A discussion with Philippe Vié, Global Head of Energy, Utilities and Chemicals at Capgemini,
In March, a new study from the University of Colorado Boulder reported that the hole in the ozone layer over Antarctica is the smallest it has been since it was discovered in the 1980s. This progress can be attributed in large part to efforts put forth by the 1987 Montreal Protocol, which was signed by 197 countries and phased out the production and consumption of ozone-depleting substances. Many in the scientific community consider the Montreal agreement the single most effective and successful environmental effort to date and have taken it as proof positive that progress can be made on climate change, especially if there is a united, global strategy.
Encouraging as this news is, it is not indicative of overall progress on a global climate change agenda – even when coupled with new emissions goals laid out in the Paris Agreement. The Future of Energy, Capgemini’s latest piece of research that explores the evolution of global energy policy, technologies, infrastructure investments, energy market evolution, and consumer behavior, depicts an industry experiencing a significant and urgent need for change over the last two decades. Here we are joined by Philippe Vié, global head of Energy, Utilities and Chemicals at Capgemini, to review the report’s key findings and discuss the future of energy:
Urgent as climate change is, the most pressing topic on everyone’s agenda today is the public health emergency. Can you tell us what effect this event is having on the way utilities operate or invest?
First of all, this is a devastating and disruptive global event, the full implications of which we don’t yet know. Within the context of the energy industry, we see demand decreasing, along with a slowdown in commodities pricing. As a result, we’re seeing companies find new ways to be more efficient – for themselves, their clients, and society.
One interesting point to come out of this health crisis is how the environment is responding. We are seeing improvement in air quality all around the world as greenhouse gases drop. For the first time, we’re seeing oil & gas companies reduce CO2 emissions. People are traveling less, driving less. And, a lot of the conversations surrounding this public health emergency have an undertone of sustainability. Though we need to keep these changes in the proper context –there are many lives at risk – there are some signs that this health emergency could serve as a wakeup call for how our industry and the world should respond to climate change. It may even trigger more sustainable ways of living, working, and travelling in the post-crisis world.
To that end, what role do utilities play in driving the climate change agenda and sustainability efforts?
Utilities play an absolutely critical role in driving the climate change agenda forward. Most of these organizations have drastically reduced their emissions, which account for about one-third of all global emissions. In addition to serving as a positive example and leader on this issue, they have also helped their customers reduce emissions. We see now that customers are consuming less, which means that utilities are selling less. That may seem counterintuitive for the utility, in that they are helping customers buy less, but that is hardly a new concept. Utilities have been fully engaged in sustainability for quite some time.
The Energy and Utilities companies that have become or will become sustainability champions and that remain committed to their clients’ results, will lead the game, becoming preferred suppliers or even partners to their clients. They may also create new sources of revenue from selling sustainability-related products and services; in the process, it’s possible that they will avoid taxes, such as carbon taxes or energy efficiency obligations, from direct or indirect emissions. To be competitive, these players of the new age will need to completely renew their product and services portfolios.
Along the same lines, utilities have acknowledged that they alone are not responsible for change. There is a need to create public and private partnerships and forming ecosystems to address these issues more effectively. In our most recent World Energy Market Observatory (WEMO) report, we outline how utilities can adopt the role of orchestrator, working with a wide range of stakeholders, including technology companies, the investment community, or consulting partners to develop solutions, identify funding, and implement them at scale.
What role will technology play in transforming the energy industry?
Unfortunately, our research shows that no energy-related technical breakthrough is expected over the next two or three decades to address climate change issues. However, that is not to say that technology will not play an important role in shaping the industry’s future. The digital revolution, combined with sector technology evolution, is primed to disrupt the energy landscape and help organizations overcome core challenges in this area. Competitiveness will also be derived from the growing use of technologies and services at scale. This is a really important point when you think about competitiveness. Who would have imagined 15 years ago that renewables could compete with existing nuclear?
Further, sector technologies, such as renewables, hybrid farms, storage, hydrogen, or the smart grid, in conjunction with intelligent automation such as artificial intelligence (AI), robotic process automation (RPA), and the internet of things (IoT), can create meaningful impact – far more than the deep technologies by themselves. For example, advances in intelligent automation will continue to decrease the cost of renewables by enabling the development of hybrid farms. In order to enable a larger share of variable renewable energy in the energy mix, utilities can shift from an experimentation mindset to at-scale deployment of the smart grid. In turn, the increased use of the smart grid will improve system reliability by managing key attributes of intermittency and distribution of new energy sources as they are added to the system.
What closing thought would you like to leave with readers?
The world is not changing fast enough. Even areas such as Europe, which are leading global efforts, are not aggressive enough in terms of their climate agenda. Again, there is no silver bullet solution, no technological breakthrough expected to address these issues. And so, we need to act – every country, every company, every consumer.