How Far Will Platforms Be Able to Go?

Electricity at the local level is a complex ecosystem, constituted by an array of electricity consuming, of electricity generating and of electricity storing assets. This ecosystem becomes even more complex if other energy vectors, such as gas, district heating, or water are included. Coordinating such complex systems and intermediating with the corresponding energy suppliers (whether electricity, gas, district heating, water, or in the future even hydrogen suppliers) will already be a major challenge for a digital platform, but the digital platform is not alone and cannot do exactly as it pleases. Indeed, even if a (smart city) digital platform will one day coordinate entire smart cities, or preferably less smart cities, the platform will have to interface with a TSO, which will remain the ultimate coordinator of the (national) electricity system. It is highly unlikely that the TSO can itself be intermediated or platformed, at least not at the current stage of technological development. Indeed, the electricity grid needs to be coordinated by the same actor that is capable of balancing the system in real-time; so far, only the TSO can do this.

It is also unlikely, in our mind, that the TSO will evolve into a digital platform, at least not into the type of platform we have been discussing in this book. While TSOs are already highly digitalized in themselves, which is a prerequisite for them to manage the grid and especially to ensure grid stability, their core business remains the grid and its operations. TSOs already interact closely with electricity trading platforms, which are digital ventures in themselves, like any other financial market platform. In some cases, they manage or even own such trading platforms in order to better vertically integrate; that is, to be able to handle “implicit trading.” Implicit trading is the most efficient form of electricity trading, as the commodity (electricity) and the grid capacity are traded together, ensuring maximum efficiency for both the grid and the electricity market. All this takes place at the national level, or at best at the European level, whereas the potential for platformization in electricity and in energy is, as we have seen, basically at the local, urban, and in any case the decentralized level.

In other words, platformization in electricity and in energy more generally will start from the bottom up by integrating at a digital level formerly fragmented assets, namely homes and SMEs. It will not be a top-down venture starting with an ambitious TSO. Tiko Energy Solutions AG is a virtual energy management company that claims its solution “is better than Tesla’s.” It was created a few years ago by the Swiss telecom operator Swisscom to aggregate flexible electricity consuming assets, such as home appliances, electric heating, battery chargers, etc. Subscribing homeowners, building managers, or operators of entire area networks (such as hospitals, airports, or shopping malls) connect all these flexible assets to the (Swisscom) telecom network, which then allows owners not only to monitor their energy consumption, but also to receive all kind of services, such as green electricity. Moreover, Tiko is capable of creating a so-called virtual power plant (VPP) by pooling all these flexible assets. Once pooled, Tiko can sell balancing energy, typically negative balancing energy to the TSO, by remotely turning off these assets when the TSO needs to diminish the load on the high-voltage grid. Thus, Tiko is already in the platform business: to the homeowners, building managers, or operators of area networks Tiko delivers efficiency gains and less costs, whereas to the TSO it delivers balancing energy. The more houses, buildings, and area networks are connected to the Tiko platform, the better the offer it can make to the TSO, and the better it can sell its virtual power plant to the TSO, the cheaper it can serve its customers. Thus, Tiko already platformizes the DSO, which is basically reduced to transporting electricity as well as to making sure that the distribution grid remains stable and functions efficiently.

The model is extendable, both in terms of customers and energy vectors, as it can easily be extended to gas and water. The model is also extendable beyond a telecom operator and could easily be taken over by a pure digital platform: it is sufficient to install devices capable of controlling electricity, gas, heat, and water consuming assets, manage supply and demand, and optimize this complex system thanks to sophisticated algorithms. Thus, the platformization of decentralized electricity- and energy-related assets is simply a matter of time. Tiko is showing the way in this regard, as are many other similar energy platforms.

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