Drive for digitalisation powers up

It has been a torrid few years for energy producers in Europe, caught in a perfect storm of market liberalisation, shifting renewable and sustainability policies, capital constraints and energy grids that are no longer fit for purpose. Digital technology will play a key role in the re-invention of our energy markets as the continent transitions to a low-carbon future.

The growth in renewable energy sources means that power is no longer concentrated in centralised conventional thermal power plants, but is intermittent and lies off the grid in remote coastal locations or generated onsite. Distributed resources pose many operational challenges for the traditional grid, including rapid voltage fluctuation and bi-directional flows on radial distribution lines. This is where the digital grid comes into its own, using software to monitor and integrate distributed assets to address demand more efficiently, improve flexibility and increase resiliency.

Indeed, in the future, it’s possible to envisage distributed resources, be it a remote offshore wind farm or a customer’s roof-top solar panel, operating as part of a single connected network: a “virtual” power plant, flexing to meet shifting demand and adapt to real-time pricing signals.

The electric grid of the future will suck in data from across our hyper-connected world – from weather stations, satellite imaging of vegetation, granular load projections from smart grids and real-time asset health reports – and use machine learning to ensure optimal resource mix and power flow path to improve efficiency, reliability and delivered cost to the consumer.

Digital technology is also transforming the relationship with consumers – some of which are now energy producers in their own right. The roll out of smart meters – albeit at a slower pace than anticipated and dogged with controversy about billing mistakes and cyber-vulnerability – gives householders increased visibility of their energy consumption. Advanced data analytics, drawing on data from smart gadgets and real-time price signals from the connected grid, will allow customers to shift consumption to off-peak hours to benefit from lower tariffs while smart appliances may be able to barter with other devices to optimise their operations.

As digital technologies facilitate the transformation of the power sector value chain, energy providers have the opportunity to re-invent themselves to meet growing consumer demand for value-added services beyond energy. This is a trend already seen in other industries, such as financial services and retail, as digitisation blurs traditional sector boundaries.

Energy companies will be able to power previously unimaginable insight from the torrents of data streaming from their networks –  GE reckons that, by 2020, over seven billion devices will be installed across the energy value chain, generating 24 exabytes of data – enabling new interactions with customers and positioning themselves as trusted energy advisor or even offering a wider suite of services to embed themselves into the fabric of daily life.

There are challenges before this vision can be realised, not least a lack of commonality around standards and interoperability issues and ever-growing fears about cyber security. But the transition to a 21st century digital energy provider is already underway…