Automated Demand-Response solutions versus Legacy management systems
The topic of today is hot: the Demand-Response Management System is globally estimated in US$ 36 billions, with a CAGR 7% during 2020–2025, whilst the Automated Demand-Response solution grows at a CAGR of 26,5% over the same period.
In USA only, it was worth US$ 7 billions in 2015.
Its growth is due to relevant factors, such as the integration of Distributed Energy Resources (DER), rising adoption of smart meters (IoT) in the residential segment, commercial and industrial, integration of Electric Vehicles (EVs) with smart grids, and government regulations encouraging the adoption of Demand Response (DR).
The impulse has not always come always from top (Industry) to bottom (Consumers), rather than the consumer’s sensibilization effect and the Regulation (in the EU the Directive 944/2019) have strongly pushed to the energy digitalization process.
This means that it became important to start measuring consumption data, through the installation of smart-meters behind-the-meter (behind the smart-meter provided by the Distribution Service Operator), to gather data to make informed decisions.
Benefits of Demand-Response solution
Once a Consumer rolled out the energy digitalization in his Factory or building, he then looks for exploiting these information to create internal value added.
He can develop energy efficiency projects, so he can save money by avoiding consumption with more efficient devices or algorithms. Then, what?
This is a good starting point, but it comes to an end because it will not pass the walls of the building or factory.
Nevertheless, the best cost-effective solution to generate a continous added values is to deploy a Demand-Response solution to:
- generate new revenue streams from selling the energy flexibility in the Balance Market;
- optimize consumption;
- reduce the energy costs of production;
- altogether with the GHG emissions.
Undoubtly, there will be either economic and environmental benefits out of this solution.
What solution to choose?
The response is not unique, but any Consumer who needs to deploy a Demand-Response platform project has to take in consideration the mid-long terms benefits on his business-as-usual.
So, to invest in smart-meters and an evolved production control system has positive effects on his finance, as it was explained before.
Nevertheless, if the Demand-Response Management System is so huge, not all the solution are as affordable as effective.
We do not aim at posing one vendor is better than another, rather on highlight the difference between Legacy systems and Automated Demand-Response ones.
The first group, Legacy or Conventional, is actually accountable for 75% of overall expenditure, but this is often a misconception because of the sales for hardware such as smart meters, load control switches, and other devices installed at the utility and consumer’s end.
The real key success factor is the intelligence, even though, by 2025, the hardware segment is projected to account for a revenue share of around 65%.
The best-cost effective solution is that that dialogues with any installed system with open protocols, so that it focuses in the capacity to develop the information system to make the best decision making for Consumers.
Nowadays, the intelligence is much more relevant because it is often hardware agnostic, but it helps much more in taking strategic decisions. Conventional solutions are more likely a mix of hardware and software, but limit the benefits in integrating with other incumbent eco-systems.
The best-cost effective solution is that that dialogues with any installed system with open protocols, so that it focuses in the capacity to develop the information system to make the best decision making for Consumers.
What is the difference in between Legacy and Automated Demand-Response solutions?
The first key differences are in what method is used to make decisions and on what data.
Second, it is the autonomous decision making system, i.e. mathematical engine.
These two detemine the intrinsic risk for Market and Consumers.
The Legacy systems are characterized by:
- Interruption of electric supply, as often these came from Interruptive Service, now ceased in the mayority of local Markets;
- Relying on proprietary hardware systems, which are costly or its integration is expensive;
- Relying on consumption forecasts to make strategic decisions;
- Often basing the forecasts on a mix of historical data and actual consumption, but so they are affected by bias;
- for this reason, the risk for Market and Consumers, to exactly determine the actual consumption and the actions to be taken, is not zero.
On the other side, the Automated Demand-Response solutions are more likely the modern evolution of the latter.
- They use Artificial Intelligence algorithms to make decisions based on actual consumption;
- They rely on open protocol to communicate to smart-meter (i.e. Modbus) and via SCADA to production control systems, so that they close the loop with Consumer’s installation;
- then they are hardware agnostic.
What about the intelligence?
If you limit the benefits to the latest ones, there is no relevant different to choose Legacy or Modern, unless the competitive advance resides elsewhere.
the latest 2 benefits are possible because underneath there is a patented method to identify, map and model the production system jointly with continous data gathering
At BeChained there are key differences that determine the zero-risk of outcomes:
- It is based on an industrial secret (the platform) with Artificial Intelligence algorithms that automatically and in real-time make decision;
- The consumption control is through production program scheduling, so that it can be dynamically adjusted on the basis of actual consumption measuring on top of the inputs from the Market;
- The latest 2 benefits are possible because underneath there is a patented method to identify, map and model the production system jointly with continous data gathering;
- Finally, any energy transaction throughout the platform is secured and made transparent to Consumers and the Market via a blockchain based energy tokenization.
The latest advantage means that the solution is preparing (10 years in advance) the Market to a distributed ledger with application on top, to secure the value transaction in the whole value chain.
If the actual consumption is an unequivocal proof to determine the CO2 generated by a production system or a building, there will be any error in tracking the actual benefits of any sustainable innovation
The nodes reside at any Consumer’s site and the value chain is not configured with the Market Operator in the star center, rather is commonly shared among the peers, which determine the validity of transaction by consensus.
To estabilish a common method to calculate the the benefit, the blockchain application determines also the calculous of the CO2 credits in the value chain.
If the actual consumption is an unequivocal proof to determine the CO2 generated by a production system or a building, there will be any error in tracking the actual benefits of any sustainable innovation, before and after it is introduced in the value chain.
