Utilities need to get smart or lose efficiency… and customers

The smart grid could be a double-edged sword for utilities as it creates potential for efficiency gains but also opens the market to new entrants, speakers warned in London this week.
Published: Fri 10 May 2019

Utilities need to stay on top of their customers’ preferences for energy delivery or risk losing them to suppliers from other industries who tend to adapt to new technologies more quickly, speakers warned at the Digital Utilities Europe event in London this week. Some countries have encountered technical issues with smart meter roll-out and other barriers to full deployment remain. A more engaged consumer will emerge, who might be persuaded to use energy at an optimal time for the network, but may also be lured away from traditional suppliers if services can be packaged in an appealing way by other more nimble and customer-focused industries.

The UK’s smart meter aspirations have been plagued by technical set-backs but these are being overcome, said Rebecca Yates, policy and public affairs manager at Smart Energy. “This is about big picture change. The results and where it will get to are worth the bumps in the road,” she said. But engaged customers who understand the benefits of the digitalised world may move to suppliers from other industries if they are well-known brands, such as TV or music streaming services. “There could be a huge shift in the way people will buy energy,” she warned.

Utilities need to reinvent themselves, agreed Dr Holger Wiechmann, senior manager – Digital & Smart Energy World at EnBW. “These are all business opportunities and we can take them or leave them. If we don’t take them, Google or someone else will.”

Dansk Energi will publish results in September from a demand management project on the island of Bornholm with around 800 households with smart meters called Ecogrid 2.0. “We need to get more flexibility into the consumption curve,” said Jorgen Christensen, chief technology officer at Dansk Energi. “We’ve learned a lot and there is a lot more to learn about the new consumer.”

“Smart meter technology is there but it’s not being used to its full potential,” said John Harris, president of European smart energy solution providers group ESMIG, based on his experience as a smart metering technology provider and a March workshop in conjunction with the European Energy Retailers organisation. Simply having a smart meter can raise customer awareness of their energy usage but that does not necessarily encourage them to avoid using appliances at peak demand or switch them on when renewable capacity is high. ‘You have to give people an incentive to change behaviour,” he said.

In order to maximize energy or emission reductions, disaggregated consumption data as close as possible to real time needs to be fed back to the system operator. But new EU privacy regulations prohibit the collection of information from terminal equipment unless needed for software updates or the customer gives explicit consent. ESMIG is talking to the commission about whether smart meters should be included in the ban.

 

System operators need to think very carefully about how their business models will change, said TSO representatives from European countries. Digitalisation will unlock opportunities to use time-based tariffs, local flexibility, information and reactive power management to optimise resources. “The value chain is changing and we need to change assumptions. Our planning and economic logic needs to change,” said Signe Horn Rosted, director of electricity markets at Energinet. “We are the ones who have to help enable these business models. We continuously have to gain insights.”

Netherlands TSO TenneT wants to expand on successful pilots testing various digitalisation projects such as artificial intelligence, blockchain, robotics and sensors that it will need to cope with the future demands of the grid, said business developer Klaas Hommes. But many questions need to be answered beyond testing the technology, perhaps most importantly who is responsible for the new infrastructure and who pays for it. As resources become more distributed and customers rely less on the grid, costs will need to be divided among an ever-diminishing client base and more reserves may be required in a less connected network.

Vattenfall Distribution has been testing new digital opportunities, one of the most exciting of which is having a ‘digital twin’ where applications can be tested before they are put in place, said Peter Soderstrom, asset development manager. The Swedish regulator’s decision to allow DSOs to use storage and invest in generation was welcome, but the EU commission is “not on that page yet,” he said. Vattenfall has designed an Asset Simulation Planning tool to demonstrate how assets behave long-term. “A crystal ball is very important when you have assets that last a long time,” he said.

Getting the balance right between long run and short run marginal costs is very challenging, agreed Stephen Woodhouse, chief digital officer of consultants Pöyry, who chaired the first day of the conference. In his presentation he offered alternative future visions in which energy and perhaps aggregation of flexibility is bundled with sale of appliances, or where an electric vehicle dynamically contracts for a supply of energy each time it is plugged in.  As we move to a world in which distribution networks are congested, the existing model for connection and firm access will be challenged, and more flexible access and grid charging arrangements will be needed in future.  Grid operators may find themselves offering an insurance service to back up homes that only need occasional recourse to additional generation when domestic renewable resources and battery storage systems are insufficient. Each European country has very different circumstances and utilities need to embrace digitalisation taking into account their unique network structure.  However, if the industry doesn’t set the protocols for the future management of the smart grid, then these protocols may be driven by players from outside the sector eg car charging services.