Analysis of Future Energy Development Prospects: Smart Meters as the Next Breakthrough Point

In Europe, the EU has stringent regulations on smart meter installation. Countries like Sweden, Italy, and Finland have achieved nearly 100% smart meter penetration, benefiting from customer engagement and proactive energy management initiatives.

With the large-scale integration of renewable energy into the grid, maintaining a stable supply of high-quality electricity has become a greater global challenge. High-quality electricity is characterized by stability in voltage and frequency, which are essential attributes of a power supply. The demand for energy storage systems paired with renewable energy to overcome this challenge is rising. Ram Ramachander, Chief Digital Officer and Chief Commercial Officer of Hitachi Europe's Social Innovation Business, recently explained how Hitachi is developing new battery energy storage solutions, expanding smart meter and electric vehicle initiatives, and offered insights into the future of energy.

An Analysis of Future Energy Development Prospects: Smart Meters May Be the Next Breakthrough

Network connectivity and unprecedented volumes of data are revolutionizing many industries, and energy is no exception. Digitalization is transforming how people produce, distribute, and manage energy. Artificial intelligence and machine learning enable predictive maintenance across entire energy networks, while battery energy storage technology facilitates the integration of renewable energy. In residential applications, smart meters are being installed, and plans are being made to purchase electric vehicles. These advancements are democratizing energy, turning consumers into both producers and consumers of energy. As technology continues to evolve, where will the next developments occur? A recent white paper co-authored by Hitachi and the consulting firm Frost & Sullivan explores these questions. The study highlights three areas of rapid innovation: the booming development of battery energy storage, the widespread application of smart meters, and the advent of the electric vehicle era.

(1) The Booming Development of Battery Energy Storage

Battery energy storage is key to the successful integration of renewable energy into the grid. Its ability to store energy enables grid services such as smoothing, congestion management, and frequency regulation, which are crucial for the effective integration of power sources. These advancements depend on battery technology development. New lithium-ion batteries offer extended lifespans, increased energy storage capacity, and reduced size, while advanced battery management systems maximize cost savings through tariff price tracking and arbitrage services.

In the future, once upfront costs are reduced, consumers who install their own energy storage systems will see significant cost savings and the ability to generate revenue by selling excess energy back to the grid via cloud-based community platforms. These communities can integrate not only homes but also electric vehicles (EVs), enabling cheap and green charging through grid-connected charging points. Blockchain technology is currently being used in pilot projects to provide a trust layer necessary for peer-to-peer energy trading among consumers equipped with solar panels, energy storage systems, and EVs.

The report states, "Why is battery energy storage so important for the future energy roadmap? It has a dual purpose. First, it facilitates the integration of intermittent renewable energy while generating revenue. Battery energy storage will drive large-scale market adoption of residential energy storage systems after 2020. By 2025, we expect residential energy storage to become an integrated and essential component of all renewable energy projects."

(2) The Increasingly Widespread Application of Smart Meters

Smart meters are one of the cornerstones of smart grids and digital energy because they generate vast amounts of data. As more users connect via smart meters, the volume of data available to the system increases. The importance of smart meters lies in their simplicity. Compared to battery energy storage and electric vehicles, the barrier to entry is lower (upfront costs are typically borne by energy suppliers), meaning they have the potential to impact ordinary consumers most directly. In Europe, the EU has stringent regulations on smart meter installation. Countries like Sweden, Italy, and Finland have achieved nearly 100% smart meter penetration, benefiting from customer engagement and proactive energy management initiatives.

As more smart meters are installed, doors open to digital retail services, such as tariff optimization, customer engagement, and Internet of Things (IoT) technologies. Among these advantages, IoT technology may be the most exciting: smart meters provide gateway services at the consumption level, such as demand response for commercial and industrial customers, remote building control, home energy management, and energy optimization. The opportunities for creating efficiency are immense.

(3) The Advent of the Electric Vehicle Era

"The electrification of the energy industry is a transformative trend. The adoption of electric vehicles is accelerating rapidly, with global EV sales exceeding 1 million units in 2017. The automotive industry is inherently customer-centric and fast-paced, with companies responding to this change by investing in R&D and actively promoting electric vehicles. Coupled with governments setting targets to ban the sale of internal combustion engine vehicles, the development of the EV market is being propelled forward.

The convergence of e-mobility and energy is clear. Opportunities will arise to address charging infrastructure and grid balancing issues, as well as to deploy millions of EVs to create distributed energy storage networks. The integration of electric vehicles, solar photovoltaics, and home energy storage is driving the emergence of the vehicle-to-home (V2H) concept. V2H solutions maximize energy efficiency and cost savings for EV owners by drawing energy from the grid during low-price periods, storing it in the electric vehicle, and feeding it back to the grid during peak hours to generate revenue. After 2020, excess stored energy from EVs will be supplied to homes, commercial facilities, and public charging infrastructure for grid services. Once the ability to use EVs as a revenue-generating tool is realized on a large scale, the challenge of high upfront costs can be alleviated. By 2025, annual demand for new vehicles is expected to rise to nearly 20 million.

Prospects for the Future Development of Energy

These three areas represent the hottest innovation opportunities in the digital energy sector. It is predicted that by 2025, the value of smart energy infrastructure could reach at least $1.5 trillion annually, considering market opportunities and benefits for businesses, customers, and society. Committing to making people's lives more sustainable is no longer an option but an opportunity to leverage smart technologies to maximize the use of renewable energy. The momentum and opportunities behind the digital transformation of energy are immense, and governments, businesses, and consumers must work together to achieve it.