Decentralized Energy
Decentralized Energy
View the film of this
Living Energy interview.
Jacob Østergaard:
From Smart Grids to
Smart Energy
The rise of decentralized energy is shaping the
future of ­energy markets worldwide. What does
that mean for ­technological innovation – and
for business? Danish Professor Jacob Østergaard
has answers for both questions.
Text: Marc Engelhardt Photos: Kennet Islandi Havgaard
8 Living Energy · No. 11 | November 2014
Living Energy · No. 11 | November 2014 9
Decentralized Energy
Decentralized Energy
Will decentralized energy even­
tually be able to ensure system
­stability on its own?
J. Østergaard: One example is the
50-hertz frequency in the grid that
reflects the immediate balance of
the system. Today, the large power
plants monitor the frequency and
­adjust their generation in accordance.
Smaller decentralized plants are able
to do that quite fast and flexibly today. My team and I are working on
technology that, instead of increasing
the power generated when the frequency runs high, would decrease
the demand by shutting it down locally. We have been investigating the
thermostatic demand, like cooling
and refrigeration processes. Shutting
a freezer down for three minutes
will not ­impact its energy service. So
ideally, the control of demand will
take over services that, for now, are
provided by the central plants. And
the business case for this is very good.
The initial investment in the technology we developed would typically
be recuperated within one-­and-a-half
to two years.
P
rof. Østergaard, is decentralized energy already transforming the energy ­system –
and if so, how?
Jacob Østergaard: It definitely is.
New stakeholders have already
moved in; take the owners of wind
turbines and photovoltaic units,
for instance. In Denmark, one third
of the ­capacity of traditional power
plants has been shut down, and we
expect more to follow in the upcoming years. This represents a trend we
see in many places around the world.
For the electricity system, that means
many changes: We have more and
more generation in the distribution
grid, which changes the operation
of the grid and the control of the
whole system.
So should conventional players
be afraid of these changes?
J. Østergaard: If I were the owner
of a conventional power plant, I’d
­definitely look at how the rise of
­decentralized energy will affect my
business. I think there remains an
important role for centralized generation though, as well as for decentralized conventional units. If we
want to maintain a stable grid with
high reliability, we need a source
of power when there is neither wind
nor sun. The large power plants play
a very important role in that context.
Also, they supply a lot of system services that are needed to maintain the
stability of the grid. But the properties of the plants have to change:
They must become more flexible and
be able to power up very fast, and
probably they will have less operating hours compared to today.
10 Living Energy · No. 11 | December 2014
There is a huge need for automation
solutions and communications-based
solutions to manage all the decentralized energy units.
We have talked a lot about the new
electricity age that is rising at the
moment – but does decentralized
energy only apply to electricity?
J. Østergaard: Absolutely not. We are
already discussing a transformation
from smart grids, which combine
communication and energy supply, to
smart energy, combining different
energy domains. That is a very important expansion. A lot of decentralized energy is of course connected to
the electricity grid, because wind turbines and photovoltaic cells produce
electricity. Smart grids help us to operate and balance the electricity system accordingly. But if we also integrate other energy domains and link
them closer together, as in hybrid
technologies such as power-to-gas or
power-to-heat, it will help us solve
many challenges we still face. District
heating, cooling systems, and the
gas systems provide the flexibility
­needed in the electricity system. u
Who are the new players in the
f­ uture you’re depicting?
J. Østergaard: I can cite myself as an
example. I own a 660-kilowatt wind
turbine. I have a service agreement
with a company for maintenance, but
I do the accounting myself. I’m part
of a group of more than 2,000 private
owners, and we sell an energy production equivalent to seven large
power plants on the market in competition with conventional providers.
“If we integrate other energy
domains, it will help us solve
many challenges.”
Jacob Østergaard
Which role will social networks
play in coordinating decentralized
energy or providing virtual market
places?
J. Østergaard: You could say that the
wind turbine association I’m part
of is a kind of social network – not so
much on the iPhones and iPads, not
yet, because most of the farmers and
other investors are too old-fashioned
for this. But when the new generation
moves in, many will use innovative IT
platforms generated by IT companies
and other new players as we speak.
All the data in one place: The control room at DTU provides all of Denmark’s energy
data in real time.
Living Energy · No. 11 | December 2014 11
Decentralized Energy
Decentralized Energy
Jacob Østergaard
“We are going to see more decentralized
energy in the future.”
Jacob Østergaard
Career:
•Studied Electrical Engineering at the Technical University of Denmark (DTU)
•Ten years’ work in industry
•2005: Return to his alma mater; founding head of the Center for Electric
Power and Energy at DTU, which collaborates closely with industry on
­engineering research. Students work in interdisciplinary mixed teams of IT
experts and classical engineers.
Memberships and Awards:
•Member of the EU’s SmartGrid councils and chairman of the PowerLabDK
coordination group
•Honored with the IBM Faculty Award and the AEG Foundation’s Electron
prize, among others
A film of this interview
can be viewed online.
siemens.com/living-energy/
ostergaard-interview-yt
The Living Energy app with additional features can be downloaded for
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12 Living Energy · No. 11 | December 2014
“We’ll see more ­solutions
that already ­create
a business case ­today.”
How would that actually work?
J. Østergaard: There is a lot of
­research into developing energy conversion technologies that can provide
this kind of flexibility – and that will
take some time, because today the
cost and the losses of these conversion processes are quite high. But in
the short run, we’ll see more solutions that already create a business
case ­today. Take combined heat and
power plants: You can operate these
in times of low renewable energy
generation. You would turn them on
instead of using electrical heating,
which has two effects: You reduce the
demand of electricity and create extra
electricity at the same time.
Jacob Østergaard
And how would smart energy contribute to energy storage, which is
one of the key challenges we see?
J. Østergaard: Again, if you have a
district heating system, you can use
that as a storage medium. And there
are quite considerable storage capacities in these heating systems. The gas
system has huge potential for storage: In the Danish gas system alone,
you could store the equivalent of
three months’ worth of demand. So
if you can link gas and electricity,
then you can solve the storage problem once and for all.
And which storage solutions do
you envisage in the short run?
J. Østergaard: There is definitely a
need to reduce cost for dedicated
storage solutions, and to use flexible
demand to reduce consumption.
­Electric vehicles, for instance, have
quite some capacity for storing – the
battery can be used to balance the
electricity system when the car is
­stationary.
All this means that machines will
have to talk to the grid and vice
versa – do you see an internet of
things developing?
J. Østergaard: It fits with the development; the optimization of a system
requires automation. You might set
your personal preferences. For instance, if you have an electric car, you
will want to make sure that it’s at
u
Decentralized Energy
Decentralized Energy
Bornholm, a Real-Life Laboratory
24,000 consumers on the Danish island of Bornholm are part of PowerThat’s expensive. But if instead you
add intelligent control units for the
devices, for the decentralized units
as well as demand, you can operate
the units according to the capacity
of the grid – which eliminates the
need for new cables and saves lots
of investment.
LabDK, a real-life laboratory for decentralized energy that has been
­running since 2011. Out of these, 2,000 have agreed for their houses to
participate in a smart grid experiment. Various appliances, including
some from Siemens, are tested under everyday conditions. The aim is
to use the decentralized energy units on the island in an optimized way.
From a control room at DTU, researchers follow the experiments in real
time. Already, many of the solutions tested on Bornholm are being
Smart grids are the backbone of a smart energy system – designing them is part of Østergaard’s work.
least 80 percent charged every
­morning. But the automatic system
will make sure your wish is realized
in an optimal way.
There are huge amounts of data
involved. Where do you store
them, and is it safe?
J. Østergaard: I think we’ll see different solutions in the future. There are
a lot of stakeholders involved, and
all of them own their data, which will
be stored in different places in the
system. In the EcoGrid EU project that
we are running on the island of
­Bornholm (see box), all information
is stored locally. We send price signals from the energy market and the
local grid operator to buildings and
decentralized units owned by private
and commercial stakeholders. That
is all. And then they can decide how
they want to react. They can ask
someone external to optimize their
data and send it back to them from
a cloud, but that would be a private
­decision. It’s not necessary, so the
privacy of the data is ensured.
14 Living Energy · No. 11 | December 2014
You’re a ­researcher, but you
­cooperate closely with the corporate sector. Which business cases
do you see in decentralized
­energy?
J. Østergaard: Today, the business
case for decentralized energy is to a
large extent set by politicians. Many
core investments in these technologies are made because society wants
them to stop climate change. What we
are developing now are solutions
that drive down the cost of these technologies so that they are more competitive on the market. We want to
­increase the value of these solutions
by having them interact dynamically
and provide services to the power
system. That means we’ll see new
business opportunities coming up.
Which ones?
J. Østergaard: I mentioned the
­frequency control on the demand
side. If you connect the decentralized
units to the grid, in conventional
thinking, you would have to increase
grid ­capacity, lay down more cables.
Which trends do you see – is decentralized energy here to stay, or
rather a short-lived phenomenon?
J. Østergaard: I see a definite drive
to get more renewables into the system. They have to be set up where the
resources are and have to be distributed from there – so we are going to
see more decentralized energy in the
future. And that is a global phenomenon. In China, there are big investments in renewable energy. The same
is true for Japan, after what happened
in Fukushima. And even if you look at
developing countries, a lot of inventions that we developed for smart
grids fit perfectly with the situation
in countries that have hardly any
grid, and where you need insular systems that use smart grid technology
and decentralized energy solutions.
So decentralized energy can help
developing countries to develop
their energy supply?
J. Østergaard: Yes, definitely. Of
course you have to use robust technologies that have proven to be reliable without top engineers nursing
the equipment. Robust generation
based on environmentally friendly
technologies, of course. And simple
demand-side solutions; for instance
those where you have a local controller embedded into a thermostat for
a refrigerator: Even our second-year
students have installed these, and
you don’t have to maintain them. It’s
just working. This is an example for
a technology that can very easily be
adapted into a scenario for a developing country.
­adopted by other countries, says Jacob Østergaard. The conditions of
Bornholm as a testing site are globally unique. “It’s easy to come up
with the perfect solution in your lab,” Østergaard knows. “But reality is
very different.” That’s where Bornholm and its inhabitants come in to
try out whether great ideas are really feasible on the ground.
“What we are developing
now are solutions that drive
down the cost.”
Jacob Østergaard
If you look at your own house
20 years from now: How smart will
it be in terms of decentralized
­energy use?
J. Østergaard: Well, my house will
have a lot of technology. It would be
automated, interfaced with the markets, and receive price signals to optimize its behavior. My house would
of course be connected to my smartphone. But I think others might have
other wishes. There is no single truth
for all of us. But my house will definitely be smart. p
Marc Engelhardt reports from Geneva on
the UN and international organizations for
­various media, including the Berliner Zeitung
and the Deutschlandfunk.
Living Energy · No. 11 | December 2014 15