The emergence of an open layer?
Batteries, software, and the open architecture Europe has only just started building.
We don’t know what we don’t know so we are quite sure about things we don’t really know about. Hype begins with simplification. The dot-com internet vied for “eyeballs.” Mortgages (“dead pledges”) were abstracted into securities before the crunch. And intelligence, some claim, will become a commodity you can buy on a meter.
Memes wrap around grains of truths. Stories spread and mobilise capital, they get entrepreneurs and builders motivated to focus around the next big thing. Momentum needs simplification. It’s how we’re wired.
But simplification becomes problematic as it hardens and as we lose sight and understanding of what is actually going on. Shadow-play in a cave: the customer disappears behind click-thru rate statistics. The borrower is anonymous behind the tranche. The data centre seems unreal, covered in conceptual clouds. The abstraction begins to take the place of the thing it describes; the derivative overshadows the underlying. When’s the last time you thought about Poynting vectors?
Carlota Perez’s work on technological revolutions describes moments when finance and technology reinforce each other: money arrives, expectations overshoot, infrastructure gets built, and it’s only later, after dust settles, that we understand which parts of the new system are here to stay. The overshoot is not simply a mistake. Sometimes it is how a new system gets installed.
Batteries are necessarily somewhere in a pattern of this kind. That’s worth thinking about if you are in any way interested in the future of the energy system.
For a while, grid-scale storage looked like one of the cleanest stories in the energy transition. Solar build-out would deepen the daily price shape. Midday power would become cheap, evening power expensive. The shape of the profile looks a bit like a duck. A perfect meme. Batteries would follow the duck curve: charge when prices were low, discharge when prices were high, add some ancillary revenue. Volatility as a business model, guided by software, by AI, optimising and trading in free markets with the latest technology. The purest possible play on the energy transition.
I’m not being cynical, quite the opposite.
The story was attractive because it was simple, and because it contained truths: renewable generation does change the shape of power markets, volatility does create value for assets that can move energy through time, batteries are one of the few technologies that can respond quickly enough to matter.
Reality has a way of catching up to the first-order abstractions, however. Network location, market rules, local constraints, forecasts, the behaviour of other assets responding to the same signals. The value is in the relationship between the asset and the system. The play is not as clean as many thought. A smell of disappointment is in the air, sometimes. Have you noticed?
What is the way forward? Openness. Not openness as branding or as insider networking, nor as a fantasy that everything should be free and accessible, but openness as a way for complex mechanisms to become exposed for interaction. More participants. More inspection. More shared definitions. More ways for the grid, the asset owner, the operator, the regulator, the customer, and the market to correct one another.
Abstraction works when reality can loop back in to move the concept forward.
