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Blockchain Technology Encourages New Models of Demand Response Participation

Sept. 11, 2018
Vehicle-to-grid systems to be leveraged as demand response resources

Grid instability and power outages caused by the peaks in energy demand are emphasizing the need for cost-efficient demand response (DR) programs all over the world. As a new model of energy distribution, DR programs will bolster energy efficiency and energy management initiatives in spite of the declining energy reserves. Frost & Sullivan's recent analysis, Global Demand Response Market, Forecast to 2024, notes advancements in enabling technologies such as data analytics, Internet of Things (IoT), and blockchain, as well as the rise in the number of electric vehicles (EVs), particularly in Europe, have proven themselves as powerful drivers of DR programs.

"Blockchain technology will provide an innovative and disruptive approach to automated DR programs, thereby creating a secure and decentralized smart energy grid management ecosystem," said Naren Pasupalati, research analyst for Energy & Environment at Frost & Sullivan. "Additionally, blockchain-based DR solutions will significantly improve real-time event validation, financial settlements and secure energy contracts. It currently enjoys enthusiastic adoption in regions such as Europe and North America, where the energy sector employs it to meet the growing demand for transactive energy applications."

Meanwhile, the popularity for EVs and their related charging requirements is expected to augment peak power demand globally. The charging stations for EVs will serve not just as fuelling points, but also as vehicle-to-grid (V2G) energy resources that can potentially feed back into the grid and support DR programs.

"As the EVs in operation increase, aggregators or DR services providers will have to plan and implement delayed charging. DR programs rolled out by utilities will leverage price signals to incentivize electric car loads to respond to dynamic hourly as well as time-of-use prices," noted Pasupalati. "Such DR measures will aid significant cost savings by encouraging consumers to reduce peak loads."

Energy storage and V2G are anticipated to become key components of an integrated energy management system by the end of 2030. Other key enablers of DR programs that can help utilities uncover new revenue opportunities include:

  • The North American hub, with approximately 60% of revenues coming in from the United States.
  • Data analytics, which is becoming a core offering in the European energy management and DR markets.
  • Customer engagement, wherein millennials, in particular, express interest in real-time energy tracking and billing analytics apps.
  • Partnerships between DR Software-as-a-Service (SaaS) providers and established utilities to take their products to the mass market.
  • Partnerships among fleet service providers using EVs, utilities, and curtailment service providers to increase the capacity of DR resources.
  • A merger & acquisition (M&A) strategy, wherein larger players seek out firms with unique product portfolios to penetrate developing countries offering potentially higher returns and mitigated risks.

Global Demand Response Market, Forecast to 2024 is part of Frost & Sullivan's global Grids Growth Partnership Service program.

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