Decentralised Energy - a Global Game Changer

313 Pages·2020·11.295 MB·English

by  Christoph Burger, Antony Froggatt, Catherine Mitchell, Jens Weinmann

The energy system is undergoing a fundamental transformation – from D
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decentralised generation facilities such as rooftop solar panels or wind t
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This book looks at the energy transformation from two complementa-
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governance is a decisive factor for the success of the transformation Christoph Burger t Antony Froggatt
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because it can act as an accelerator, or it can delay the process. On the
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business models for a decentralised energy world. G
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Based on best practices, country studies and interviews with CEOs and
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founders of startups from all over the world, the “Global Game Changer” a
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fully implement the transformation, and six core competencies for cor-
porate decision-makers to thrive in the new marketplace.
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“Everyone knows that renewable energy’s time has come. An increasingly important u
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issue relates to decentralised resources, and how to use them most efficiently. Gov- d e
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for anyone interested in the acceleration of GHG reduction and in coordination factors nn tt
for a cost effective energy policy.”— Dan Kammen, Professor and Chair, Energy and (e , M
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Resources Group, UC Berkeley, Former Science Envoy, US Department of State .) h
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Decentralised Energy –
a Global Game Changer
Christoph Burger
Antony Froggatt
Catherine Mitchell
Jens Weinmann
]u[
ubiquity press
London
Published by
Ubiquity Press Ltd.
Unit 322-323
Whitechapel Technology Centre
75 Whitechapel Road
London E1 1DU
www.ubiquitypress.com
Text © the authors 2020
First published 2020
Cover image based on a photography by Andreas Noback, depicting solar
panels on the roof of K76, a multi-family home located in Darmstadt,
Germany, which received the award “Preis für Innovation und Gemeinsinn
im Wohnungsbau” (award for innovation and community spirit in housing
construction) of the state of Hessen in 2018. The image was modified using
the open-source vector graphic software Inkscape. The font is the open-source
font Kenyan Coffee, designed by Raymond Larabie.
Print and digital versions typeset by Siliconchips Services Ltd.
ISBN (Hardback): 978-1-911529-68-2
ISBN (PDF): 978-1-911529-69-9
ISBN (EPUB): 978-1-911529-70-5
ISBN (Kindle): 978-1-911529-71-2
DOI: https://doi.org/10.5334/bcf
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Suggested citation:
Burger, C., Froggatt, A., Mitchell, C. and Weinmann, J. 2020. Decentralised
Energy — a Global Game Changer. London: Ubiquity Press. DOI: https://doi.
org/10.5334/bcf. License: CC-BY 4.0
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Praise for Decentralised Energy
“In the last few years, renewable energy has broken through the cost barrier. But, if
it is to become widely adopted, it has to break through an array of country-specific
institutional, technical and political barriers. The strength of Decentralised
Energy is that it takes seriously each country’s context through a range of coun-
try case studies. And yet, it pulls the messages together to give us the common
challenges that advocates and promoters of renewable energy and decentralised
resources must address to take forward and complete a clean energy transition.”
Navroz K. Dubash, Professor, Centre for Policy Research, India
“Everyone knows that renewable energy’s time has come. An increasingly impor-
tant issue relates to decentralised resources, and how to use them most efficiently.
Governance frameworks and developing new business models are important for
both. This book uniquely takes a global view of these intertwined issues, and is a
fascinating read for anyone interested in the acceleration of GHG reduction and
in coordination factors for a cost effective energy policy.”
Dan Kammen, Professor and Chair, Energy and Resources Group, UC Berkeley,
Former Science Envoy, US Department of State
“Accelerating the energy transformation is in all likelihood this generation’s most
significant challenge to solve with little room for error. The authors write: “The last
decade has witnessed the beginning of what is likely to be a fundamental, irrevers-
ible transformation of the power and wider energy sectors, […] [which] entails both
regulatory incentives as well as entrepreneurial initiatives.” This book delivers on the
high ambition to compare different models and derive critical success factors: it pro-
vides a review of different country archetypes with differing needs on their transition
paths; on that basis the authors formulate requirements for decisive, transformative
top-down governance; they study start-up success stories and categorise underlying
business models; and they place these in a three-phased transformation model, con-
cluding on relevant core competencies and success factors. In its essence the book sub-
stantiates the “D3” – decarbonisation, digitalisation, decentralisation – as key drivers
for the energy transition through a rich range of top-down and bottom up examples. A
relevant, timely, and compelling transition synthesis and precious resource for energy
transformation practitioners!”
Christoph Frei, Partner, Emerald Technology Ventures (and former CEO &
Sec Gen of World Energy Council)

Contents
A note from the authors–editors xiii
Glossary xvii
1 Introduction – what are the drivers of decentralised
renewable energy generation? 1
1.1 Renewables becoming competitive 3
1.2 The global spread of decentralised energy generation 8
1.3 Decentralised storage gaining importance 10
1.4 Decoupling growth and energy intensity via renewables and
energy efficiency 11
1.5 Value creation with decentralised renewable energy generation 12
1.6 Digitalisation as enabler of the smart grid and new business models 14
1.7 References 15
2 Regulatory and policy incentives – how to establish
governance for decentralised energy systems? 21
2.1 The role of regulation and governance 21
2.1.1 Regulation as accelerator or decelerator of the energy
transformation 21
2.1.2 An assessment of governance practices in key
transformation countries 22
2.1.3 References 24
2.2 Australia: from central electricity to solar/storage systems 25
2.2.1 Introduction 25
2.2.2 The Australian electricity framework 25
2.2.3 Australia’s renewable energy resources 29
2.2.4 DER in Australia 29
2.2.5 Disruption within the electricity industry 35
2.2.6 The future of the Australian electricity system 37
2.2.7 Conclusion 41
2.2.8 References 41
vi Decentralised Energy — a Global Game Changer
2.3 China: bureaucratic and market hurdles to move from a central
towards a decentral energy system 47
2.3.1 Introduction 47
2.3.2 Growth in renewable energy 48
2.3.3 Phases of the development of distributed energy
development 50
2.3.4 Lessons from the five-year plans 52
2.3.5 Developing distributed solar energy systems in China:
challenges and prospects 53
2.3.6 Creating system flexibility 57
2.3.7 Conclusion and prospects 58
2.3.8 References 59
2.4 Denmark: centralised versus decentralised renewable
energy systems 63
2.4.1 Introduction 63
2.4.2 Phase 1: 1975 to 2000 – the development of efficient
single renewable energy technologies 65
2.4.3 Phase 2: the need for an integration infrastructure 68
2.4.4 Decentralised smart energy systems versus centralised
power transmission line scenarios 72
2.4.5 Conclusion and policy recommendations 76
2.4.6 References 77
2.5 Germany: from feed-in-tariffs to auctions and the question of
diverse actors 82
2.5.1 Summary 82
2.5.2 Decentralised citizen energy in Germany 82
2.5.3 Drivers for – and against – decentralised renewable
energy in Germany 86
2.5.4 Change of funding regime by amendment of the EEG
in 2014 88
2.5.5 Decentralised citizen energy and actor diversity at risk? 89
2.5.6 Conclusions 92
2.5.7 References 94
2.6 India: dirty versus clean decentralised energy generation 101
2.6.1 Introduction 101
2.6.2 A brief history of systemic changes 102
2.6.3 Potential for decentralised energy 105
Contents vii
2.6.4 The drivers of decentralised energy 106
2.6.5 Outcomes 109
2.6.6 References 111
2.7 Italy: network costs versus decentralised system 113
2.7.1 Introduction 113
2.7.2 The impact of European policies on the
decentralisation of the Italian electricity market 114
2.7.3 The status of decentralisation in the Italian electricity
market 118
2.7.4 The Italian regulation for distributed energy resources 121
2.7.5 Conclusions 126
2.7.6 References 127
2.8 California versus New York: policy implementation via
Investor-Owned Utilities or Distribution System Provider? 133
2.8.1 Introduction 133
2.8.2 California 136
2.8.3 New York state 140
2.8.4 Comparison of California and New York energy policies 148
2.8.5 References 152
2.9 Conclusions and reflections from the country reports 157
2.9.1 The eight requirements of transformative governance 158
2.9.2 The way forward: transformation and acceleration 174
2.9.3 References 174
3 Business models beyond subsidies – which core competencies
are needed? 177
3.1 Energiewende 1.0 – 3.0: matching phases of energy transition
and business models 177
3.2 Start-ups pave the way towards a new energy system 180
3.2.1 References 181
3.3 Envio Systems: redefining building efficiency – Envio Systems
targets an untapped legacy market 182
3.3.1 Technology and business model 182
3.3.2 History and organisation 188
3.3.3 Scaling and cooperations 188
3.3.4 Market outlook and competitive environment 190
viii Decentralised Energy — a Global Game Changer
3.3.5 Interviewee biography 191
3.3.6 References 191
3.4 Timo Leukefeld: a business model for an energy-autonomous
house without subsidies 192
3.4.1 Technology 192
3.4.2 Business model 195
3.4.3 Scaling 198
3.4.4 Market outlook and competitive environment 199
3.4.5 Interviewee biography 200
3.4.6 References 200
3.5 Entelios: Demand Response – a decentralised approach to
complement intermittent renewable energies 201
3.5.1 Technology and business model 201
3.5.2 Scaling and cooperations 204
3.5.3 Market outlook and competitive environment 208
3.5.4 Interviewee biography 210
3.5.5 References 211
3.6 SOLshare: decentralised energy supply – complementary or
antagonistic to rural electrification 212
3.6.1 Technology and business model 212
3.6.2 History and organisation 218
3.6.3 Scaling 218
3.6.4 International expansion 220
3.6.5 Market outlook and competitive environment 220
3.6.6 Interviewee biography 221
3.6.7 References 221
3.7 Mobisol: developing a pioneering business model for off-grid
energy in East Africa by starting with the users 222
3.7.1 Context and origin of the idea 222
3.7.2 Phase 1 (pilot phase): what do we provide then, really? 223
3.7.3 Phase 2 (becoming operational): how do we sell? 225
3.7.4 Phase 3 (commercial roll-out): how do we finance our
growth? 227
3.7.5 Phase 4: how to become a market leader? 228
3.7.6 Summary – finding new ways to serve the underserved 229
3.7.7 Author biography 230
Contents ix
3.8 Solarkiosk: social enterprise and decentralised energy 231
3.8.1 Technology and business model 231
3.8.2 History and organisation 233
3.8.3 Scaling and cooperations 237
3.8.4 Market outlook and competitive environment 240
3.8.5 Interviewee biography 240
3.8.6 References 240
3.9 Power Ledger: peer-to-peer trading with Blockchain as
decentralised transaction technology 241
3.9.1 Technology and business model 241
3.9.2 History and organisation 243
3.9.3 Scaling and cooperations 243
3.9.4 Market outlook and competitive environment 244
3.9.5 Interviewee biography 245
3.9.6 References 245
3.10 Core competencies in the energy transition – insights for
corporate and political decision makers 246
3.10.1 Three new business models for dealing with the energy
transformation 246
3.10.2 Six core competencies for corporate decision makers 255
3.10.3 A world of entrepreneurial activity 258
3.10.4 References 258
4 The three phases of the energy transformation – combining
governance and business model innovation 261
4.1 Three phases of the transformation 261
4.2 Phase I (Energiewende 1.0): grid-based and connected energy
system with decentralised renewables as a niche (<10 per cent) 263
4.2.1 Governance of Phase I: centralised system regulation
promoting renewables, local industry, and lead markets 263
4.2.2 Business models and core competencies of Phase I 266
4.3 Phase II (Energiewende 2.0): decentralised renewables growing
in importance with partially autonomous solutions 266
4.3.1 Governance of Phase II: setting the ground for
Energiewende 3.0 with performance-based regulation 266
4.3.2 Business models and core competencies of Phase II 268