The energy sector is in a state of greater change than at any time in its history. Changing government policy and regulations towards sustainable but reliable and affordable energy, uncertain economic conditions forcing companies to rethink their businesses and technological advances bringing new products and services to the market are all having an impact.
These developments are changing the energy market and the energy system. They will change the way consumers interact with their utilities and will change how market parties interact with each other. All these interactions will be digital and the number of interactions will expand dramatically, enabling the creation of new business models and new ways of operating the energy system that is more insight led and customer focused. This is what we call digital transformation of energy markets.
The question facing the sector is how this transformation can best be harnessed to the benefit of all players from governments to utilities and their customers.
Waves of change in the energy market
Resulting from these drivers, there are three primary waves of change in the energy market that need to be taken into account, says Michiel Homan, Vice President, CGI, in an interview with Engerati.
These are the forced competition of utility companies through unbundling and rearrangement of market tasks, the introduction of smart meters and the participation of consumers in the market as producers and traders of electricity.
“All of these are happening in many countries and they are giving rise to an increase in the numbers of information exchanges and volumes of data that need to be transmitted between different players in the system. For example, in some countries in Europe smart meters can increase the meter data rate from one read per year to one read every 15 minutes. And this in turn is giving rise to, for example, changes in billing and new market models such as demand response, with the additional complexities and time sensitive requirements they impose.”
With such data exchanges occurring increasingly not only within individual companies but with multiple parties, Homan points to the need for “market facilitation.” In CGI’s experience this can best be delivered through a Central Market System (CMS) – as an increasing number of parties are realizing.
Perhaps the best known example is the Energinet.dk system in Denmark. Others include the central Data and Communications Company (DCC) data services system for smart metering and the Market Operator Services system for the water market in the UK. In all there are 18 central market systems deployed or being deployed worldwide currently, of which CGI has delivered 11 since the first in the late 1990s. As a result of these experiences the company is making available the product as essentially a turnkey solution.
Central market facilitation
CGI defines a CMS as “A platform to exchange data that enables fair competition and the creation of innovative services accelerating smart grid deployment.”
Homan says that while CMSs can vary in scope, there are four basic functionalities they should provide. These are a message hub, where market parties exchange information; an administration hub, where energy transactions such as billing and supplier switching take place; a data management hub, where meter and other data is distributed and stored; and an aggregation hub, where volume and other aggregations take place.
Further the CMS is a platform for innovation as it accelerates the ability of market parties to introduce new services and develop new digitally based business models, delivering more value to consumers and driving their participation in supporting managing the energy system. Thus, they will play an important role in moving towards more flexibility in the lower grid areas and supporting fair financial settlement when consumers start producing their own energy.
The CMS should be accessible by all market parties. i.e. producers, TSOs, DSOs, retailers, traders and metering companies. However, who should “own” such a CMS is open to debate and will depend on the market requirements. Indeed, several different ownership models are possible and have been implemented, from government appointed third party (the DCC in the UK) to TSO (Energinet.dk) or DSO joint venture (Energie Data Services Nederland in the Netherlands).
“In this way we see the CMS as the transformational platform of the whole energy system,” says Homan. “The energy market requires a level playing field with quality information, data management and interoperability among siloed organisations where new business partnerships can lead to innovative services. Only a CMS can provide all of these capabilities without undue complexity, and as utilities move to new operating models to incorporate digital technologies, this becomes more prevalent.”
The customer experience
Commenting on CGI’s CMS Intellectual Property (IP), Homan says that a good deal of customer experience has gone into it. Two key features are its security and performance characteristics. “Security is critical and with high throughput of data, a high performance is needed. And it also needs to be transparent – with millions of data points and messages going through the system, none of them can be lost and if there is a problem, one needs to know what that is.”
He adds that the solution is also constantly being updated at both the technology and performance levels.
“As a repetitive solution, based on best practice and lessons learned, it can be implemented more quickly and cheaply than building it up from scratch. And with markets very dynamic and in a state of rapid change, such as those in northwest Europe, we aim to keep it competitive.”