The platformization of energy
Do sharing platforms impose their own logic on smart energy 2.0?
Even a casual observer will have noticed that the “platform economy” has been having it kind of rough of late. Cambridge Analytica meant the end of the honeymoon phase of our relationship with “tech”. Admiration for Silicon Valley’s low-rise pinnacle of late capitalism has turned to suspicion. Social media are hotbeds for conspiracy theories with lethal consequences, and Amazon’s Everything Store approach is now being scrutinized for anti-competitive behaviour (as is Google’s ‘we’ll be the OS for your everything’ approach).
Meanwhile, platform spirits have soured in other domains too: Airbnb before corona was eating away at its own success, the promises of mobility as a service have failed to materialize (no environmental benefits, terrible working conditions). Their “neoliberalism on steroids” (Murillo et al 2017) was revealed especially strongly during the Covid-19 crisis, for example when the already underpaid Uber drivers were left out in the cold. Food delivery platforms are making no one money, while Naomi Klein is sounding the alarm bell about tech lobbyists hoping to seize the day by privatizing public goods like health and education through the latest “tele”-technology.
Ironically, in precisely these last few years the platform economy has “gone energy” too. In itself, that development is unsurprising: sharing platforms seem tailor-made for the decentralized demands of our future energy system, in which many dispersed assets and their owners will have to flexibly connect to form a kind of an intelligent, self-adapting system. They promise to be a catalyst of the decentralization revolution of green energy.
But recent developments in Platform Central beg the question if we’re not towing a Trojan horse into the energopolis.
Incidentally, in a recent survey of user expectations of (blockchain enabled) peer-to-peer energy trading platforms Fell et al found that few people, interviewed right around the time the Cambridge Analytica story broke, felt good about having “social media companies” or “energy start-ups” to run their energy platforms, preferring instead “established authorities, such as energy suppliers and the council”.
To be clear, energy platforms are their own beast, but there are some key resemblances to other tech platforms that warrant closer scrutiny.
In fact, that is just what Sanneke Kloppenburg and I did in the academic equivalent of an op-ed, almost two years ago. It was pretty explosive material for all the 7 people who read and cited it.
But that was then and this now, so let’s see if newer developments have shown the wisdom or folly of our words.
Now, the kinds of problems we see above are mostly of three kinds: the platforms can only be profitable at large scales and the ensuing ‘growth mentality’ discards ethical questions as mere obstacles to clear from the path; the platforms seem to enhance the tendency of people to congregate into bubbles; users and workers are mostly on their own, as they exert little control over, and get little security, from the service.
Will we see the same kinds of ‘externalities’ undermining the potential of energy platforms? (For a less black and white set of questions, please see the paper instead.)
Promise of empowerment
While platforms promise to empower the user, there are at least two reasons for caution. Firstly, energy is complicated. The energy market is highly regulated and participating in it requires not only quite a bit of technical and business expertise, but also licence to operate. Thus, as Mourik et al (2019) observed, even through the EU has created stipulations to promote community energy, a cooperative in The Netherlands can’t just organize its own sharing platform. That cooperative would need to become an official energy provider, which comes with requirements that would divert it from its commitments to the community it was set up to serve. Different planes of policy-making do not necessarily align.
Er, yes, but it all depends on what you mean by ‘own’ and ‘sell’. (via Friends of the Earth Europe)
Secondly, energy is complicated. Introducing peer-to-peer exchange makes it even more complicated, even for system actors, as evidenced in an Australian case of solar and battery powered p2p mini-market for a diverse set of apartment complexes (very much like this one). Just take the relatively simple act of ‘billing’. Hansen et al (2020) argue that the system actors involved were working under the assumption that the new digital data management system would do the accounting for them. They were then caught off guard when they realized that the successful performance of this software would necessitate defining new roles and responsibilities, even bringing in new actors. (Just one of the ways a newsletter about the social life of energy might have come in handy.)
The same dynamic occurred with regard to the daily users. Abhigyan Singh recently talked about how the energy field was lagging behind consumer-facing digital technology, which has drawn on “user experience” specialists for longer. Hansen et al’s case seems to be an unfortunately typical example of engineers thinking their software is a piece of clear and distinct logic, relying on the product to communicate their intentions, when the product is in fact not clear at all. As Christine Milchram has argued, seeing things from the eye of the users is not just a matter of good product management, it also has implications for energy justice – system complexities should not exclude certain users or make them hopelessly dependent on ‘expert’ providers. (I’ll actually soon talk with design researcher Karthikeya Acharya about the importance of choice in smart domestic energy).
Promise of sustainable energy use
Sustainable energy is reduced energy. While the platforms do usually promise to even out the spikes and lows in the energy supply, can they facilitate the reduction of energy? Whether they will depends on the lot on how the market is structured. So far, the record for battery powered Virtual Power Plants (VPPs) is mixed at best: market efficiency has its own irrationalities and may come at the cost of a lot of surplus trading (*cough* financial markets *cough*). So if you want to do more than help the invisible green hand, you need to pro-actively build demand reduction into your business model.
Solarwatt is selling modular batteries in faux-industrial style. Batteries have breathed new life into German PV companies. Lots of assets for platforms to play with. (via Yale 360)
Tietze et al (2019) conclude that few of the battery powered VPPs in Germany that they reviewed do this. They mention innogy’s attempt to stimulate savings by pegging their yearly flat rate to a bandwidth of permissible deviation (p. 14). If you consume out of that bandwidth, your flat rate will go up for the next year. I think this falls in the category better than nothing.
So, while battery-powered VPP platforms might encourage investment in renewable sources, they don’t necessarily encourage reduction. There is also the demand-response-powered VPP, however. This looks more promising. This certainly could be geared towards energy savings. In combination with community energy it might as yet not be possible due to unfavourable regulation or be financially feasible, as Mourik and colleagues found in the case of the Netherlands. But if Fell et al’s UK survey (p. 19) is something to go on, most energy consumers would have more faith in a regional, rather than a neighbourhood level energy sharing platform anyway. Just the golden mean of reliability and relatability.
Promise of democratization
Platforms offer ways to monetize renewable energy assets, which makes them more financially attractive. In theory then, they should make sustainable energy more widely accessible (see also Tietze et al: 11) Of course, if you still rely on private investment for access, you are democratizing for only a small subset of people. If you then also start creating energy communities around these assets, then there’s the risk of entrenching bubbles. People already in the energy community might well forget about the interests of those outside of it.
Of course, I’m not talking about the good folks from Moss Community Energy.
None of this is inevitable, but the sociology of (non-energy) sharing platforms so far shows that tendencies to exclusivity are strong. To counter the tendency, you need to be aware of it. Next week, I’ll be talking to Sylvia Breukers, one of the authors of the Mourik et al paper and part of Duneworks research and consultancy. We’ll go over ways to allow for (increasing) diversity, for example by planning for different time points at which users with different capabilities can enter the community.
In grand conclusion, energy platforms can do pretty nifty things, but over-reliance on digital tech can make us blind for the social context (cf. Hansen et al.) and an over-reliance on the market can limit their application (cf. Mourik et al.).
Hope y’a are keeping well, till next time!
Marten