A New World of Opportunity for Industry Players to Begin Creating the Utility of the Future Today
- Apr 11, 2019 3:29 am GMT
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Utilities are being challenged to adapt and change to an extent and degree that hasn't been experienced before in industry history amid the emergence and fast growing deployment of distributed renewable energy, energy storage and integrated digital energy management, information and communications systems. Those challenges also present opportunities for industry players to leverage and capitalize on all their resources to launch new types of energy services and products, expand and begin to create the utility of the future today, according to a new white paper from global business consultancy Deloitte.
Utilities can benefit by continuing to focus on striking a balance between keeping the lights on and affordability, but they can't afford to maintain a "business as usual" strategy and approach given the rapid growth of distributed energy resources they don't own, the rapid pace of technological innovation, the drive to "decarbonize" energy, regulatory reform and increasing competition from a wide variety of new market players, Deloitte highlights in Digital Innovation: Creating the utility of the future. "From large conglomerates in the technology, retail, oil, and other sectors to asset managers and hot new tech startups, a lot of outsiders are looking to enter this market," the report authors point out.
Three broad trends can serve as guideposts as utilities strive to adapt and change: electrification, decarbonization and decentralization, according to Deloitte. "To further reduce carbon emissions, some groups are advocating electrification of end uses such as transportation, water and space heating, and industrial processes."
Navigating a power industry transformation
Projections foresee 55 percent of the global new car sales and 33 percent of the global car fleet being electrified by 2050. That would represent about 9 percent of electricity demand, the report authors note.
In addition, forecasters project that decentralized wind, solar and other emissions-free electricity generation resources will continue growing and reach 48 percent or more of total generation capacity globally by mid-century. "In the United States, power sector carbon emissions were down 28 percent from a 2005 baseline at the end of 2018, and many power companies have voluntarily committed to reduce emissions as much as 80 percent from the 2005 level by 2050."
Yet the economy continues to grow and jobs are being created. In fact, in parallel to rising investment and deployment, employment in the solar, wind and renewable energy industries have been growing much faster than the national average, as attested to in The Solar Foundation's periodic research reports.
As has been the case across a wide swath of the economy, identification of new use cases and the development and application of digital information and communications technologies, in this case along with power electronics, is turning the traditional utility industry operating model on its head.
"[T]o thrive in this bright future, power and utility companies will need to develop new capabilities and transform their working environment. Continuing what they’ve been doing for the last century is likely not going to work," the report authors assert.
Energy digitalization has broad and deep ramifications for utilities and the power industry. "Going forward, power and utility companies will likely see increased opportunities to create value based on data, insights,and services, in addition to moving electrons," the report authors state.
They go on to present three scenarios, or "vignettes," that illustrate the digital energy innovations that are emerging and gaining credibility and legitimacy inside and outside the industry. Each takes a different perspective, or viewpoint: one from that of the utility customer, another from the power company employee and the third from that of an asset manager.
For more on Deloitte's white paper, click on this link.