Decentralisation key to empowering energy consumers

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Digitisation and distributed energy resources are helping to facilitate a new trend of empowered consumers. Provided governments and regulators allow for it, consumers can play a key role in the grand energy transition, according to a new report by the World Energy Council.

This happening at a time when we are seeing a shift in final energy consumption with demand for electricity doubling globally by 2060.

The electricity sector is undergoing change at an unprecedented pace with the growth in distributed generation enhancing trends in decentralisation and decarbonisation, opening new opportunities and challenges for countries to balance the energy trilemma.

The World Energy Trilemma 2017: ‘Changing dynamics - Using distributed energy resources to meet the Trilemma challenge’, published by the World Energy Council, in partnership with global consultancy Oliver Wyman, a subsidiary of Marsh & McLennan Companies, has identified three key focus areas for policymakers and industry leaders to consider building a resilient energy system of tomorrow.

Philip Lowe, Chair of the World Energy Trilemma study group, said: “Policy makers need to adapt regulatory frameworks to the new opportunities opened up by decentralisation and to take account of the widening options for energy supply and use. While many challenges remain, it is difficult not to be optimistic about the potential for change that has been opened by decarbonisation, decentralisation and digitalisation in an overall context of electrification of final demand as outlined in the latest energy scenarios published by the Council.

“Decentralisation can empower local communities, firms and local communities, who produce energy through wind and solar installations of their own. The recommendations of this report attempt to present policymakers with clear choices and potential solutions to the Energy Trilemma which are in the interests of society as a whole.”

The report highlights key findings emerging from interviews with energy leaders:

Distributed energy resources are becoming increasingly important to the energy system
Changes in electricity supply structure is expected to shift from a centralised to a hybrid model between 2017 – 2025
More than 50% of energy leaders surveyed for the report expect a rapid increase in the share of installed distributed generation capacity in their country to 15% or higher by 2025
Innovative market entrants such as energy service aggregators, rural entrepreneurs and consumers are driving forces behind the increase in distributed energy resource
Energy storage is becoming a key element of the grid of tomorrow

Thomas Fritz, Partner at Oliver Wyman, said:

“In an increasingly crowded marketplace, the providers most likely to capture a competitive position will be those who can offer customers’ choice in accessing or using energy, or by offering ways to simplify customers’ lives, for example through digital home services.”

This report will lay the foundations for discussions at COP23 in Bonn, where it will be launched on 15 November in addition to the 2017 Energy Trilemma Index, which rates countries’ energy performance globally, providing a framework to monitor progress.

Speaking ahead of the COP23 meeting, Christoph Frei, Secretary General of the World Energy Council, said:

“The energy sector is at a transition point and faces a number of growing challenges. While the transmission and system operator function will become even more critical, it’s role and asset base will have to adapt. Governments and regulators need to plan for the transition and anticipate its likely impacts on the energy system and market actors. Countries that do not take the necessary steps to integrate distributed energy resources will face potential infrastructure redundancies and investment challenges that will adversely affect their Energy Trilemma performance.”

Use the interactive Trilemma Index Tool and its Pathway Calculator (which will be available after the embargo date) to find out more about countries’ trilemma performance and what it takes to build a sustainable energy system: https://trilemma.worldenergy.org/