In the fast-changing energy sector innovation is proving key to staying ahead for utilities, with the need to adapt with new products and services.
Coupled with digitalisation, this trend has given rise – and impetus in some cases – to what are currently emerging technologies. Think blockchain and artificial intelligence, or on a larger scale battery storage and electric vehicles.
While some utilities are pursuing innovation, either or both internally or with suppliers, it is still to become widespread. Indeed, according to the World Energy Council’s Energy Issues Monitor 2018, innovation is the key area of concern for energy leaders currently.
The Monitor, which is based on a survey of more than 1,200 sector leaders globally, also finds that issues considered to have the greatest level of uncertainty are blockchain, artificial intelligence, platforms and the hydrogen economy. Issues with the greatest impact – all with a low level of impact uncertainty – are renewable energies, energy efficiency and electricity prices.
Notably, the Monitor also finds that it is not only the energy leaders but also the startups themselves that are finding the increasing pace of innovation difficult to understand. And again, blockchain features as having the greatest uncertainty coupled with the greatest potential impact among innovators.
Another interesting insight revealed in the Monitor is how different issues have changed over the last five years since they started being tracked.
For example, issues that have remained essentially constant in the impact-uncertainty space are electricity prices, US policy and China growth. These have an impact on all countries.
On the other hand, issues that have increased in importance include digitalisation and electric storage. According to the Monitor these demonstrate that the energy transition is moving in the right direction and show their expanding role in transforming renewable energies from a niche resource into one with consistent participation in the generation supply mix.
Notably, nuclear stands out as one of the issues that has decreased in importance, with regions and countries such as Europe and Japan looking out phase out nuclear power.
Overall, according to the Monitor, it is evident there has been continued evolution of the energy sector towards a more diversified global energy mix with greater penetration of renewable technologies. There also has been a shift away from centralised systems to accommodate this; and growing interest in technology innovation, digitalisation and the use of data.
Future energy leader viewpoint
Current wisdom has it that if one wants to look to the future, then one should look to the future leaders.
In doing this the Monitor finds that future energy leaders have placed a special emphasis on emerging topics such as blockchain, internet of things and digitalisation. They also have attributed importance to market design, suggesting the need for greater attention to longer term developments and for a new approach to business as usual.
Another finding is that commodity prices have increased in urgency over the past year, with the evolution of oil markets among other issues inducing significant concerns for the coming months.
In addition, the climate framework has emerged as a new action priority with growth in both urgency and impact. The climate framework is a key element to both the energy transition and the sector transformation. Continuous rollout of renewable generation and the curtailing of greenhouse gas emissions through enhanced regulations are expected.
Market design remains nonetheless one of the critical uncertainties with a higher impact than previously. New business models are in the future energy leaders’ agenda with the belief that markets must adapt to better serve customer needs in the different world markets.
Commenting, WEC Secretary General Christoph Frei says in the foreword that the Monitor reflects an energy world in an accelerating transition toward digitalisation, decentralisation and decarbonisation.
He adds: “It is clear that our community of leaders of the future are anticipating an accelerating/rapid energy transition.”