Opportunities for reinvention
Change needn’t be a threat. The new energy ecosystem offers the opportunities for reinvention that many energy companies have been seeking, after years of eroding revenues. The potential for new paths to growth are waiting - for those that get ready in time.
- Microgrids: As generation continues to evolve toward a more diverse and decentralized network of intelligent flexible units, energy companies can help build community microgrids, connecting and managing the energy inputs from many different self-generating households.
- EVs: Utilities could take a bigger role in the EV industry, investing in infrastructure that allows EV batteries to help stabilize the grid.
- Emerging technologies: Energy companies could develop new digital applications that create virtual marketplaces to trade energy in new ways. Technologies such as blockchain and smart contracts will underpin this new transactive energy ecosystem.
The truth is that as technology evolves and sectors converge, the resulting business possibilities will grow exponentially and take forms that we cannot even imagine today. Twenty years ago, did telco bosses envision that one day we could control almost our entire lives from a handheld smartphone?
Instead of trying to predict the future of energy innovation, energy companies should focus on building an agile, collaborative business that is ready to quickly pivot to take advantage of new technology and trends. Our advice for utilities preparing for the imminent tipping points of their sector is to make smart “no regrets” investments now while planning for a very different future. Utilities should:
- Invest in digital grid infrastructure: However the future energy ecosystem will evolve, it will be built on digital technology – the investments utilities make now will determine how well equipped they are to reap the benefits of digital applications tomorrow. Energy companies need to make strategic investments in digital grid enabling technologies, such as smart meters and advanced distribution management systems (ADMS), and the skills required to operate them.
- Evaluate new business models: In the new energy ecosystem, revenue growth will come from enabling self-generation, growing digital-enabled energy services and the EV ecosystem. Utilities will need to consider potential business models supported by digital grid investment, such as EV infrastructure and microgrids.
- Engage the regulators to shape a future role: In most markets, the regulatory models that shape energy investment are yet to catch up with the sector’s transformation. Different models of incentivizing utilities could encourage more innovation. Now is the time for energy companies to drive the discussion around their future roles to ensure relevancy and remuneration in the long-term.
Tomorrow’s energy winners are taking action now
The tipping points that mark the journey to a fundamentally different energy ecosystem are almost here. The energy companies that prepare will win in the new energy ecosystem – however it evolves. The key is to embrace the potential of change by taking bold steps now. Those that do will do more than simply survive, and thrive.
For further EY insight into the impact of Digital Transformation, please click here