Cleantech Market Intelligence
European Utilities Will Never Tame Enterprise Data, but That’s Okay
The last decade bore witness to the beginning of the energy transition. In 2018, the European energy transition is well underway. Without doubt, the next decade will be the most disruptive in the industry’s history. Investment in innovation is running at unprecedented levels as incumbent energy suppliers seek out the business models that will serve the 21st century customer. It is now commonplace for utilities to acquire technology companies; 10 years ago, this would have been largely unheard of. In addition, startups are bringing new products and services to market at a pace which the industry has never experienced. While the energy transition is concerned with decentralization, decarbonization, customer centricity, and increased competition, none of this will be possible without a concomitant digital transformation.
Energy Supply and Distribution Operation Will Significantly Transform
In Defining the Digital Future of Utilities, Navigant Research discussed what future business models could look like in 2030. European utilities are leading this transformation. The old utility supply businesses are rapidly shifting focus to energy services, based on a decentralized energy value chain. Many European utilities are already shifting focus away from traditional supply, recognizing that future value lies in helping customers reduce energy consumption, become greener, become more responsible for their own power needs, and create community-based business models for power generation and consumption. In the future, energy service providers will also help maximize economic returns on customers’ investments made into demand energy resources (DER). This will be done either by aggregating customers’ loads and supply to offer large-scale grid services, or by providing a platform for customers to buy and sell electricity with whomever they want.
Managing future distribution networks gets much harder with high concentrations of DER. Consequently, distribution network operators (DNOs) are undergoing their own transition to distribution system operators (DSOs), shifting focus from managing assets to active network management and the provision of distribution platforms that will be the mainstay of new energy services. This transition is essentially digital: the first step must be to improve visibility into distribution networks. Once a DSO has visibility, it can then improve control. Flexibility markets will be increasingly important in the future and their data demands are even greater. If flexibility markets expand into residential loads and supply, the DSO must allocate a time-sensitive value to each of these assets. This is not an easy task, and requires the integration of existing grid management applications, plus additional functionality not yet in existence.
Digitization Requires a Pragmatic Approach to Data Management
Neither the energy service provider nor DSO business model is viable without data. Data is critical to the energy transition and data flows are critical to electrons. European suppliers and DNOs must prepare for the energy transition by undergoing a digital transformation. While most understand the benefits, few fully understand the requirements for digital transformation, the full costs involved, or the enormity of the task.
The exponential growth of connected devices with relevance to the energy transition (devices like smart grid monitoring and control and in-home smart thermostats) create an exponential increase in data. Few, if any, utilities will ever tame this data; however, the smartest utilities will create IT infrastructure to maximize the value derived from this data. They will invest in platforms that are sufficiently flexible to stack increasingly sophisticated use cases, rather than reinvent technologies whenever requirements change.
However, this investment in platforms must be matched by more prosaic investments in data management. A digital platform is only as useful as the quality and completeness of the data on which it relies, and the analytics algorithms that provide insights.