René Mono, managing director of the 100 Prozent Erneuerbar Stiftung and dynamis Co-Founder, was invited by the European Economic and Social Committee and was asked to discuss the question of how artificial intelligence could solve energy poverty. Hereinafter, you may read his original statement:
In the Third Report on the State of the Energy Union, we read on Page 2: “Europe is moving from a fossil fuels -based energy system to a low-carbon and fully digital and consumer centric one.” Personally, I would suggest replacing “low carbon” by “decarbonized”. But this not today’s point. The point today is the emphasis of “full digital” and “consumer centrism” and the close context of these two phrases.
And this is the right approach. Full digitalization makes it possible that the consumers becomes the central actor in the future energy system. This is an important point when it comes to energy poverty and vulnerable consumer. Because the crucial question is: What is the fundamental reason that makes consumer vulnerable? And this is dependence. Consumers are dependent from their energy supplier. They are dependent on the energy suppliers‘ decision to increase the prices or not. They are dependent from their possibility of abusing their market power or the market intransparency. The best strategy – and especially the most sustainable one – is therefore to reduce this dependence. And this becomes possible thanks to the opportunities of digitalization.
When I say digitalization, I mean above all artificial intelligence. Artificial intelligence makes one vision that some years appeared to be a complete utopia a highly realistic scenario. And this scenario is: each consumer can become an individual prosumer or a member of a local prosumer community. And on this level he or she, her or his community optimizes the usage of different energy technology – like self-generation and storage, load management (which will reach a new level thanks to automation), power to heat, e-vehicle loading and back-feeding, and so on. Also, trading energy to the neighborhood becomes an attractive option. The decentralization of energy generation and storage has resulted in a variety of balancing options that are now available also to normal “small scale” consumers. But you need artificial intelligence to make usage of these options in an optimized way.
This is important to say: In the end, no consumer, no community will need to decide on his/her own when to store or use electric current for electricity, mobility or heating. A smart client will take these decisions using machine learning, algorithms that help predict the individual consumption profile and do prognostics of the eco-system.
I am talking about micro-optimization. In the long run, micro optimization will be better – more precise – than macro-optimization which has been the standard approach in the energy system in the last century. With artificial intelligence aggregation will no longer be needed, and aggregation is always a second best option because you always loose information and create transaction costs.
For the prosumer or the prosumer community this artificial intelligence based “do it on your own” energy management is the best approach to overcome vulnerability. Billions of Euro today are made in the energy industry – a significant part is going to some autocratic regimes. Artificial intelligence makes it possible that a large part of this money stays in the pockets of European citizens.
Beautiful new world?
Not really! There are two fundamental problems. First of all: The political system ignores the potential of artificial intelligence to overcome energy poverty and consumer vulnerability largely. Best proof: There is no mentioning of digitalization in the Report of the State of Energy Union, apart from digital energy infrastructure. But digitalization goes far beyond.
And this is a problem: Individual or community based energy management by artificial intelligence does not need to mean that millions of people working for large European energy supply companies will lose their jobs. But energy supply companies need to find new business models, reinvent themselves. They need to become energy service provider that support prosum. But they have to be fast. Because google, amazon, facebook are better in AI than they are. As long as the European policy suggests that maintaining the old energy system is an option they won’t be as fast as they need to be.
Secondly, barriers. We have been talking about barriers many times in the last months in this committee and I am very grateful that it provides a floor for this discussion. But we are still lacking a thorough and differentiated study that identify and analyze the most important barriers. From my practical experience I would say that there are at least five barriers to be considered:
A) information especially regarding the fact that this prosuming scenario is already a economically and technically realistic one
B) access to capital / bankability
E) digital literacy
These barriers are not insurmountable. For example access to capital: Money from the European funds and investment facilities need to be used for making capital accessible for vulnerable consumers. Don’t forget prosum will be in the end also a good policy to strengthen social cohesion and growth of underdeveloped regions.
But we need to be honest. This is serious work. We need a strategy and an action plan. Where are they? I don’t see any. The only strategy that I see is the strategy of some member states to fight artificial intelligence and prosum in the energy sector. I want to say it very clearly: these are strategies that will result in strengthening energy poverty and vulnerability. Because in the end it is not a question whether we will have artificial intelligence based prosum as an important pattern in the future energy system. This will come.
The question is: will only the consumers with equity, space, information, digital literacy and the capability to deal with bureaucracy benefit from it or will it be used as a mean to fight energy proverty and to strengthen social and regional cohesion? This is the decisive question. It is in our hands. But we need to be serious by doing two things: first, consider AI based prosum as approach to fight energy poverty and vulnerability of consumers. Second develop a strategy and implement an action plan to overcome the relevant barriers.