How ‘smart integrated renewable energy systems’ can drive sustainable economic development in remote communities

Soheil Contributed Article
Solar-charged electric golf carts have given Tokelauans a whole new mobility system. Located in the South Pacific Ocean, Tokelau has been the first nation to reach 100% renewable energy.

Providing access to clean, reliable, and affordable energy is the key to promoting sustainable economic development. The rapidly falling costs and growing maturity of ‘green energy technologies’ have substantially reduced the dependence of remote communities on imported hydrocarbons. Yet, socio-economic barriers have slowed the development and roll-out, especially in low-income communities.

Smart integrated renewable energy systems could overcome some of the challenging barriers. These systems, which could logistically deliver sustainable energy services to all sections of communities, rely on three pillars: energy sector coupling, demand-side management, and peer-to-peer transactions of energy.

Schematic showing conceptual design of a typical smart integrated renewable energy system. IEA, CC BY-NC-ND
Opportunities driven by energy sector coupling

Energy sector coupling is the increasing interconnections between different energy carriers – electricity, heating/cooling, and synthetic fuels, such as hydrogen, ammonia, and ethanol – to exploit their synergy. This process helps initiate sustainability in different energy-use sectors, as well as improvement in efficiency and adequacy.

While there are still some techno-economic challenges regarding energy sector coupling, policy and regulatory requirements pose more serious challenges. Setting up a policy and regulatory framework within utility business operations is much less challenging for first-class energy systems then for independent sector services in metropolitan areas. Therefore, the value chain – from technology to markets – can be properly analyzed and appropriate decisions can be made regarding market designs and procedures of flexible provisions.

Demand-side flexibility programs

Through the deployment of “demand response,” financial viability can also be improved. This process refers to the schemes developed by utilities to balance out peaks and troughs of the electricity demand.

Different levels of service reliability can ultimately be tolerated by different strata of society. In addition, the incorporation of demand-side flexibility resources in long-term planning decisions lays groundwork to establish new design standards for off-grid renewable energy systems. The new design standards entail varied reliability margins to varying populations and can serve as a buffer against uncertain investments in specific economic conditions of communities.

The above process of habitual electricity consumption patterns can be transformed into 100%-renewable energy systems. This could pave the way to reap interactions between different energy carriers. Accordingly, prioritization weights can be personalized by end-user of different energy services subscribed to an integrated energy system.

Smart integrated renewable energy systems as a community resource

In addition to encouraging end-customers to be active in supporting grid services, advanced information and communications technologies provide an opportunity to establish peer-to-peer (local) energy marketplaces.

A study of local energy exchanges on the Latrobe Valley Microgrid at LO3 Energy in Victoria, Australia reported that the implementation of local energy markets has resulted in 6-12% savings on electricity bills, while increasing the revenue of prosumers by 18-37%. This difference of efficiency is between feed-in tariffs and retail rates, which generates financial benefits shared among both parties.

Overall, peer-to-peer energy trading is valuable within multi-energy systems. It allows for charitable prosumers to donate or sell subsidized energy to low-income customers. From the utility’s point of view, such local energy markets may be a useful risk-management tool, reducing the long-term financial risk of investing in renewable energy projects.

The “energy trilemma” – a term that sums up the difficulty in optimizing the trade-off between reliability, affordability, and sustainability of energy systems – has been aired for decades. However, the advent of smart integrated renewable energy systems in recent years seems to offer promising prospects on the way out of this trilemma.

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