Digitalisation is transforming the energy sector. The integration of smart technology into energy networks fundamentally changes how energy is generated, distributed, managed and stored. Utility companies need to adapt and reconsider what they offer their customers in order to keep up.
To stay ahead in an increasingly competitive and evolving business environment, utility providers also need to be able to leverage and monetise the extensive data from new technologies such as smart meters, electric vehicles and energy management systems to add value and create new revenue streams. Ultimately, those that embrace the new future will thrive but those that underestimate the pace of change will struggle. I believe there are three key areas that companies must prioritise to take advantage of the opportunities offered by an internet of energy: 1) putting customers first; 2) making smart energy secure and 3) collaborating with stakeholders.
Putting customers first
Digital technology offers huge opportunities to give customers more flexibility and to customise their energy usage, and utility companies need to act fast to provide this. We’re already beginning to see the potential from AI software that learns from customer behaviour and offers the best configuration for connected devices and systems. This digitalisation has the potential to improve customer satisfaction whilst reducing costs and increasing efficiency – the customer benefits from cost savings whilst the grid operator gains the ability to react to consumption fluctuations and consequently encourages users to develop usage patterns to optimise their energy consumption. Data analytics then allow the prediction of demand peaks to be combined with personalised usage profiling to support tariff optimisation. We believe that by 2020, customised tariffs based on individual usage and needs, demand response services and time of day usage billing will have become the norm.
Ensuring cyber resilience
In an increasingly connected world, utilities must safeguard smart energy infrastructure from potential cyber-attacks. As energy networks become increasingly digitised, utility companies need to build cyber resilience into all systems, processes and platforms from the very start. It must also be possible for customers to share or sell their energy securely. The next level of decentralisation is seeing the emergence of peer to peer trading models, for example, which are expected to take hold beyond 2020. Blockchain technology is already being used in pilot projects to provide the trust layers for peer to peer energy transactions for those with connected energy systems.
Embracing collaboration
Digital transformation will be felt across the whole value chain and holistic programs are needed, from the point of generation to the point of consumption. Collaboration will become the new norm as stakeholders from across the industry realise they need to combine skills and embrace co-creation to navigate the challenges and embrace the opportunities of digitalisation. Smart energy networks will be made up of technology from a range of companies as they work together. As technology from different companies is increasingly used, energy providers must ensure that a diverse range of software is compatible across smart energy networks.
The momentum behind the digital transformation is huge. Making a success out of the digital energy future will depend on stakeholders taking a long-term view of the future, putting customers first and opening up to real collaboration. Players from across the energy ecosystem will witness increasing and accelerating disruption, whether they are utilities, manufacturers, system providers or energy consumers. They will all face the same choice: sit back and watch the consequences unfold, or turn this technological disruption into opportunities.
All stats referenced are included in Hitachi’s latest whitepaper with Frost and Sullivan on Digital Energy: The Future of Energy and the Roadmap to Business Transformation