The New Power Generation
The power and utilities industry is going through a radical change, but how will its legacy lengthy planning cycles meet the demands of innovation and new customer expectations?
The Wzard team recently attended the Future Of Utilities Conference organised by Marketforce, it provided an opportunity for us to consider what can be learned by sharing experiences from different industries, it turns out quite a lot!
Coming into the conference as an outsider it was interesting to see the whole industry is highly regulated, is significantly influenced by political changes, and largely operates as a monopoly. While regulation is no surprise, the other two immediately sets a different set of challenges, it's a tough place to be driving innovation.
Interesting facts, such as the Energy System is only 46% productive, open your eyes to the technical challenges faced and then hearing how the industry is facing phenomenally challenging environmental goals helps you to understand that in many ways the focus on simply keeping the show on the road is a massive draw on time.
The environmental drivers are forcing the reduction of traditional nuclear or coal power stations in the system (Scottish Power alone have closed 2 coal plants in the last 3 years) so you also have an urgent need for radical transformation in order to meet future demand. Its a very complicated environment to operate in. Stepping back a moment and looking at this really high level, the industry value chain breaks down into 4 key stages:
The Future Customer / Future Home
No surprise the customer featured predominantly, this wasn't just about todays customers but also a clear vision for the customer/home of the future (see diagram at top) where:
Electric Vehicles will be charged overnight
Self Power Generation will be in place, typically via solar
A battery will store capacity until it is needed
If needed then the home will draw power from the grid
If excess capacity is available, capacity can be added to the grid
Without doubt, this is a compelling view, but the national grid are already flagging their concerns, that a truly flexible solution that provides a fully distributed system will take another 15-20 years to deliver! Ouch.
Smart metering is a key customer component, but already supplier dependent metering solutions is limiting the ability to switch suppliers without additional expense. In terms of hardware, new innovations are clearly happening, the challenge is how they fit together in the whole ecosystem.
The demand for power is increasing and the customer needs are changing, this comes across as 5 demand areas:
Electrification of Transport
Electrification of Heating
The Need for improved data (to provide individualised customer services)
Further Deregulation (eg. for Water) to encourage more competition (ergo less collaboration!)
Political Influence on the industry as a whole (a general election won't help if parties change) and the Climate Change Agenda
Innovation at the ready
From many perspectives there is already a lot of innovation from the introduction of technologies such as wind or solar that is driving new ways to provide and service homes. A significant event occurred recently when demand for power was lower on Saturday afternoon than in the evening. Normally this would be the other way around and the expected cause is the volume of self-generated power for homes was reducing the overall demand on the system.
Other innovations are stepping into the area of AI, National Grid for example are utilising deep mind to evaluate energy consumption in buildings and identified a 40% reduction where deployed.
There are greater opportunities from a retail perspective, most notably the recently de-regulated elements of water supply. Here it feels like the very early days of continuous improvement, although the word innovation was used a lot in describing their activities, it seemed more like small incremental improvements, which is not typically innovation per se.
At one point there was recognition that the average age of leadership in utilities is higher than in other industries and in a moment of self reflection, considered how to engage a more diverse group that can drive an innovative mind-set.
It's a challenging industry, and technical innovation at the plant level seems to be happening rapidly, but embarking on a culture change will be essential next steps.
While each industry has its own specific challenges, there are also many opportunities to learn by sharing insight across different sectors. Contact email@example.com for more information.