Energy storage can change electricity’s status as the ultimate ‘just-in-time’ product, where supply and use have to be matched in real-time, but this won’t be possible without increasingly sophisticated software solutions.

Four industry representatives with expertise in software spoke last week at an energy storage event hosted online by Guggenheim Securities, the investment banking and capital markets business of global investment and advisory services firm Guggenheim Partners.

The introduction of scalable energy storage solutions is a new fundamental technical capability in electricity, the first time — with the exception of limited quantities of pumped hydro energy storage —that the model has been changed in over 100 years, Larsh Johnson, CTO of distributed energy storage company Stem Inc said.

Software enables that new storage, mostly from lithium-ion batteries, to react quickly, flexibly and be adaptable to changing market conditions, Johnson said. At the same time, more and more variable wind and solar resources are coming onto grids all over the world, requiring integration and balancing.

The energy industry has to deliver instantly and can’t always count on suppliers. Johnson compared the predicament to what online retail giant Amazon faced when rolling out its Amazon Prime Plus subscription model.

Amazon, he said, solved its problems with massive software investments. That software is underwritten by artificial intelligence (AI) that predicts customers’ future needs and behaviour while also projecting the retailer’s own supply and delivery constraints. Thus ensuring marketplace inventory and on-time deliveries.

“It’s the same with directing resources into real-time power markets,” the Stem CTO said.

Energy storage can provide workarounds to what Johnson called “some rigid power grid situations,” allowing energy to be flexibly transacted when it’s needed.

Not only that, but software is adaptable. With regulators and policymakers under continuous pressure to evolve their market design rules governing energy assets that may have useful lifetimes decades long, software can help shape those rules too.

Ben Irons, founder of Habitat Energy, a company specialising in software-backed optimisation of energy storage and renewable energy assets in markets including the UK, Australia and Texas, noted that “there’s no other traded commodity where you would see low prices every evening and high prices every night,” without seeing arbitrage and traders spotting the opportunity to trade.

Energy storage has revolutionised that, Irons said, adding that even five years ago, there weren’t “physical assets that could store electrical power in an efficient way at a reasonable price” the way lithium-ion can.