Nobody knows what our energy supply will look like in 2050. Will we be completely dependent on renewable energy? Will electric vehicles be the norm? What new opportunities will the Internet of Things (IoT) and big data provide? Will we be prosumers? Will we have a “Spotify-like energy solution,” which like the music streaming company, will respond on demand to instantly meet consumers’ requirements?
While all this is speculation, those who watch current events closely could make predictions that go beyond just “guesswork.” In this blog, I outline three dimensions that may color the energy market of the future.
The energy sector is experiencing tremendous change, motivated both by climate targets and attempts to push the boundaries of technology. Consider the development of solar panels, the continuous improvement in battery technology and the increasingly important role that smart homes and other ICT solutions play in the energy ecosystem.
In this dynamic sector, grants and offsetting make all the difference and, in time, the price of solar energy and energy storage could be a game changer. Take the huge battery factory that the electric car company Tesla Motors is currently building in Nevada. In 2017, the factory’s first battery will be produced here, and it is expected to have a huge impact on the production and price of storage. Analysts predict that this will reduce battery-pack-level costs by $38 per kWh[i], which will have an impact on the entire electric car market.
There are other trends that also affect this sector:
· Technology: New technologies follow each other rapidly and bring endless possibilities, such as in the case of big data. This largely determines where the energy sector is going. For instance, in the 80s, who would have thought that by 2015 a smartphone would offer the functionality of a PC at a lesser cost, and do more than you had ever imagined?
· Peer-to-peer trading: Today, through a “connection” to the Internet, a smartphone and an app allow consumers to start new networks and trade directly with each other. For instance, take the case of Marketplace, Uber and Airbnb. In the energy world too, we have the example of Enwire that enables person-to-person trading.
· The shift from products to services (i.e., from ownership to use): We see this development in many areas. For instance, in the case of transport, why would you want to own an expensive car when you can arrange your transportation via an app? Similarly, why buy or download music CDs, when you can use streaming services such as Spotify?
The future in three dimensions
The above changes, developments and trends color the future of the energy market. In addition, several obstacles remain, such as laws and regulations, the unpredictable nature of solar energy and the crucial question about whether these energy sources are profitable.
In recent years, there have been several pilot projects that have brought us many new insights. The key question is how will the “valley of death” 2 come through and create a new energy market. Or, what does a “Spotify” energy solution look like?
The answer for me has three dimensions:
1. Vision and collaboration/co-creation: The starting point is to illustrate an idea of what the energy market will look like. To do this, it is important to understand how the market works. However, understanding today’s market should not be a hindrance; rather, a balance must be created between today’s market trends with tomorrow’s innovation to predict future scenarios. Collaboration is essential between large corporations, start-ups and customers. Here, customer satisfaction, leadership, creativity and scalability go hand in hand.
2. A “just do it” approach: Change is initiated by carrying out projects and launching new services. It is important to respond to matters that are topical at the moment, but to keep the end goal in mind. It is essential to dare to learn and, from this, to further refine our final vision.
3. And last but not least, timing is crucial for the launch of new services: As I mentioned earlier, energy storage is indeed a game changer. Before you know it, it will be 2020, and there will be an increase in microgrids, energy sites, self-sufficient houses and electrical transport. Generic and scalable IT platforms are already taking these potential developments into account for their future planning. These platforms will connect smart objects (IoT), balance supply and demand in the market, and enable us to develop new services. However, waiting for the development of these platforms is not an option, otherwise, there will be no Spotify for the energy market.
Are you wondering how CGI is already building the “energy of tomorrow”? Contact Jos Siemons to find out more and visit our webpage: http://www.cgi.com/en/solutions/central-energy-management-system.
[i] Stephen Lacey. "Analyst Prediction: Tesla’s Gigafactory Could Drop Battery-Pack Costs by 70%." Greentech Media. September 23, 2015. http://www.greentechmedia.com/articles/read/analyst-prediction-teslas-gigafactory-could-drop-battery-pack-costs-by-70.
2 The “valley of death” is derived from the innovation curve, referring to the difficulty of covering negative cash flow in the early stages of a startup. (E.g., http://www.forbes.com/sites/martinzwilling/2013/02/18/10-ways-for-startups-to-survive-the-valley-of-death/#1c1ed73f5e40)