Last updated: 13 October 2017
“You’re not going to be selling energy in the future, you’ll be selling life!” Manon Janssen Chair of Topsector Energie and CEO, Ecorys.
Last week, the team and I were in Amsterdam for a week of fascinating debate and sharing of ideas about the energy market. I’m going to breakdown what I thought were the most important takeaways.
1 – The energy market must encourage innovation:
It’s not unusual to attend a conference and hear people espouse the need for innovation. But this time, it felt like there was real impetus for change. Many of the delegates spoke of the need for a re-setting of traditional KPIs. This would encourage intelligent risk-taking, accelerate technology adoption and allow the industry to embrace new business models.
But new ideas and technology pilots cannot be tested on a whim. Just because you can engineer it, doesn’t mean the sector needs it. New technology adoption must have a solid business case that either cuts a utility’s cost-to-serve or allows a Distribution System Operator to do something it couldn’t before. These criteria are essential to driving real transformation.
At the show it was clear that regarding technology the move from adoption to ubiquity is accelerating. And while some critics point out that the industry is perceived as being slow to embrace digitization, it must be remembered that technology is moving faster than at any other time in human history.
Fortunately, solutions are available to help companies address their digital challenges. And if companies adopt a collaborative approach, they can build a robust ecosystem of trusted partnerships that will allow to succeed. This is not an industry for those that want to fly solo.
This theme of innovation was also reflected by new start-ups who showcased the latest in AI and blockchain.
- People believe that AI will dramatically shift the way utility consumers buy, sell and interact with their providers. Plus, it could also improve customer communications as well as internal systems to reduce the cost to serve.
- The acceleration of Blockchain use cases was also evident. The non-profit organization Energy Web Foundation (EWF) has identified 100 blockchain energy use cases, and engaged sector partners including Engie, Centrica and Stedin. We’re looking forward to hearing more about this initiative.
2 – The 4 Ds and 3 Is of the modern utility:
Utilities should focus on decarbonization, decentralization, digitization and diversity in order to remain competitive.
Achieving this requires new ecosystem partnerships and collaboration with non-traditional actors. Utilities should prioritize the three Is—insight, intelligence and implementation—to achieve their aims.
From our side we are not just a supplier for our customers, we are a trusted partner accompanying them in their digital transformation. As such we know everything that entails, including the challenges that arise – especially if you’re attempting decentralization.
3 – Power of partnerships
“Don’t close the doors of your company to third party companies; you are killing yourself”, Enel’s Head of Innovation and Sustainability Ernesto Ciorra told EUW delegates.
This philosophy is evident in how some companies made a huge success of forging key strategic partnerships and investing in renewables early. As we said before, if you choose to isolate yourself, you’ll fail.
This is also true of the consumer market. Traditionally there are those entities that generate and transmit energy, and those who implement meters which give consumer access to energy.
Now with smart meters and emergent smart grids, new players are popping up as service providers. These new actors create value by connecting to your meter to offer extra services adapted to your specific consumption needs.
This is decentralization, a clear “call for partnerships”.
But to succeed, these new providers will have to abide by the same rules and standards as the rest of the industry. Security and interoperability become key and this is where standardization and regulation are becoming pre-requisites to ecosystem evolution.
4 – Data regulation & standardization
European energy regulation is complex, so are utilities up to speed with European Commission data initiatives? Mercè Griera, Head of Research and Innovation at DG Connect, highlighted three essential pieces of regulation.
- First, compliance with General Data Protection Regulation (and if you don’t know how to manage this, find a partner who does, she says).
- Second, new legislation on the free flow of data across Europe.
- Third, a new consultation on whether utility data should have the same status as public-sector information.
Gemalto is contributing heavily to specific working groups to discuss on the definition of security requirements for utilities: ESMIG (the European Smart Energy Solution Providers), ENCS (the European Network for Cyber Security), ECSO (the European Cyber Security Organisation), AIOTI (the Alliance for the Internet of Things Innovation).
We also have a proven expertise on data security management with our Enterprise & Cybersecurity BU, such as solutions for a proper advanced metering infrastructure (AMI) security. It’s far from a straightforward context for compliance!
5 – The consumer is becoming active
The full shift from consumer to prosumer is not fully realized, but the consumer is increasingly demanding more from utilities. This is where the concept of smart energy comes in. This is about optimized individual consumption management to enable stable collective energy provisioning.
The utility should consider value not in terms of KWs or euros, but in terms of services. Smart and optimized energy management is in the consumer interest and facilitates, in parallel, a collective objective that says: “through a smarter usage & consumption, we hope for a greener world”.
At EUW, this led to some interesting discussions:
— With computing power close to that of a “smartphone” embedded in every meter, distributed intelligence is fundamentally shifting the paradigm for smart metering and redefining what’s possible for both grid operations and customer service.
— Energy providers have always wanted to be able to anticipate consumption peaks and stabilize their energy provisioning as much as possible. The potential for improved analytics and decision making at the grid edge needs to be exploited further.
— What financial incentives can be put in place to encourage new consumer behaviors? How, for instance, could the consumer sell energy created by their own solar panels back to the grid?
— Connection and access to greener energy sources are critical. Traditional energy providers have to re-think their mission and vision for providing new sources of energy. The prosumer contributes to collective energy production and increasingly thinks about the collective benefit when it comes to energy.
As we left the conference, we thought about how we have gone “from energy” to “smart energy”, and how this “smart energy” will finally open up the true potential of “smart cities”. It’s an exciting proposition and we can’t wait to get started. Do get in touch to let me know what you think!