Is Your Company Ready for Energy’s Future?
Many things will change in the energy industry as it moves toward the future. Distributed energy resources (DER), transactive energy (TE), technology, and updated business and payment models are all factors that energy companies will be forced to consider. While each company is different in its goals and capacities, and therefore in how it will choose to evolve, there are some areas that stand out as worthy of attention. Let’s take a look at a few of them.
Rise of the Prosumer
Within a distributed energy system, customers are at the core. A recent EY article explains, “The current integrated one-way model, comprising generation, marketing and trading, transport, distribution and retail, will become multidirectional.” Because what are now called customers will be so heavily involved with energy generation, the more appropriate label for them within the new model is prosumers. Prosumers will be so central to the process that a recent Navigant white paper states, “Any organization that thinks it can develop an [energy service provider, or ESP] without placing customer needs at the center of their strategy will rapidly fail.”
Technology is Key
The role of technology will also be key in the energy industry of the future. It will serve a variety of functions, including providing the cloud model companies are starting to adopt, as well as the platforms needed to maintain it. The Navigant white paper states, “The importance of technology will grow, and the industry must invest in state-of-the-art IT that can support this disruption.”
Technology and energy are becoming so intertwined that, as reported by Jennifer Delony for Renewable Energy World, “Companies with product offerings that will drive the future of energy services were among the 30 start-ups and scale-ups featured on the World Economic Forum’s (WEF) 2017 Technology Pioneers list.” They include “providers of wind farm data analytics, solar for developing countries, electricity-generating windows, and blockchain for energy markets.”
Big Data is a Big Deal
As a subset of technology, data analysis will be the foundation of an integrated TE system. “Big data is a critical element to solving key business problems for utility companies,” writes Stephen Callahan for R&D. “It can turn the information from smart meter and smart grid projects into meaningful operational insights and understandings about their customer’s behavior.”
Reporting for Fortune on funding secured by energy technology company AutoGrid, Katie Fehrenbacher explains that the company’s software “can suck in large amounts of energy data from smart devices on the grid like transformers and generators, and data about grid problems like outages.” It can then deliver important information to power companies, such as predictions, reports about grid device performance, and energy usage trends.
Callahan continues, “With analytics, energy companies can make the shift to engage with customers in highly personalized ways that can increase customer satisfaction, lower the cost of service and promote new products and services.”
Opportunities in Energy Storage
As the price goes down and demand goes up for energy storage solutions behind the meter (BTM), energy companies need to decide how to incorporate them into a comprehensive forward-thinking plan for the future. As Julian Critchlow and Aaron Denman point out for Bain & Company, “Every utility executive has an eye on energy storage, but many have not yet confronted the complexities, such as integration into strategic plans, investment decisions or regulatory priorities. They need to grasp the opportunities sooner rather than later to avoid the types of pitfalls they experienced as renewable energy, particularly distributed solar, took off.”
The Right Pricing Model
Within the TE model, pricing must evolve to reflect the multidirectional nature of energy flows. Such a model would allow customers to take charge of their energy usage through an understanding of peaks and valleys of usage throughout the system. “We do this in all other segments of our economy,” observes Paul A. Centolella, as quoted by Utility Dive, “We rely on Kayak to pick our air fares and our hotels. We have Pandora which matches our preferences for music. Why can’t my thermostat find the lowest price and match my preference for comfort?” This model benefits all parties within the TE system: energy companies can lower their emissions — as well as their costs, enabling them to decrease customer prices.
While the above elements, as well as many others, may certainly play a role in the future of energy, no one can say for certain how much importance will be placed on each one. Therefore, as companies begin to examine these factors and develop plans to move forward, it will be critical to remain flexible. According to the Navigant white paper, “The most successful businesses will embrace change by being flexible, adaptable, and agile.”
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