The electricity landscape is a prime example of the Fourth Industrial Revolution as it undergoes a transformation, becoming more complex than ever before with rapidly evolving technologies, declining costs, and shifting regulatory landscapes. Three trends in particular are converging to produce game-changing disruptions: electrification, decentralization and digitalization. These trends are presently at the “grid edge” – smart and connected technologies at the end of the electric power grid. They encompass all of the major technologies – such as distributed storage, distributed generation, smart meters, smart appliances and electric vehicles – that are impacting the electricity system.
Adoption of new “grid edge” technologies in OECD countries could bring more than $2.4 trillion of value creation for society and the industry over the next 10 years, by increasing the efficiency of the overall system, optimizing capital allocation and creating new services for customers.
Rapidly falling costs of grid edge technologies is fueling their adoption by customers. Smart meters, connected devices and grid sensors will increase the efficiency of network management and, more importantly, allow customers to have real-time information about energy supply and demand across the system. The expected surge in adoption of electric vehicles could provide great flexibility to the grid in the shape of storage, but could also pose site congestion challenges, for example if a large number of electric vehicles wanted to recharge in a given geography at the same time.
For consumers, the roll-out of grid-edge technologies will enable customers to take the center stage of the electricity system. Under the right price signals and market design, customers will be able to produce their own electricity, store it and then consume it at a cheaper time or sell it back to the grid. Such a system will even allow peer-to-peer decentralized transactions.