Transactive energy and the democratization of energy – two phrases we will hear a lot more of

Our energy system is changing. As we see the exponential growth of new ‘edge technologies’ it is becoming increasingly apparent that the traditional centralised power system will simply be unable to co-ordinate all these new devices. This simple fact means we are currently at the cusp of a paradigm shift in how we produce, distribute and consume energy.1

Smart Grid technology itself only offers part of the solution. The real solution lies in the technology enabling; electricity supply, delivery and demand to be managed through a market based approach – transactive energy. Transactive energy is a word we will hear a lot more of over the coming years as it is likely to be the driving force in the development of Smart Grids. There are two key reasons for this:

  • Firstly, a market based approach is essential to manage the complexity of a new Smart Grid
  • Secondly, consumers will increasingly demand it

The Smart Grid will allow the consumer to play an equal role in what has been a traditionally highly centralised market. This trend has big implications; the democratization of energy markets (this is not the last time you will hear this)

Moving to a Transactive energy market and ultimately the democratization of energy is not going to be straightforward. There will be technical challenges with interoperability and security. Perhaps a more significant challenge will be addressing how consumers deal this increased complexity.

However, whilst over the coming years we will see many articles citing these as reasons why things won’t happen. We are not so sure, as we are already seeing fascinating changes. Not just in the technological solutions, but also new social models being developed by our communities themselves. This combination of technological and social innovation will be the driving force behind this now inevitable paradigm shift in our energy futures.

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