Skilling Up for the Clean Energy Transition: View from Skills Work on EnergyREV

A couple of weeks ago I attended the “Skilling Up for the Clean Energy Transition: Creating a Net Zero Workforce” IPPR discussion. Given that we had 1.5 hours to get input from 5 presenters and about 20 participants, it was not really possible to put many thoughts across. Hence,  this blog. Using some of the questions set out at the IPPR discussion, I started to put together some answers based on our work from the EnergyREV Skills work group (so far). Seeing that there is quite a lot to say, I will focus here on only 3 questions set out at the IPPR meeting:

Question 1:  What are the main challenges and opportunities we face in the transition to net-zero?

Today an average person on Earth consumes 1.5 planets [1]. In other words, we need 1.5 planets worth of forests, seas, land, and other resources to produce what an average person consumes and be able to absorb the emissions and negative impacts of it. And this number varies between developing and developed countries (e.g., 1.1 for China and 4.1 for USA). 

For the UK we will be looking at 2.5 planets per person! Transitioning to net-zero economy then implies drastic change to our everyday production and consumption structures, processes, and habits. 

Such change cannot be accomplished by one stakeholder, by few regulatory changes, or legislations. A systemic change in the mindset of the whole country is needed: from school education, to university level training, from industrial and societal regulations and legislation, to societal values that drive the  kinds of companies that entrepreneurs want to run, and jobs that employees want to take, to the way that products and services are valued and consumed.

In considering this transition, we take a look at the energy sector, asking: how can we transition to renewables-based, local energy systems? Let us first clarify:

  • Why renewables-based? Because that is the only clean, continuously available energy source.
  • Why local? Because renewables are locally distributed and so should be harnessed where they are located. Moreover, wherever possible, the generated energy should be consumed where it is produced to avoid transmission losses as well as extensive costs of transmission infrastructures. 

1.1 So what are the challenges in transitioning to renewables-based local energy systems?

1.1.1 Political landscape 

The most recent Global Talent Index Report (GETI) [2] based on 17,000 respondents from 162 countries has shown that, although there is an obvious skills shortage, the most worrying issue for the renewable energy sector is, in fact, the political landscape. A lack of subsidies is of huge concern to the renewable industry, significantly more so than to the conventional and better established non-renewable sectors. Similarly, stability of the policies is a key determinant for investment into the new technologies and renewables sector. 

1.1.2 Transitional mindset

Provisioning the right political landscape requires a transitional mindset within the society.  Such a mindset would enable people to support the policies even though many of these would threaten to uproot their normal daily lives. This social support is essential not only for accepting the (potentially unpopular) policies, but also for taking an active role in the required change of daily practices (e.g., engaging with Demand-Response services, installation of own renewable generation and storage equipment, etc.) both as a consumer, and as a professional choosing to seek employment within the zero-emissions sector.  This (I think) is the biggest challenge of all, as it requires A change of mindset and lifestyle of the whole of the country’s population. All of this cannot be achieved without:

  • widespread ecological education: Such education should be provisioned to all of the citizens: from children to retired. 
  • commitment of resources to enable and support the necessary changes: it will not be enough to explain to families that driving a car is harmful for the planet; the family should get access to an alternative viable transportation option, so that they are able to get to school and work on time. To give a few examples (for UK): 
    • the transportation service would need to be improved (if it takes me 1 hour to walk to my work place and  1 hour if I take the bus, what is the point of the bus?); 
    • work practices would have to be changed to support flexible start/end as well as working from home/alternative locations to reduce the need for peak-time transportation pressure;
    • change in hiring practices for jobs that require physical presence, would have to account for the workers’ ability to reach their workplace in carbon-neutral way;
    • change would be needed in pricing/taxation of products, ensuring that the cost of carbon is taken into consideration (a move which, if not prepared for carefully,  will undoubtedly be met with a lot of resistance from both producers and consumers)

Without such education and resource commitments the policies to aid decarbonisation are likely to create disruption and unrest, as recently seen with the ‘gilets jaunes’ in France. When president, E. Macron proposed a rise in tax on diesel and petrol without any transitional arrangements or subsidies for the alternative cleaner, electric vehicles, protesters took to the streets in violent clashes with the police [4]. 

1.1.3 Skills Shortage

Sills gap (or shortage) is a disequilibrium between the skills available from workers and those demanded of them by employers. 

The skills shortage is a looming crisis that many in the renewable energy sector are also worried about: in accordance with GETI [2], 60% of respondents believe there is only 5 years to act before it hits. So what talent is lacking? 

  • The discipline of Engineering was reported to be in highest need, 50% of which were  mechanical and electrical/E&I engineers – both 25% –  followed by R&D at 20% and project leadership following with 25%;
  • Lack of understanding of the system as a whole: how multiple energy generation methods can work together and complement each other;
  • Legal experts and policy makers in steering the path to change; 
  • Implementation of effective and relevant training and education programmes ;
  • Vision of how all of these factors come together. 

Such a gap can cause structural unemployment whereby the unemployed workers lack the skills needed to get the jobs. The shocks in economic activity that can lead to structural unemployment in the area of low-carbon and localised energy systems can arise from three main drivers: 

  • Firstly, as industries become more energy efficient and less polluting, the demand for occupations (such as drilling engineers) decreases whereas there is an increase in the demand for others, such as solar panel technicians. In some cases the occupations are relatively transferable. For example, an individual working on oil or gas drilling sites will be able to transition to the geo-thermal industry which relies on similar methods for heat extraction. The change in market behaviour can also be encouraged by consumer habits, for instance, through mass demand for greener energy which in turn causes the industry to adapt in order to meet the demands of their customer base. 
  • Secondly, entirely new occupations can emerge as a result of developments in technology. Occupations are also limited by this factor since a technology may not be available in a certain country or relocation to an area where the occupation is vacant may not be a feasible option. 
  • Thirdly, the introduction of regulation and environmental policy can force the industry to alter its structure. For example, policies may be put in place that ban certain materials or processes with negative environmental impacts [3].

The key risks to the sector, as a result of skills shortages, include decreased efficiency, loss of business and reduced productivity. These consequences will trigger a negative feedback loop since it is likely that there will be less incentive to work in the given industry if it is seen as a failing one. 

How could the skills shortage be addressed?  

The required skilled workers can be:

    • Attracted from other industries with transferable skills (e.g.,  increasing need for the geo-thermal energy drill operators can be filled by attracting such operators from the shrinking oil and gas industry)
    • Provisioning training: however, the length of a training course may cause long lead times and it is also necessary to incentivise individuals into enrolling in the training programmes in the first place. 
      • One way to speed up this process is for companies to offer apprenticeships and teach workers the skills or training ‘on-the-job’
      • Another option is to establish partnerships between employers and educational institutions, providing timely input on the expected types of training and shortages expected ahead of time, allowing for the training to be provisioned ahead. 
    • Clearer career progression, with demonstrated career pathways and specialisation opportunities. 
    • Increased remuneration and benefits packages, motivating the individuals to invest into (re-)training. 

Improved societal image of clean jobs:  As shown in the recent Talent Index Report [2] , remuneration was one of the least common reasons for the young people choosing to work in the renewables sector. A possible explanation could be that for the 25-34 year olds the concern for the climate is more apparent. Hence, they may enter the sector as they wish to take action against global warming rather than for gaining “job perks”. Thus satisfaction from work that contributes to the social good could become a major motivator in its own right.

Question 2: What is the role of government, employers and trade unions in securing a skills system fit for a decarbonised future?

Our recent review of the factors that affect skills shortages [8] revealed a picture presented in Figure 1 below. Here the factors most frequently noted as affecting skills shortages are:

  1. policy and regulation (e.g., feed-in tariff which increased demand for solar installers); 
  2. technology (such as automation);
  3. change in markets due to competitiveness;
  4. education (e.g., education may be of a low standard or not up-to-date); and 
  5. mass changes in consumption habits (which can shift demand away from certain goods and services and towards others, which in turn increases the demand at many stages of the value chain).

Factors mentioned which are noted as of mid-range impact are:

  1. physical changes in the environment as we are seeing with the climate crisis;  
  2. number  of training  providers which  may also reflect a regional shortage;   
  3. job  incentives such as wages or location;  
  4. demographics, i.e., in localities where younger generations relocate or where women have lower levels of participation;  
  5. funding towards skills and training or R&D;  
  6. social awareness for the benefit of low-carbon alternatives; 
  7. structural change; 
  8. labour market information whereby individuals do not know which skills  they need; 
  9. the number of graduates in the necessary area (or generally) may be low; and
  10. business  model changes which cause disturbances on company-level. 

Figure 1: Factors affecting skill shortages (source [8]).

2.1 Government

From bans on harmful products to the introduction of a carbon tax, the government has an extraordinarily influential power in promoting a smooth transition to low carbon and more localised energy systems through legislative prohibitions as well as by providing both incentives and disincentives. This is clearly shown in Figure 2 that illustrates the success of encouraging installations of solar panels through the introduction of the Feed-in Tariff in 2010. The growth in the number of installations post April 2016 could partly reflect the rush to set up projects before further reductions in subsidies take effect. Nonetheless, this example of a positive incentive for participation in cleaner production methods should be learnt from to support the transition. 

Figure 2: Quarterly breakdown of number of installations and total installed capacity accredited under the Feed-in Tariff. Figure obtained from [5] 

The tools that the government has at its disposal include:

  • Policy and regulation:
    • Ban on harmful industrial practices and products (including unpriced carbon emissions); 
    • Carbon taxation;
    • Technology regulation (e.g., clear regulation on use of blockchain, acceptance of peer-to-peer energy trading, regulation of self-generation and storage, all of which will drive investment into specific technologies and enable business models);
    • Change in markets due to competitiveness by taxation, e.g., taxing fossil fuel-based vehicles to cross-subsidise the electric ones, allow continuous supplier switching for energy consumption, etc.;
    • Change the value system in economics: move away from economic growth and GDP as progress indicators to Happiness Index, Job Satisfaction, Clean Environment and alike. This will change the business models that companies use;
    • Price-based impact on consumption habits, e.g., price is cost of carbon in meat and diary products. 
  • Education:
    • Public education for mindset transition through media and information which affects social awareness for the benefit of low-carbon alternatives, as well as ensure up-to date content provision;
    • Change the value system in education: school and educational curriculum review to introduce the values of environmental protection, social and personal sustainability, and provide inspirational examples of successful life not as for those who become “rich and famous” but of those who contribute to environment and society. This will both affect social awareness for the benefit of low-carbon alternatives and support change in consumption habits as well as encourage younger employees and women to get engaged with the low-carbon sector. 
  • Investment:
    • Support transition with investment into infrastructure support (provide funding towards skills and training or R&D);
    • Provide re-training opportunities (through funding towards skills and training or R&D);
    • Invest into areas with high energy potential (e.g., off-shore wind, wave and tidal to get the locations attractive for families, and so workers, affecting the demographic factors).

2.2 Industry Leaders

The tools that the industry has at its disposal are:

  • Lead by example: e.g., in renewable energy the leaders who can encourage the mindset transition are the large corporations such as Google, Apple and Facebook who are all in a race to operate on 100% renewable energy in their worldwide facilities [6] . This action is committing to investment in training and R&D, as well as technology adoption and fostering increased social awareness.
  • On-the-job training: education programmes at workplace to help to provide an adequately skilled workforce within their companies and in the wider industry. This directly relates to workers’ education and investment into skills and R&D.
  • Communication and collaboration with educational institutions and government to warn about the expected skills shortages and help train skilled employees ahead, which promotes better education and training, as well as provides clear information about the labour market to the students in schools and universities.
  • Adopt innovative business models driven by new technology and new values (e.g., social enterprises, environmentally-focused businesses, etc.). 
  • Develop standards across industry: provide clear professional progression routes and job incentives, e.g., current lack of installers for heat pumps leads to plumbers with boiler installation experience being recruited for these jobs, yet these plumbers have to continue boiler maintenance to retain plumber licences.

2.3 Trade Unions

The tools that the trade unions have at their disposal are:

  • Support career transitions:
      • Work with the management of the energy systems organisations to set transition targets and provide training for workers in transitioning to the new energy systems;
      • Work with the universities and other training organisations to develop training provision for workers in transitioning to the new energy systems;
  • Support quality assurance:
      • Lobby to accept standards and certification for new energy jobs (like heat pump installers);
      • De-risk hiring in new professions by ensuring employers are meeting their minimum obligations;
  • Hold Industry accountable:
      • by integrating the zero-carbon targets into the set of legal obligations for which the unions monitor breaches.

2.4 Others

It should be noted that other stakeholders are also very influential, though are not discussed here due to space and time constraints. To name a few such stakeholders:

  • Individuals
  • Communities
    • Local Communities
    • Religious Groups
    • Youth Groups
    • Lobby Groups
  • Activists, etc

Question 3: What are the improvements that can be made to the skills system to overcome these challenges?

In a recent study [7]  we invited 34 researchers and practitioners from across the UK’s energy systems to discuss the current state of the skills gap with regards to the localised renewables-based energy systems in the UK. The participants talked about various examples of the current skills shortages, their causes and ways to observe and measure them. The results of the said study are presented in Table 1 below. 

Table 1: Skills Shortages: Examples, Contributing Factors & Metrics (source [7])

 

Question 2 above already discusses what some key stakeholders can and should do to address the factors (as noted in Figure 1) underpinng skills shortages. There is no need to repeat all that has been note in response to Question 2, but only to highlight that the factors listed in Table 1 directly link up with the broader categories of factors noted in Figure 1. Thus, many of the factors noted in this table can also be addressed through tools discussed in Question 2.

Additionally, having carried out a mapping of stakeholders within the local energy systems [9], we identified the below 35 (non exhaustive) categories, all of which must be consulted when working towards a viable zero-carbon energy system provision. Thus, a solution that takes a whole systems perspective is unavoidable!

List of Stakeholder Categories to be considered in transition to clean energy systems (note, this is a non-exhaustive list):

  1. Building retrofitting
  2. Energy storage
  3. Transmission and Distribution
  4. Transport – EVs
  5. Transport – public
  6. Heating – heat pumps + geo-thermal
  7. Heating – solar thermal
  8. Heating – heat networks
  9. Heating – CHP
  10. Cooling – refrigeration
  11. Cooling – CCHP
  12. Biomass – waste to power
  13. Biomass – waste to heat
  14. Waste heat to power
  15. Wind energy
  16. Solar PV
  17. Marine energy
  18. Hydropower
  19. Hydrogen fuel and fuel cells
  20. Community energy
  21. Power plants
  22. Oil & gas
  23. Materials and components
  24. Financial services
  25. Reclamation, Reuse & Recycling (+ Waste management)
  26. Energy Efficiency
  27. Data Analytics & IoT
  28. Environmental Protection Groups
  29. Policy/Legal services
  30. Demand-side services
  31. Societal engagement & user behaviour
  32. Local government
  33. Government initiatives/departments
  34. Academia 
  35. Non-academic training

 

References

[1] Tim de Chant, data from Global Footprint Network. URL: https://www.footprintnetwork.org

[2] Airswift and Energy Jobline, “The Global Energy Talent Index Report 2019,” 2019.

[3] O. Striestska-Ilina, C. Hofmann, D. H. Mercedes, and J. Shinyoung, “Skills for Green Jobs: A Global View: Synthesis Report Based on 21 Country Studies,” International Labour Organization, 2011. 

[4] A. France-Presse, “Extinction rebellion goes global in run-up to week of international civil disobedience,” The Guardian, 2018. [On- line]. Available: https://www.theguardian.com/world/2018/dec/30/paris-police-fire-tear-gas-yellow-vest-gilet-jaunes-protesters 

[5] Ofgem, “FIT quarterly breakdown,” 2018. [Online]. Available: https://www.ofgem.gov.uk/environmental-programmes/fit/contacts-guidance-and-resources/public-reports-and-data-fit/feed-tariffs-quarterly-statistics#thumbchart-c4831688853446394-n91793

[6] A. Moodie, “Google, apple, facebook towards 100% renewable energy target,” The Guardian, 2016. [Online]. Available: https://www.theguardian.com/sustainable- business/2016/dec/06/google-renewable-energy-target-solar-wind-power 

[7] Yael Zekaria, Ruzanna Chitchyan: Exploring Future Skills Shortage in the Transition to Localised and Low-Carbon Energy Systems. ICT4S 2019. URL: http://ceur-ws.org/Vol-2382/ICT4S2019_paper_34.pdf

[8] “Literature Review of Skill Shortage Assessment Models”, EnergyREV Project Report. Yael Zekaria, Ruzanna Chitchyan, Sept. 2019.

[9] “Report on Stakeholder Groups”, Yael Zekaria, Ruzanna Chitchyan, 9 July 2019

Interactive Socio-Technical Systems (or what’s next for Ubicomp)

What is Ubiquitous Computing? If we look at samples of Ubicomp programmes taught at the universities across the web today, we find courses that include elements of HCI, Hardware and Software Prototyping, Programming,  Networking, and Creativity modules. How would then a Future-Focused New Ubicomp Programme distinguish itself from current as well as other similar programs (say Mobile Computing or HCI)? What are the defining characteristics of the Ubicomp of the future? To this end, let’s try and elicit these characteristics “by extension” from a set of newly emerging early examples of ubiquitous systems.

Some such examples are:

  • Home automation systems which employ AI to learn the inhabitants’ preferences and behaviours and to adapt the home environment (e.g., temperature, lighting, ventilation, humidity) for the comfort of those who live there (e.g., Amazon Alexa [1]);
  • Face-recognition systems in airports for seamless authorisation of legitimate passengers for flight boarding;
  • Driverless cars (e. g., Wymo [2] and Uber [3]);
  • Home energy management systems that optimise local renewables-based energy use by storing the energy generated through roof-top PV panels in the local battery for use or sale at the times when the energy price is highest, and trading the excess energy or purchasing it from market to cover own generation shortage (such as Nest [4], Tado [5], Sonnen Batteries [6]).

The apparent common characteristics of these systems are that they:

  • Are integrated into the fabric of user’s environment. For instance, the passenger in the driverless car does not need to be aware about the GPS system that enables the car’s navigation through satellite positioning, or the car’s acceleration, transmission or control systems. Similarly, the householder does not need to switch the battery or the PV panels on or off, or to go to the energy market to purchase and sell energy for use, etc.).
  • Enable the user to meet his/her needs seamlessly, without context switching or breaking their task into manageable sub-tasks to complete. For instance, the management of energy is carried out via price prediction (using machine learning); energy consumption, generation, storage as well as monitoring and control of the generating and consuming appliances (such as water heater or food freezer) are carried out through optimisation algorithms, sensors and actuators. Yet, the household has no need for understanding how to install these sensors/actuators or write and use the algorithms to get the energy management done at her house.
  • Be embodied in hardware and software automation solutions (e.g., smart meters, PV panels, battery, control software, trading algorithms, and electronic energy trading platform for energy management).
  • Represented in the society through businesses operating new business models (e.g., Sonnen [6] provides free energy to its customers if they allow the company to use a percentage of their battery storage capacity for grid flexibility services; Octopus Energy [7] operates new types of services (such as water heating) for a daily subscription charge rather than monthly utilities bill).
  • Can be operated in the intended users’ environments only upon significant change of the prevailing regulatory and legal landscapes. For example, there must be a legal recognition of the driverless vehicle and regulations must be in place for responsibility assignment in cases of accidents involving driverless cars. For renewable energy trading between households, regulations allowing individuals to buy and sell renewable energy to/from each other are necessary (currently only registered energy supplies can sell in all countries of the developed world as the electricity gird is highly regulated), etc.

Given these observations, what should then the Future-Focused New Ubicomp Curriculum constitute, and how would it differentiate itself from other related topics?

Clearly, the vision of the ‘disappearing computing’ [8] set out at the onset of the Ubicomp era still holds. The computation is disappearing into the infrastructure of the cities (becoming part of buildings, road surfaces, communication networks, wardrobe accessories and so on) and environment at large. Yet, the complexity of this ‘disappearing’ seems to have been greatly under-appreciated. It goes well beyond a single system development. To exemplify, let’s see what successful operation of a driverless car requires (sketched out in Fig. 1 below):

Fig. 1: Driverless car ecosystem

Not only do we need to ensure that:

  1. the car systems themselves (e.g., transmission, acceleration and breaking, collusion detection and prevention, fuel monitoring and replenishing, etc.) are operational and well integrated, but the car also needs to be navigated. [Sample of subject knowledge here includes mechanical, electrical, and electronic engineering, and software engineering]
  2. the navigation requires integrated input from a set of satellite systems that triangulate the current and intended locations of the car (we shall not discuss what it takes to build such a satellite and launch it into the Earth’s orbit, but this clearly is on someone’s to do list before our car can drive) [Sample of subject knowledge: telecommunications, software engineering, if not discussing aerospace related matters];
  3. the traffic control system would instruct the car on when to start and stop at on a given route [Sample of subject knowledge: control and coordination systems];
  4. a route selection and monitoring system would observe the current state of the possible route and plot a feasible and quick route for the car, ensuring that it stays on land and keeps to the operational roads [Sample of subject knowledge: maths and multi-objective optimisation algorithms, software engineering] … and this is only to be able to drive.

Now, to also ‘disappear into the background’ of the everyday, it would additionally

  1. be liked well enough to be accepted by the intended users (i.e., well designed) [Sample of subject knowledge: ergonomics, product design and HCI, experimental and social psychology];
  2. to provide a feasible operational mode for a company/institution / individual to maintain it at some cost (i.e., a business model that pays, e.g., a fleet of cars for taxi business to Uber [3], or a personal service to individuals) [Sample of subject knowledge: business management, entrepreneurship, economics, as well as psychology, and sociology];
  3. be legally/ethically/culturally acceptable within the intended user community [Sample of broad subject knowledge: law and regulation, cultural anthropology, sociology] .

And this is only what I can think of right away, without any detailed case study review.

Can a single curriculum deliver teaching and training in all these skills? Clearly not! Neither do we try to do this today in practice when developing and deploying such Ubicomp solutions as driverless car. Instead, teams of specialists collaborate to draw the required skills and knowledge into the driverless car development and deployment project.

Then maybe we could agree that Future-Focused Ubicomp Curriculum does not limit itself to Hardware and Software Prototyping, Programming, Networking, and Creativity modules, but is taught as an programme where specialists in Software Engineering, Networking, Electrical Engineering, HCI, Human Anthropology, Psychology, Business, Law, and other disciplines work in teams to build large, complex, situated, usable systems that become integrated into the infrastructure of tomorrow.  In other words, the learning to build Ubicomp (or to be more precise, Interactive Socio-Technical Systems) is not accomplished through graduating from a specific degree, but through “graduating from” working on collaborative interdisciplinary projects with focus on interaction of human (both individual and societal) and technical aspects.  In other words, I suggest that such projects should form the “heart” of the curriculum on Ubicomp/ Interactive Socio-Technical Systems, while the specific curricula would continue to deliver HCI, Communications, Software Engineering, Law, Phycology and other similar modules, depending on the flavour of the courses provided.

Acknowledgements: With thanks for the great discussions with Dagstuhl Seminar 19232: Ubiquitous Computing Education: Why, What, and How (including Nicolai Marquardt, Jeremy Cooperstock, Simon Perrault, Albrecht Schmidt, Caitlin Mills, and all the others)

References:

[1] Alexa, URL  https://developer.amazon.com/alexa, last accessed June 5, 2019

[2] Waymo, URL https://waymo.com/, last accessed June 5, 2019

[3] Uber driverless car, URL , , last accessed June 5, 2019

[4] Nest, URL https://nest.com/thermostats/nest-learning-thermostat/overview/ , last accessed June 5, 2019

[5] Tado, URL https://www.tado.com/en/products/smart-thermostat-starter-kit, last accessed June 5, 2019

[6 ] sonnenCommunity, URL https://sonnen.de/sonnencommunity/, last accessed June 5, 2019

[7] Octopus Energy: https://octopus.energy/ifttt/ , last accessed June 5, 2019

[8] Weiser, Mark. Designing Calm Technology , 1995, URL https://people.csail.mit.edu/rudolph/Teaching/weiser.pdf , last accessed June 5, 2019

Digital Future of Renewable Energy

1. Background

Today over 94% of the energy market in the UK is dominated by the Major Power Producers (MPP) who generate electricity and feed it to households and businesses over the grid [1].

Historically, to cut down on the fuel transportation costs, the major generation plants had to be located close to the fuel sources, i.e., where coal and oil were mined. The generated electricity would then be transmitted through power lines and distribution stations down to the households and businesses who would use the electricity up.

This structure of the industry was based on several constraints:

  • Electricity generation locations are constrained by the location of fossil sources (as it is cheaper and easier to transmit the generated electricity than to move fuel around);
  • Electricity generation requires large investments into large plants (due to economies of scale of the generation technology);
  • Electricity end users are only interested in consumption, and do not want to know much else about electricity itself.

Yet, technological advances as well as the societal understanding of the implications of the fossil fuel use have dramatically changed the framework within which the energy system operates:

  • Renewable generation technologies (such as solar panels, wind turbines, small hydro turbines) are now widely available for individual household and small community use.
  • As (most) renewable generation resources (e.g., solar or wind) are available where consumers are, it is technologically possible and economically affordable to generate and consume electricity locally, without centralised generation and transmission;
  • End users are increasingly interested in the environmental and social impact of the generated electricity, not only in consumption.

All the above, combined with the governmental subsidies for renewables installations (e.g., feed-in-tariffs) have led to a recent growth of micro-generation in the UK (i.e., individuals or organisations with small-scale energy generation, such as domestic wind or solar PV units). Such micro-generators consume their own generated energy and sell any excess back to the grid. Such generation offers the potential for a distributed model of energy generation and consumption that is not reliant on MPPs.

Challenge: Though presently, there is a successful renewables-based ecosystem in the UK, it has been largely driven by governmental subsidies. However, these subsidies are now set to be withdrawn. As of March 2019 no new installations will be eligible to feed-in-tariffs. Will this result in fall of the renewables sector, as already experienced by solar PV sector in Spain [2] when their solar PV subsidies were removed? Or can UK micro-generators find another way of ensuring viability of renewable installations?

Opportunities:  Research at the University of Bristol suggests that a subsidy-free localised renewables-based energy sector is not only possible but is also the best solution to the energy security and affordability dilemma. Our proposed model for the new, modernised UK energy sector is based around localised, but globally interconnected peer-to-peer energy markets underpinned by digital technology. This is illustrated in Figure 1 below:

Figure 1: Peninsula peer-to-peer energy market (from [6])

2. Peer-to-Peer Energy Market Underpinned by Digital Platform

In a peer-to-peer energy market any two individuals/households can directly buy  from and sell to each other, without intermediating third parties. These households can be both prosumers (i.e., producing and consuming own renewables-based electricity, as well as selling the excess to others), or simply consumers (if they have no own generation). Yet, unlike most microgrids, this is not an islanded model – which would require complete internal balance of supply and demand –  but rather a “peninsula”. Where the locality experiences shortage or excess generation, the demand/supply imbalance is resolved through trade with the other localities or the grid at large. The key advantages here are in providing avenues for:

  • Additional income streams to households with microgeneration – where the feed in tariff is no longer pays for the extra generation, the peers who use the energy do. Moreover, the price of the locally generated/consumed energy is more competitive than that of the grid supply as it does not need to pay the same full transmission, distribution, and utilities services charges. (Though I must underline that, as each locality remains interconnected with the gird, the energy costs will still include grid connection and maintenance changes. This is because the intermittency of the renewables generation must be insured against, and grid provides such an insurance and balancing services.)
  • Increasing value proposition of microgeneration and energy storage – the microgenerators are not only getting return for their generation investment, but are also supporting local communities’ energy needs, contributing to the decarbonisation and energy security efforts.
  • Increased control over source of supply – consumers are now able to express their preferences on energy purchase: do they wish to buy solar or wind, from the closest geographically located producer or from the cheapest supplier; do producers wish to donate their excess generation to the local school or to their extended family members, or to sell it to the highest bidder? All these options become viable when peers directly buy and sell from each other.

Such an energy system, however, cannot exist without a reliable and trusted digital platform which will both remove the 3rd party intermediation, and advertise the sale and purchase orders between the trading parties, undertake the users’ preferences-based matching of these orders, ensure security of the transactions, transparency of the trades, and accountability of the transaction participants.

To operate in such market:

  1. the consumers and prosumers would join the platform and publish their preferences (e.g., sell to the highest bidder, or buy solar energy only, etc.);
  2. the participants will then use their smart meter data to periodically (e.g., for every 15 min or half an hour) publish their sale and purchase orders on a digital platform;
  3. for each trading period (e.g., 15 min.) the platform will match best fitting sale and purchase orders, and settle transaction accounts.

Note, (as illustrated in Fig 2) while in the current intermediated market the utilities act as  the contracting parties between the prosumers, consumers and the energy market (see Fig. 2.a), in this peer-to-peer market each prosumer/consumer is the immediate contracting party itself (see Fig. 2.b).

Figure 2: Energy Market Dis-intermediation (from [6])

To realise these demanding requirements, we advocate use of  distributed ledger  technology for the energy trading platform [3, 4, 7]. Distributed ledgers (which incorporate blockchain and block-free technologies) are decentralised, distributed databases in which all transactions are immutably recorded. In other words, these are databases which are not controlled by any single company or individual, but are run and maintained by their participating membership. Data in these ledgers is redundantly stored in many locations, and cryptographically secured. As a result, once recorded, the data in the ledger cannot be changed and falsified [1].

The details on how to engineer this platform in such a way that it engenders trust and participation is a topic of the HoSEM research project [ 5] and will be detailed in another blog post. For now, let’s assume that this platform is in successful operation. What are the implications of it on the UK energy market?

3. Implications on Energy Market

Move to a peer-to-peer energy trading over a distributed ledger will lead to several major changes in the UK’s energy system, to name a few:

  1. First and foremost, it changes the structure of the energy system itself – from centralised fossil-based generation to decentralised, distributed, local renewablesbased generation and consumption set up;
  2. The digital technology-based market disintermediation (see section 2) deprecates the role of a trusted 3rd party (utilities in this case), reducing both the cost of transactions (i.e., energy) to the end users and allowing for the best possible preferences match to each participant. Now the suppliers are switched every trading period (e.g., every 15 min.), without any effort or cost to the market participants.
  3. This structure also radically changes the role of the energy user – from the passive consumer to an active prosumer. The end user now matters, as every unit of produced and consumed energy is different. It is different because it is produced in the users’ local area, or is originated from solar/wined/gas sources, or is bought from a friend… Then the price of each energy unit is also different and that difference is decided on basis of the participants’ preferences.

Clearly, many issues remain to be resolved before this shift to a digitally enabled peer to peer market becomes a reality. These include issues of regulation and licensing (presently households are not allowed to act as suppliers in the UK), grid safety (e.g., current frequency assurance), geographical and population density (e.g., rural areas have more renewable per-person than cities), fairness and pricing (more affluent individuals can afford more generation installations), to name a few. Yet, it is encouraging to see that technologically and economically this future can be here already today.

Footnote:

[1] Theoretically it is possible, but practically it is improbable, as record falsification is designed to be prohibitively costly [3].

References:

[1] Dep. of Energy and Climate Change Updated energy and emissions projections 2015 Tech. Rep., URL: https://www.gov.uk/government/publications/updated-energy-and-emissions-projections-2015

[2] The rise and fall of solar energy in Spain, URL: http://www.abacoadvisers.com/spain-explained/life-in-spain/news/rise-and-fall-solar-energy-in-spain

[3] R. Chitchyan, J. Murkin, Review of Blockchain Technology and its Expectations: Case of the Energy Sector, URL: https://arxiv.org/abs/1803.03567

[4] J. Murkin, R. Chitchyan, D. Ferguson, Goal-Based Automation of Peer-to-Peer Electricity Trading, URL: https://link.springer.com/chapter/10.1007/978-3-319-65687-8_13

[5] Household-Supplier Energy Market, URL: https://gtr.ukri.org/projects?ref=EP%2FP031838%2F1

[6] Used from J. Murkin, R. Chitchyan, D. Ferguson, Towards peer-to-peer electricity trading in the UK, Presented at All Energy 2018, URL: https://reedexpo.app.box.com/s/plwhcfaqp6pnhxc8mcjznh7jtkevg9h1/file/292636529562

[7] J.Murkin, Automation of peer-to-peer electricity trading, blog post at https://www.edfenergy.com/about/energy-innovation/innovation-blog/research-development-peer-to-peer-trading