There are fundamental changes happening in the energy market.
Market models are moving from a centralized long-term planning management to a decentralized customer-centric approach. Smarter grids enable local energy management initiatives and there is a market appetite for them. The growth of these localized initiatives will decrease electricity flow in the grid. Over the next decade, decentralized energy management will co-exist with grids and centralized generation. And while operators are working on integrating renewables in the grid and deploying smart meters, it is important to assess financial investment in grids in the light of the growth of these new autonomous communities.
With the chaotic markets and low wholesale prices of electricity and gas, the financial situation of Utility firms is not healthy. There are new players coming into the mix. Oil and gas firms like Total are entering the electricity and gas retail supply market. Utilities are moving from selling commodities into selling services – and here, the journey is easier for smaller utility firms like Eneco (check out its smart home system called ‘Toon’). The services market also has low barriers to entry and this means we can see more players coming in.
All this means, the traditional leaders in the Utilities market need to accelerate their transformation into digital Utilities.
Digitalization will allow operational efficiencies through the whole value chain – from generation through transmission and distribution. Process digitalization is seen to reduce costs by around 20%.
Smart meters and increased web-enabled customer touch points will enable Utilities to improve customer knowledge and thus improve customer relationship. Web-based services have been known to generate new revenue, respond to customers faster and reduce customer churn. This will further reduce costs. In addition, DSOs with the vast amount of customer data they have, could become data service providers.
This transformational journey is absolutely essential for Utilities in this changing world. If you are interested in this, the European Energy Markets Observatory (EEMO) is an absolute must read. Download your copy here!