With a projected population of 10 billion people by 2050, energy and resources demand might triple due to increased demand, increased connectivity and the energy transition from hydrocarbon based to electricity.
With the 2020 energy climate package and the 2050 energy roadmap, Europe has engaged early in the transformation of its energy system.
The Commission’s ‘Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy1’ identifies the main areas in which the EU should make progress to move to an Energy Union that fully integrates security of supply, sustainability and competitiveness.
The EU’s Energy Union strategy and the recent COP21 strengthen the energy policy axes of security of supply, sustainability and competiveness, together with the need to invest in research and innovation to embrace the necessary technology changes and to anticipate the growing demographic and environment needs.
As the Industrial Revolution was the transition to new manufacturing processes between 1760-1840, moving from manual production methods to machines and marking a major turning point in history, the digital revolution will be a disruptive transformation of the 21st century to a new economy, a new society and a new era of low-emission energy. Digitisation will have key implications on people, resources and all sectors of the economy to sustain their long-term development, in particular contributing to the achievement of the Energy Union objective.
Decarbonisation, deregulation and decentralisation have created a disruptive energy market leading to the emergence of new structures of power generation, transmission, distribution and retail. Proven energy business models based on trillions of euros worth of plants and grids are collapsing. New technology market entrants such as Google and Tesla are disrupting the value chain and traditional capital investments. For instance – consumers, communities and companies going ‘off the grid’ with new wind and solar while storage technologies are challenging network strategy. System operators are rethinking their physical assets and their customer experience, to re-imagine their business processes and their business models.
New business models
New business models in the digital economy are emerging, such as the six following models: outcome based models; expanding to new sectors; digitisation of products and services; competing as an eco-system; shared economy; and digital platform provider.
Customers will benefit from the new business models as digital technologies have reshaped their customer views on the services and interactions they will expect from service providers of energy, transport, health, social services and public administration. Energy customers of the 21st century will expect high quality, personalised services that are accessible 24/7 through mobile and social media. The wide rollout of smart meters and related digital services in Europe will lead to big data that will support the development of customer intelligence while respecting their privacy.
The energy sector, like the aerospace sector, has traditionally been modelling, simulation and forecasting intensive in markets and product design, delivery, installation, maintenance, monitoring and control. However, these models need to adjust and re-invent themselves to adapt to these major changes. For instance, the supply and balance of the system will no longer rely on large dispatchable power stations, but rather on variable renewable sources that need to be balanced with a combination of distributed generation, demand response, storage and interconnections. Millions of DERs and active consumers connected to the distribution grids will lead to more decentralisation.
Consumers will be more and more organised in ‘energy communities’ and new energy service providers and aggregators will make other stakeholders’ roles shift to new businesses.
Learning from other industry transformation cycles, the energy digital transformation will go through the same disruptive journey, making keeping the status quo no longer an option. We need the right answers to so many questions that are pending today: energy systems do not tell much and customers will ask for more transparency, more flexibility, more targeted offers adapted to their needs and adapted to their budgets!
Digital energy transformation will help system operators make rational decisions and at the same time, customers will get everyday benefits and value added services. Digital energy transformation, leveraging IOT (Internet of Things) and in-memory technologies, will break the barriers among silo applications and silo databases, building synergies between the ‘backoffice’ technical data and the ‘front-office’ customer data. It will facilitate information exchange among energy players, among industries and across borders.
Integrated smart grids, their reference architecture and their standards (M490) will enable the development of open, interoperable solutions fostering innovations.
Integrated or convergent platforms between IT (information technology, typically asset management) and OT (operational technology, typically SCADA and GIS systems) running on highly performant technologies (in-memory) with embedded predictive analytics will become the musthave platforms to deploy smart grids.
eMarketplace exchange platforms leveraging cloud and IoT connecting DSOs (distribution system operators), ESCOS, aggregators and retailers will develop fast to make data and packaged services available to anyone, anywhere using digital technology.
For instance, the platform ‘FLEXICIENCY’. [Engerati-Building The Energy Services Marketplace]
European Technology Platform Smart Grids
The European technology platform smart grids set up a digital energy task force in 2015 (led by M. Chebbo) with the objective of providing the digital use cases and benefits of digital transformation summarised in a white paper (issued in May 2016) addressing the policy makers.
The outcome of the working group that involved energy and digital experts concluded with the following:
Top 10 recommendations for the Digital Roadmap of Europe:
1. Do not miss the non-reversible digital transformation. Otherwise, it will be too late.
2. Smart grid management is not (yet) a plug-and-play story but digital smart grids are!
3. We should empower ICT infrastructure using digital simulation and forecasting models.
4. The development of open electronic marketplaces will boost digital energy.
5. Well-guided data confidentiality accelerates the digital transformation.
6. Digital, well-designed energy. management can successfully integrate massive renewables.
7. Leveraging digital technologies will also enable well-functioning, open and flexible markets.
8. Digital home technologies can shift residential consumption during peak demand.
9. Keep investing in disruptive digital technologies while thinking first of your digital use cases.
10. Setup a virtual innovation hub (like a virtual “Silicon Valley”) to source a big number of ideas, leading to disruptive innovations after due diligence, prototyping and incubation.
The digital energy journey starts now! All the energy stakeholders, either operators or technology providers, should collaborate jointly to make it happen with the right speed and the right sense of urgency that we deliver the highest benefits to the European consumers. With this partnership collaboration, we can accelerate innovations, make data services available, improve customer participation and build an Energy Union of resources.
This article appeared in Metering & Smart Energy International Issue 4 2016.