafone Global Enterprise.
It would be no great stretch to add SIM cards to millions more home devices so they could change their consumption levels in response to signals from the grid. “Connectivity will go into devices to provide a view of consumption and generation,” Skipper said.
“The energy sector is a very strong one for Vodafone,” according to Skipper.
Vodafone’s partnership with Energy Web is far from the only collaboration between the telecommunications and energy sectors. In the U.S., for example, Verizon is helping utilities to connect smart meters, sensors, distributed energy assets and other endpoints to the grid.
And the Chinese telecom vendor Huawei has a track record in smart grid connectivity, as well as producing its own line of solar inverters. Vodafone’s addition to the list could signal that more partnerships are to follow. According to Kok, “There will be more coming.”
For now, though, it seems likely telecom players will seek to become ecosystem partners rather than taking a direct role in the provision of flexibility services. “I’m not sure we’d enter the energy retail market,” confirmed Skipper.
And Jonas Corné, CEO and founder of the asset management software developer Greenbyte, said telecom companies might have a tough time vying for a piece of the flexibility services pie. “I fully understand why they want to do that, because the market opportunity is huge,” he said.
SIM cards are only one way of identifying assets, Corné points out, and they may not wind up being the preferred solution. “Telecom operators are…going to play a role in transmitting the data,” he said, but added that it’s unlikely that they will focus on “verifying that the data is coming from a certain source based on SIM cards.”