The 5 disruptions transforming the global utility sector

Utility companies have long ignored trends such as technology and changing consumer expectations. But these five disruptive trends will force the sector to innovate and adapt, says Panoramic Power chief executive officer Yaniv Vardi.

From the evolution of the telephone to the smartphone, from the first room-filling computer to the handheld tablet, the list of technologies that have shifted drastically over the last several decades is endless. The way consumers and companies incorporate technology into their operations is a constant evolution too, with the push for progress and enhanced practices unrelenting.

For a long time, one industry resisted these changes, even as everything else around it succumbed to them: utilities. The very nature of the utility business – namely, the necessity of the product and the immemorial tradition of commodity trading – had left utility companies virtually untouched by the “adapt or die” business strategy that has claimed many businesses who deal in aging or antiquated modi operandi.

No matter how small the home or how large the corporation, electricity is a must. As a result, utilities never had to adapt – until now.

Thanks to a number of market disruptors, utilities are no longer in a position to simply collect the check. Vast changes in innovation, consumer demand and expectations, as well as regulatory pressures are transforming what utility companies need to do in order to survive and thrive.

Not just that, but the band-aid and duct tape maintenance approach to the electric grid is beginning to fail in many developed nations. The grid, of course, is among the most crucial distribution channels for utilities.

With a total electric grid overhaul looming and IoT technologies suddenly so pervasive, systemic reinvention seems more than mere replacement. This, in turn, is changing the rules and expectations in the utilities game.

From generation to demand, every aspect of energy company operations is subject to calls for innovation and reinvention, thanks to several market disruptors.

These disruptions are bearing down on the energy industry and exerting a transformative effect. As with any market disruption, industry leaders have the most to lose. These companies have a lot of road to cover if they are to shake old habits and positively embrace change. No doubt, some will go out of business as modern market forces come to the fore, and many will be humbled.

When it’s all said and done though, the industry and the public will be better off for this disruption, as will those companies who seize every available opportunity and resolve to drive the disruption, rather than simply react to it.

Here, are five of the most available disruptive opportunities for those willing to embrace progress:

1.  The Internet of Energy

The Internet of Things has spawned corresponding revolutions in every industry and energy is no exception. With the growing number of interconnected, smart devices, consumers now have insight into their energy usage like never before.

The Internet of Energy refers to the extent to which our energy infrastructure is increasingly dynamic, responsive and interconnected. The Internet of Energy is crucial to achieving smarter, more efficient and effective grids, as connected devices communicate the energy consumption and performance of equipment.

By using a monitoring device to assess energy intake and usage patterns at the zone, system, and device levels, a data-driven consumer is made aware of a slew of impact points previously unknown. These impact points can range from over-cycling machinery to faulty economizers, from off-hour energy waste or excessive phantom load consumption to overloading motor components, and from system asynchronicities to invisible sequence of operations errors.

Essentially, we’re talking about smart operations powered by, well, power. (The Internet of Energy even catches good old-fashioned user negligence or mismanagement in its data dragnet.)

As a result, consumers are beginning to knock on the doors of their suppliers, inquiring about capabilities that hadn’t been relevant before the advent of advanced energy monitoring. Dynamic capabilities such as single circuit ampere ceilings, load shedding systems or distributed generation, for example.

This disruptor is in many ways the forbearer to responsive energy management.

2.  Responsive energy management

As consumers become more technology and energy-savvy, they are making concerted efforts not just to reduce overall usage but also to get more value out of whatever consumption remains. This efficiency-obsessed zeitgeist is in no way limited to utilities, but its impact in the space is profound, nonetheless.

With the U.S. Energy Information Administration predicting that energy consumption across the world will increase by 56 per cent by 2040, the push for improved efficiencies is all the more compelling. Regardless of whether the motive is to save the planet, relieve over-strained infrastructure nearing its breaking point, or reduce corporate utility costs, it’s abundantly clear that meeting this increased demand will require a smarter, more efficient grid.

A more efficient grid requires a smarter grid and more fluid communication between energy producers and consumers. This means taking all of the data collected through energy monitoring activities and plugging them in to energy management objectives – on both sides of supply and demand – in order to make beneficial operational changes.

In so doing, consumers can determine when they need more or less energy and suppliers can analyze the data to better anticipate and manage production needs.

Thanks to a number of market disruptors, utilities are no longer in a position to simply collect the check.

3.  Diversified energy supply and demand

In recent years, environmentally-minded and cost-conscious companies have taken a long look at renewable energies. While few facilities are running completely on renewable energy, many are considering incorporating renewable  sources.

Renewable energy sources and the companies working to develop them are breaking the stranglehold of traditional power brokers (literally) on the industry. More energy sources controlled by a greater number of energy suppliers means stiffer competition; that old familiar fixture of market disruption should not be underestimated.

Moreover, intensive demand for energy is no longer restricted to manufacturing facilities or other operations relying on heavy equipment. With the Internet of Things bringing all sorts of objects online, more and more everyday devices are becoming energy-intensive devices. (Consider just the added energy demand from a normal office building now expected to power countless devices and an increasing number of vehicles throughout the day.)

With an estimated 10% of “connectable” devices currently online, this new market of energy demand is poised to explode. As connected devices grow in numbers and become more closely interconnected, more energy will be needed to power them, creating a virtuous circle propelling an ever-more advanced energy economy.

4.  Distributed energy resources

A collection of smaller power sources and technologies, distributed energy resources (DERs) is the parent term for technologies (power storage systems, renewables, applied information technologies etc.) that help cover the power output that the traditional grid needs to generate.

DERs are another side effect of demand for more responsive utility technologies. They’re considered especially important as a stepping stone for utility companies to pursue new advances and technologies. This is because the market is so large – with every citizen a potential customer – and the incentive so clear cut – green isn’t just the color of trees, after all – that DERs can be used as a platform to test new technologies (with potential applications beyond DER) while easily discharging R&D costs.

5.  Regulatory changes

Politicians and policy-makers consider renewable energy and energy conservation efforts as their main recourse in combating climate change. As such, major international policy conferences like the 2015 Paris Climate Summit, as well as the independent regulations of countries and trade accords are taking a more deliberate approach to disruption in trying to get ahead of the trends.

These regulations are sure to influence trends and innovation for utilities around the globe.

Disruptions Powering Tomorrow

With more connected device come more lines of communication – between machine and operator as well as between energy consumer and energy producer. And therein lies a crucial facet of the transformation from an archaic grid to the more concerted Internet of Energy – the two-way communication between supplier and consumer.

This latent interconnectedness, along with automated monitoring and reporting combine to form a discrete type of hyper-awareness that ensures all systems are running efficiently.

Deployment of smart energy meters throughout consumer operations and the integration of a smart grid within existing energy infrastructure are just two examples of components in the Internet of Energy that bridge the demand and supply sides of the energy equation.

As smart grids continue to expand, disruption will be a fixture of the utilities landscape. And while that disruption will no doubt make for a difficult transition, those who embrace this evolution (on both the demand and supply sides) will play an important role in introducing greater transparency, modernity and democracy into an industry on which we are all profoundly reliant.  

 

Yaniv Vardi is the CEO of Panoramic Power, a leader in device level energy monitoring and performance optimization. This post was exclusively written for Eco-Business.

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