Authored by Yogev Barak, Chief Marketing Officer at SolarEdge

Spurred by technological innovation and globalization, the world economy has undergone profound change over the past century. Entire industries have been reimagined and transformed -- however, in the energy sector, change has come at a much slower pace. Electricity generation largely looks the same today as it did 100 years ago, with large power stations at the center of our electricity network. While other industries, such as computer networking, have progressed towards a distributed structure that effectively connects people and resources, energy generation has yet to witness a similar evolution.

To be sure, the sources of energy powering these centralized stations have changed. Coal is beginning to lose its luster, having been dethroned by the rise of natural gas and nuclear energy. At long last, however, we are at the cusp of a seismic energy transition that promises to reshape the way we produce and consume energy. This shift heralds a more user-friendly, economical, and technologically sophisticated energy economy, with tremendous benefits for industry players, consumers, and the planet.

There are four factors contributing to this transition. First, due to declining prices, a growing number of solar-plus-battery systems are being connected to the grid, introducing new and distributed energy sources. Second, the proliferation of Internet of Things (IoT) devices is giving people significantly more control over how they use their energy. Third, Grid instability is a main focus due to a number of factors, including an aging power infrastructure that exposes vulnerabilities, the increasing frequency and strength of extreme weather (as exemplified most recently in the Texas power outages), and even the increase in photovoltaic solar energy installations and electric vehicle (EV) adoption. The introduction of electric vehicles has not only created strenuous demands on the energy grid, but also jump-started exciting opportunities that can also feed energy back into the grid and help stabilize it. Finally, traditional generators like coal plants are increasingly being retired and replaced by more cost-efficient and environmentally-friendly sources.

At the electric grid level, this means that centralized power production will soon become a thing of the past. What will replace it? In the new energy economy, solar energy will be generated from individual rooftops, stored in batteries in the house, and the energy will then be used in that same location as it is produced. Neighborhoods may be connected in mini-networks, and cloud-management solutions will balance energy production and usage. The days of sprawling electric lines transmitting electricity from central stations to remote communities will become a thing of the past. Just as the “think global, act local” credo has changed how we think about and consume food, a similar shift will occur in the energy industry.

In our homes, our energy usage will mirror the way we use other hi-tech devices – it will become smart. There will be one energy manager, likely the solar energy inverter, that manages all the home’s energy needs. The manager will produce solar energy, store it in a battery, and govern the use of that energy at optimal times. This will all be done through one user-friendly, convenient app. You want to take a shower at night? Your energy manager will know how hot the water should be based on your personalized needs, how long your shower will take based on your preferences, and how to use solar energy most effectively so that it won’t send your electric bill soaring. It won’t stop at showers: it applies to all your appliances, from your washing machine to the charging of your electric vehicle, which today can already be powered by your solar energy system.

credit: B&W Energy

Together, these create a shared energy economy in which consumers become active participants in the electricity market. No longer passive energy consumers, people will become energy producers and sellers. Not unlike the democratization of transportation and lodging by the ridesharing and home-sharing industries, the new energy economy will create a marketplace filled with new opportunities, empowering ordinary consumers who will be able to take charge of their energy consumption.

When this new energy network is combined with the power of artificial intelligence, big data, and predictive analytics, the possibilities for a smart energy grid will prove extraordinary. Equipped with AI and data analytics, the smart energy grid of the future will make insights-driven decisions for optimizing energy allocation. This will present a substantial boon to the market, generating unprecedented efficiency by enabling a better matching of supply and demand. While this more advanced technology is still being developed, smart home and grid technology is already being implemented today.

For an industry that has been slow to evolve, this change comes at a vital time, with the shifting energy demands of a growing global population combined with the immense power of IoT, AI, and big data to create a brave new energy economy. Its arrival comes not a moment too soon.