Enabling the Decentralized Energy Revolution

Posted on by Bhanu Nuthakki

The energy landscape is undergoing a generational shift. We built the grid with predictable demand and supply from large power plants in mind. This status quo is quickly changing and in this post, I’ll dive into the software tools we’ll need to adapt to the evolving grid.

What’s Changing? Why?

After decades of relative stagnation, electricity demand growth is accelerating. EVs, electrification of HVAC and water heating, increased domestic manufacturing (including green steel and green hydrogen), and AI workloads are expected to drive the uptick in demand. While these are critical behavioral shifts on our path to decarbonization, they are straining the aging grid by introducing increased demand and shifting load profiles.

The supply side isn’t getting off easy either. Renewables continue to come online at a faster pace, but the bulk of the renewable capacity being added is intermittent and distributed. Markets with high intermittent resource penetration and inadequate grid infrastructure (looking at you, California) are increasing curtailment and interconnection queue continues to build up. While flexible loads (thermal batteries, hydrogen, AI training) and battery storage (both existing and new technologies) are helping alleviate some pain on the supply side, more solutions are needed.

So What?

Tldr, we have a much more dynamic world for electricity demand and supply moving forward, with significant added complexity for utilities to manage. Simply deploying more transmission infrastructure may not be an economically favorable option. We need to adopt new technological solutions on both the demand and supply side in addition to infrastructure upgrades to successfully and expeditiously navigate this shift. On the supply side, we need tools to make it easier to identify, develop, deploy, operate, and orchestrate DERs. On the demand side, we need tools to provide increased visibility into and orchestrate emerging demand sources.

We need to identify, build, deploy, and operate a massive amount of new infrastructure. This includes accelerating deployment of clean energy sources, EV chargers, HVAC upgrades, thermal batteries, and transmission. However, significant soft costs reduce adoption of these technologies. It will be critical to drive operating leverage using technology across the value chain for new infrastructure deployment.

Fortunately, we have made significant advances in the performance of computing, machine learning, computer vision, drones, sensors, and connectivity solutions. The surface area to apply these advances cost-effectively to lagging technology adopters like utilities and infrastructure developers is massive. Let’s break down the types of solutions we can deploy at different stages in the value chain.

Identifying Viable Sites & Projects

Software can help reduce field work and streamline workflows when it comes to identifying viable projects. We need tools that can sift through energy usage patterns, land parcel information, solar and wind potential, and the patchwork of policies and permitting at various governmental levels. Solutions include:

Making the Money Work

Financing clean energy is its own beast. We need software that can translate the technical jargon of energy into the language of investors, unlocking the capital needed to make projects a reality.

Getting Things Constructed

Construction has famously seen declining productivity, but digital tools can play their part in enabling infrastructure deployment.

Optimizing Grid Investments

Utilities will need tools to manage and upgrade an increasingly complex grid, and a lot of advances in ML and AI are well suited to address the challenge.

There’s a whole host of companies improving manufacturing processes, reliability, and broader industrial automation that I have not covered that can have a material impact on our ability to deploy infrastructure as well.

The Bottom Line

The shift to distributed energy won’t be a walk in the park. But with the right enabling tools, policy support on interconnection and energy markets, we have a shot at building a smarter, cleaner, and more affordable energy future. And that’s the kind of innovation challenge worth sinking our teeth into.

P.S. as with other content I’ve written about, there is a U.S. centric skew; however, a lot of the noted themes apply in other geographies as well but with additional complexity and intricacies that need to be taken into account.