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Services the next frontier in Asian energy revolution

'Smarter' delivery and consumption systems will help the region utilize energy

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Solar panels and a wind turbine at a power station run by State Grid Corporation of China in Zhangjiakou, Hebei province.   © Reuters

Modern life is characterized by a constant quest for energy. Every day, we refill our gas tanks, charge our phones or replace the batteries in our devices. This need for energy can provoke anxiety when we cannot find power plugs to charge our laptops in classrooms, conference rooms or restaurants. We sometimes worry whether we have switched off the stove or air conditioner before leaving home. Then there are the bigger issues, such as energy costs and the environmental impact caused by energy production and consumption. We consume more energy all the time, but the experience of using it is hardly satisfactory.

New energy technologies are removing some of these concerns. But progress in the energy sector has mainly focused on quantity over quality in terms of energy supplies. For instance, we consume a much higher amount of energy per capita than our parents' generation. This reflects the availability of more energy sources resulting from better mining technologies for offshore and deep sea drilling and the tapping of unconventional oil and gas supplies, as well as continuous and significant investments in modern energy supply chains and related infrastructure.

At the same time, thanks to progress in renewable energy, we now have much greener and cleaner electricity. Higher storage capacity and longer battery life allow us to do more with our electronic devices. As a result of improved energy efficiency and conservation technologies, we now have more fuel-saving furnaces, engines, air conditioners and other machinery.

Asia's next energy revolution must focus on the "quality" of energy: how green or clean it is, how safe it is, and how efficient the supply and consumption is. These developments will become reality as relevant technologies eventually popularize the concept of the "digitization of energy."

Information and communication technology and new technologies such as robotics, the internet of things, big data and artificial intelligence are penetrating every industry and digitizing business procedures, products and services. The most recent examples come from China, where smartphone apps have conquered most aspects of life and business. Everything that can be found at department stores, and more, can be purchased online and delivered the same day. Services ranging from movies and haircuts to medical and government appointments can be booked by these apps. Electronic money is increasingly paying for most transactions. Urban young people can survive without carrying a wallet but just a smartphone. As such, "energy as services" could become the next big thing to be digitized.

To achieve this goal, we need to transform smart grids into an "internet of energy," employing internet of things technology and big data in energy systems. Smart grids initially consisted of technologies for power grids to provide more stable electricity supplies. When applied to generation grid systems, they have helped ensure the optimal integration of new renewable energy sources such as solar and wind power to deliver greener and cleaner energy. When they are used in distribution grid systems, they can promote real-time demand responses and demand-side energy management for energy efficiency and conservation. This generates savings in peak generation capacity and can help reduce total energy costs.

The internet of energy is the next stage in redefining energy products as energy services. For the first time in history, technologies will deliver energy services at the exact time and place they are needed. For example, electric vehicles will be able to inform drivers of the estimated amount of battery charge needed for a round trip. At the same time, the internet of energy will try to identify a renewable energy source to meet this need based on estimated time of arrival, distance to the nearest charging post and possible grid costs. In a competitive energy market, an attractive and optimal price will be calculated by the system to encourage drivers to recharge their vehicles when renewable energy is available.

Ideally, fully digitized energy systems will allow artificial intelligence systems in vehicles to do all this automatically. As such, large battery packs in electric cars will no longer be needed, reducing the barriers to entry. Common use of electric vehicles will also provide opportunities for the internet of energy to use them for flexible storage of intermittent renewable energy.

Or imagine phone-charging on the go, with wireless charging hotspots distributed in public areas. In this case, the system should be able to provide recommendations regarding recharge times, charging locations and payment plans. Customers could choose and then connect their phones to wireless charging, just as they connect to Wi-Fi today. No more carrying heavy power banks. Your phone will recharge itself while you wait for the bus or drink a coffee at your favorite cafe. Then on your way to your office or home, a phone connected to the internet of energy will inform appliances to pre-warm or pre-cool the space, using just appropriate amount of energy to make your feel comfortable upon your arrival.

Businesses will benefit as well. By collecting and analyzing real-time energy consumption data, companies will be better able to understand and predict their own energy consumption patterns, making it possible for them to choose the best available suppliers and pricing schemes. Distributed power generation and energy storage will be better integrated into a community energy management system enabling businesses to act as active "prosumers" to minimize energy bills. In a mature market with developed emission trading or clean energy certificate trading, the economic implications of the internet of energy will be even greater.

Such developments require not only new types of infrastructure embedded with the new technologies, but also innovative business models in energy services. On the policy side, there needs to be sound planning that considers the digitization of energy systems, the development of competitive and integrated energy service markets, and the integration of digitized energy systems with business and social activities. Another crucial point is that regulations, taxation and legislation on energy services should be updated to encourage innovative business models.

These developments should not favor only developed economies. Although many developing economies are still struggling to provide basic energy supplies, they could exploit these trends to leapfrog into the latest energy technology and infrastructure, since the technologies used to digitize energy systems are getting more reliable and affordable thanks to standardization and commoditization. Their participation would not only promote energy efficiency, energy conservation and energy security, but also create new business opportunities in the energy sector and enhance the competitiveness of energy-intensive industries in developing countries.

The availability of better energy technologies and infrastructure means higher quality energy services that support the development of more advanced economic activities in manufacturing and services. High quality energy services, for instance, could include uninterrupted energy supplies, accurate temperature control, and precise service periods for machinery operations. The impact would be felt in food supply chains, petroleum and chemical processes, medical treatments, data and computing centers, and logistics networks.

Intelligent and responsive energy networks would transform economic and social activities. However, the reform and liberalization of energy markets is needed to reach the full potential of these technologies and achieve the concept of energy as services.

Yanfei Li is an energy economist at the Economic Research Institute for ASEAN and East Asia in Jakarta. The views expressed here are his own and do not necessarily reflect ERIA's position.

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