RENEWABLE ENERGY
The momentum for decentralized energy supply
is gaining pace, and corporate businesses are part of the process. But it is interested individuals who are the real drivers of this change. Those in local communities with the desire to reclaim sovereignty over their energy supply convince their peers that it is the only way to go. They are the ones that will make Germany’s vision a reality. As opposed to the paradigm of liberalization, where energy became a commodity most often defined by its price, decentralized energy is a topic that reveals an emotional dimension for many people – and enough to act on. Consumers see it as a way to be real agents of change, a way – in short – for them to seize control of an important part of their lives and to contribute to a more sustainable path for economic prosperity. Motivated individuals encourage entire villages and towns to move away from the simple anonymity of receiving their energy from an unknown origin, to finance local initiatives, and to rely on a new, renewable supply.
As Germany shows, liberalized electricity markets, even in their early stages, offer ample opportunities for entrepreneurs Germany’s 800 municipal utilities discover their
unique selling proposition in the provision of locally produced, environmentally friendly energy, and convince residents that “think global, act local” cannot only be applied to food and the preservation of the natural habitat, but also to energy supply. Innovative entrepreneurs provide the technology
and business models needed for such a seismic shift. They demonstrate that, if intelligent market strategies are applied, some of the technological solutions for decentralisation are already economically viable on a stand-alone basis. Residential combined heat and power plants – so-called micro CHP units – are the best example of the kind of technologies under consideration. Until recently, experts doubted the success of micro CHPs without substantial subsidies. Yet, the biggest private German renewables retailer
LichtBlick has successfully developed an alternative strategy that ensures profitability, without relying on hand-outs that hit taxpayers. Their idea, broadly speaking, is to create a virtual
power plant out of a cluster of micro CHP units. LichtBlick calls that concept “swarm electricity“, and use the sale of peak electricity prices on the wholesale market to finance the cost of the units. This model has
already attracted attention (as well as a number of imitators) among traditional energy companies and even from diversifiers in other industries like Deutsche Telekom. LichtBlick has by now installed 420 micro CHP units and plans to reach a rollout of 100,000 units. This number, albeit optimistic given current sales figures, would exceed the annual global installations of micro CHP units four times over. But the energy revolution is not only about the
availability of renewable Megawatts, but also their counterpart in efficiency improvements, so-called ‘Negawatts’. If the EU wants to reach its energy policy goal of reducing energy consumption by 20% in 2020, major efforts have to be directed towards intelligent heating and cooling systems for buildings. A successful example of a German player developing
integrated solutions is a start-up called MeteoViva. Their founders’ idea is to optimize the energy consumption of buildings with data from the nearest weather station. Local weather forecasts are used in special software adapted individually to each building and the client’s energy requirements in order to benefit from sunny days or temperature changes up to three days in advance. Conventional energy control of buildings does not take these factors into account. MeteoViva has achieved substantial savings in buildings that were already energy-efficient and is currently involved in the design of the new headquarters of the European Central Bank in Frankfurt. As Germany shows, liberalized electricity markets,
even in their early stages, offer ample opportunities for entrepreneurs, beyond mere subsidy schemes, to develop innovative business strategies and creative new ideas. But there are many other issues that need to be addressed before we can say we have all the answers. We need to analyse how long-distance transmission grids that carry renewable energy over thousands of miles can best be complemented or even substituted by largely autonomous island systems that rely on central coordination only as a backup. And we need to work together to develop a regulatory framework that reconciles the high quality standards of the current system with a future supply composed of a multitude of dispersed players on the market. It’s a long road, but given the
right encouragement we have the tools and the will to become a benchmark for Europe in the on- going quest for responsible and sustainable energy production. •
Christoph Burger is a member of the faculty at ESMT European School of Management and Technology and managing director of ESMT Customized Solutions GmbH. His latest book The Decentralized Energy Revolution, written with Jens Weinmann, will be published in December 2012. It provides first-hand insights of how sustainability and economy can be
reconciled – and how agents of change successfully develop the blueprint of a decentralized energy future.
www.esmt.org
December 2012 77
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