IBM defines the energy integrator as the body that provides the systems of engagement that sustainably balance distribution side energy supply and demand safely, reliably and securely. This role may fit the incumbent utility or potentially a new entrant. According to Steve Callahan, Vice President Strategy and Solutions, Global, Energy and Utilities Industry at IBM, there are some incumbent roles embedded in this definition such as safety and reliability, which have in the past been a utility function. However there are some new energy roles which utilities should step up to and own in order to really take advantage of the business opportunities arising from the transformation taking place in the energy industry. [Utility as energy integrator].
But very few are, according to Callahan. The energy industry is not looking at the role of energy integrator as an ecosystem in terms of having a business model impact. While this ecosystem involves grid operation, energy exchange and data services, there should be a wider incorporation of business models that involve residential, commercial and industrial accounts.
Europe’s utilities more experimental
The network of grid participants is growing, calling for an improved network orchestration. According to Callahan, Europe’s utilities are snapping up the opportunities on the grid edge faster than its US counterparts. “There are some interesting first-mover cases in Europe where utilities seem to be more willing to experiment and aggressively implement new business models when compared to the US and Asia-Pac.”
He adds: “There is a raw dynamic in places like Germany which is seeing a restructuring of utilities in response to new strategies. Due to various industry drivers and societal norms, the industry is more open to experimentation. This mindset has yet to reach the US.”
He says that there seems to be more experimentation in Europe when it comes to peer-to-peer business models and more openness to engage in innovative transactions. “Sustainable generators are now actually transacting with the customer directly. There’s a higher level of implementation of cloud technology in Europe than anywhere else, driven by regulation and society’s expectations. Cloud computing is it-this is where the world is going so utilities really should be climbing on the bandwagon and following the lead of Germany and the Netherlands.”
In fact, new entrants are snapping up the opportunities faster than utilities when it comes to the uptake of new technologies in the industry, explains Callahan. New entrants are building their businesses on the cloud-not data bases. He adds: “The new entrants may eat everyone’s lunch if incumbents are not careful.”
Utilities can be the orchestrators of their future
Callahan, who will be attending this year’s European Utility Week, says that his company wants to gain a clearer understanding as to why the US lacks the aggressiveness that Europe’s energy industry is showing towards experimentation and innovation when it comes to new technology and business models.
“If we can craft what the net looks like we may be able to learn something and shape where we are going in the future. It is Europe’s momentum and vibrancy that we are most interested in.”
He concludes: “The energy industry can choose to either be victims of change or orchestrators of their future. By their very nature, utilities are cautious and conservative but disruption-both in technology and business models- should prompt them not to play on the defense. They should own the march to sustainability and a zero carbon future as the industry has a large part to play. We want to encourage utilities to up their game from a business strategy point of view especially when it comes to the uptake of innovative technology since this will only improve their sustainability and viability in a highly competitive environment.”