Utilities

Transformation

 The industry will transform rapidly over the next decade as it seeks to meet the demands of energy transition and net-zero targets. The New Energy Ecosystem will further embrace Clean Power Generation, Smart Grids, Distributed Energy Resources, Digital Retail and New Energy Services.

Clean Power Generation

Path to Net-Zero

Power generation, including both electricity and natural gas, constitutes 30% of CO₂ emissions, and 3% of nitrous oxide (N₂O) emissions [1]. Shifting from carbon-based electricity generation is already well under way in support of net-zero plans and also as some governments seek energy independence.

Renewables are expected to become the new baseload, accounting for 50% of the power mix by 2030 and 85% by 2050 [2]. Solar and wind builds already come at a lower cost than than existing fossil fuels in most countries and are projected to become increasingly cost competitive globally. European oil and gas firms like BP and Total are investing in power generation, competing with incumbent utilities. The UK is already on this journey and has made significant progress with over 11GW of offshore wind capacity already installed. With the offshore target raised from 40GW and now to 50GW by 2030 [3].

Coal-fired plants are being phases out in favour of renewables or natural gas. There is considerable debate of what technology should be used to provide a baseload as renewables are intermittent due to weather conditions. Nuclear is one option, favoured by the UK but not other European countries, but this is costly and takes many years to build. 

Developing any new power generatiom will rely on high-degrees of digitisation, this includes IoT, cloud, networking, security, automation and analytics.

Smart Grid

Connected & resilient

The energy transition requires a significant transformation of the power distribution grid. However, this transition could cause significant supply and demand swings—caused by variable output from grid and Distributed Energy Resources (DER), embedded storage, EV charging and other customer behaviours such as peer-to-peer transactions—that may lead to localised problems.  Therefore, simultaneously the grid will need to:

- manage an increase in electricity demand, mainly due to EV charging and shifts to heat pumps.

- connect and manage the load from distributed renewable energy sources that are intermittent in nature

- support demand response (two-way communication with consumers, businesses and DER providers) through smart devices and meters to reduce the peak loads (e.g EV charging) and provide smart pricing to consumer to reduce bills and manage demand

- cope with more extreme weather events caused by climate change, and

- deliver higher reliability and system resilience.

The impact will fall on both the backbone high voltage transmission networks (National Grid in the UK) and the lower voltage electricity distribution networks (know as Distibution Network Operators (DNOs) in the UK) that connect consumers and businesses.

To become Smart Grids, network equipment will need to be gradually become more connected to allow remote management and intelligence to allow self-optimisation. This will leverage real-time asset data and external data sets (water level, weather, traffic, etc.) to make more informed decisions and exploit analytics and AI to enable automation. The human operator role will shift from monitoring to supervising and decision making. Smart Grids will converge the IT and OT (Operational Technology) world and requires a revisited enterprise architecture and new way of working. Cybersecurity is critical to the protection of the grid.

Utilises Digital workplace, IoT, Data, Automation, AI, networking, cloud and security.

Distributed Energy Resources

Clean & intelligent

The energy transition opens the way for smaller power sources to be connected to the energy network. These are known as Distributed Energy Resources (DERs). 

DERs are both physical and virtual assets that can be deployed across the grid. DER technologies—such as solar arrays, wind turbines microgrids, combined heat and power systems, backup generation, and battery energy storage.  They are often close to load, and typically behind the meter—such as a residential or commercial rooftop solar installation, or wind turbine serving a single household or an industrial facility.  Indeed the battery in an EV could be used as a DER. 

DERs benefits include cost savings to customers, a reduction in emissions in the move away from fossil fuel-generated power, less reliance on long transmission lines and more control by consumers of their own power. However, they also bring challenges including the threat to utilities from reductions in revenue, questions of reliability and resiliency, and the need for a commercial and technical model to manage payments and control.

Core to the new system will be multidirectional flows of energy and information enabled by widespread digitisation. Technology includes IoT, cloud, networking, automation and analytics. Blockchain is seen as an enabling technology to enable peer-to-peer communications to sell excess energy, balance supply & demand and manage infrastructure in a secure and transparent way.

Digital Retail

Evolving customer engagement

Most utilities have steadily shifted to a more customer-centric model over the past decade. This started with the deployment of contact centres as the point of customer engagement. This remains an important channel and increasingly employs AI, e.g. chatbots or voice recognition, to automate interactions. 

Over the past decade utilties have invested in digital channels. Customer expectations around digital interactions with utilities continued to accelerate through the COVID-19 pandemic, and digital channels and self-service are key enablers of unlocking higher satisfaction at a lower cost. From 2018 to 2020, utilities that maintained or improved digital satisfaction saw overall customer satisfaction rise by an average of 2% [1].

However, worldwide, 47% of customers say the digital channels of utilities are inadequate [2]. Utilities need to continue to develop their multichannel engagement to deliver a true digital experience. First, utilities must provide the basics, such as letting customers report outages or stop or start service via a website or mobile device. The second stage is personalisation, providing targeted offers and solutions depends on more granular data and a deeper understanding of customers’ needs and behaviors.  Customers are eager for utilities to provide personalised information about their usage so they can adjust it for monetary and environmental savings.

The proliferation of smart metering systems gives utilities extremely granular information about usage patterns, which the companies connect to customer-preference data, third-party customer behavioural data, internet of things (IoT) data, and other emerging information sources. This will form the basis of a more two-way customer relationship. The utility customer of the future will connect to their provides through a “smart home platform” that they can access through their phone, laptop, tablet, or smart home speaker. The platform delivers a personalised, data-driven customer experience in real time, as well as services such as home energy management enabled by AI; transactions management; and other products and services in addition to electricity.

The metaverse may present the utility industry with an opportunity to further transform customer and community engagement. It could  create an immersive approach that enhances the nuances of a transformed utility-customer relationship. It also could be used to educate and engage customers on energy efficient technologies, local energy markets, EV route planning and charging, and much more.

Requires the integration of networking, cloud, AI & analytics and security.

New Energy Services

Capturing new value

Currently, energy retail accounts for about 10% of total industry value. This is predicts to
rise to about 25% through the introduction of new revenue opportunities such as Energy Services . It is estimated that in Europe alone the market for connected energy products and services could represent a potential €52 billion to €73 billion in revenue in 2030 across three core value pools [1]:

- Behind-the-meter offerings related to DER, focusing on helping customers achieve sustainable, manageable and efficient energy with rooftop solar, storage, electrified heating, energy-efficiency measures and energy management solutions.

- EV offerings, such as chargepoint infrastructure, charging services and data integration services to facilitate the Mobility ecosystem. In Europe, utilities are racing with oil and gas companies to build these networks of charging stations. Oil & Gas players (BP, Total, Shell) see a natural opportunity here; instead of providing gasoline through a pump to a fuel tank, they want to convert their retail network to provide EV charging.

- Flexibility services to enable energy providers to leverage the interconnection of devices such as smart meters, smart thermostats, and residential and commercial energy management systems and their data—creating value for players actors across the new enery ecosystem through management of energy supply and demand (e.g. smart pricing).

Technology includes IoT, cloud, networking, automation and analytics. Like DER, Blockchain is seen as a secure and transparent enabling technology.