A big part of the future energy system will be distributed energy networks, a network of energy generation technologies that are spread across an area or region, rather than relying on the big old school, centralised, power plants such as coal plants or nuclear power stations. These technologies often generate renewable energy through solar or wind, rather than use fossil fuels such as coal and gas, or also nuclear power to drive big turbines. This new approach is called distributed energy generation or simply decentralised energy.

Whats in a distributed energy network?

It consists of a variety of small devices, which are individually connected to the national grid or [an alternative, local, off-grid] distribution system. These technologies are grouped in ‘microgrids’, where, for example, a small solar power array or small wind turbine will be located near to, and supported by, a battery energy storage unit. There is often a conventional diesel generator also included in this arrangement for back up in case something goes wrong, but these generators in reality are not often needed.

Another common arrangement for distributed energy resources is solar panels on rooftops, small wind turbines and/or community owned and operated small solar farms where the solar panels are ground mounted.

How does a distributed energy network operate?

Large conventional power stations generate electricity which is then delivered to customers over long distances by power lines or underground cables. These ‘centralised’ power stations are usually coal-fired, gas-fired or generate nuclear power.

In contrast, the alternative view of energy networks which are part of the current energy transition are smaller, decentralised, located in or near local communities, mostly generate renewable energy from the sun or wind and are typically more flexible. Given that they generate renewable energy, they don’t need to be ‘switched on’ or ‘powered down’, which often takes a long time, wastes energy and is expensive.

Also because they are often located close to the communities they serve, they do not need to transmit their generated power over long distances, something that often results in energy being lost in the network.

However as we all know, solar power and wind power can be ‘intermittent’. Solar power does not generate energy at night and may generate less on cloudy days when the sun isn’t shining. Wind turbines generate less energy when the wind blows at a lower speed and don’t generate energy when there is no wind blowing!. For these reasons, renewable energy systems are often supported by energy storage systems, typically based around lithium ion batteries.

Where these batteries are located close to a solar farm or wind farm, they are often termed hybrid power systems.

Alongside solar and wind, some distributed energy systems use small hydropower, biomass, biogas or geothermal technologies to generate power. DER systems can also sometimes consist solely of batteries connected directly to the grid. In this case, they are typically called distributed energy storage systems.

DER systems can be managed and operated in coordination with a smart grid. This arrangement uses an interface – software that gathers electricity from many different sources. This enables a greener and more secure electricity supply that is less likely to suffer from power cuts.

In the near future, the national grid will use such ‘smart software’ across the network to properly balance the grid and make it more resilient to power cuts. However, in the meantime, microgrids can be used to ease the strain on the network caused by more renewable energy being added, as microgrids, being more local and decentralised, can be isolated from the national grid and then operated autonomously. This helps the network to become more resilient.

The benefits of a distributed energy network

Big benefits of distributed energy networks and resources are

  • more flexible than centralised energy systems
  • cleaner and greener
  • can be cheaper
  • can be smarter
  • more resilient at the local level

As they improve and develop, the concept of a ‘prosumer’ – in which people produce and consume locally generated renewable energy – will become more widely visible and familiar, and indeed this is already happening.

Rooftop solar is the best example so far of how this is happening, but Vehicle to Grid (V2G) – in which EVs will act as energy storage devices while they are not being used – will also be a huge growth in the future  as renewable energy produced at times of over supply can be absorbed by the millions of new batteries acting as a massive distributed storage facility. This energy can then be sold back to the grid at times of high demand, enabled by some smart technologies and bringing more two way flow and flexibility into the energy system.

Companies operating in the energy transition

Energy has changed hugely across the industry. All incumbent companies have had to change their ways to some extent. Most boast about their green credentials whilst forgetting to publicise their BAU.

But there are many glimmers of green hope, and some companies are driving forward the energy transition.

Octopus Energy is the fourth largest energy supplier in the UK. It mainly generates its electricity from solar farms, wind power and anaerobic digestion, but in 2020 it partnered with Tesla to encourage domestic homes to become 100 percent renewable.

In November 2020, Octopus acquired Upside Energy, which in 2021 rebranded as Krakenflex. Octopus also runs an energy tech platform called Kraken, which uses advanced data and machine learning to automate the supply chain, greatly improving customer self-service and increasing efficiency.

Tesla meanwhile has expanded from purely being an EV company into home charging via its Wallbox, joining another well-known company in the EV charging space Volta Charging.

In the building heating space, heat pumps and hydrogen are helping buildings to become cleaner and more efficient, replacing natural gas. Danfoss, Hitachi and Johnson Controls are among the main companies providing heat pumps.

The hydrogen sector is still at an early stage of development in the UK at the moment, but one of the major companies is First Hydrogen, which is looking at four potential sites in the country for green hydrogen production, supported by the UK Government.

Energy purchasing and consumption

One of the main changes in the way the energy transition is affecting how energy is purchased and consumed is that the energy transition is increasingly being driven by consumers becoming ‘prosumers’.

Consumers are also modifying their energy demand in order to increase energy efficiency and reduce costs. The recent massive increase in energy prices has led more people than ever to monitor, track and reduce consumption. And this is against a trend as energy consumption in some European countries and the UK which has been falling for some time. Three of the main areas we can look into to reduce demand further are:

  • Demand reduction – Using energy efficiency and conservation measures, such as building insulation. This is the elephant in the room on the UK government’s energy strategy as huge gains are spread across the housing stock
  • Demand response – Switching energy usage to particular times when renewable energy is most available
  • Switching fuel – Moving away from fossil fuels to electricity and low carbon alternatives.