While the energy sector had already been showing signs of evolving before COVID-19, the pandemic has re-emphasised the concept of distributed energy.
As countries moved into lockdown, encouraging remote working, the load shifted away from peak hours overnight.
This has made the historic models of managing that load invalid. According to Kamal Ballout, Global Vice President of Sales and Practice for the Energy Segment at Nokia, the industry is now at a point where they need a more nimble, dynamic, distributed energy model and find their future value.
“Communications service providers went through this process in the late nineties when the line was unbundled from services. Utilities need to start identifying ways to re-insert themselves into the value chain or risk losing relevance and ultimately margin to new entrants. Chief digital officers within utilities are looking at ways to diversify top-line revenues and substitute losses in electrons by substituting that with other services, such as smart city-as-a-service, appliances-as-a-service, and facilitating the transaction between the consumer and distributor.”
He said utilities are going to suffer from reduced budgets in the short term, facing lower income, but with high expectations around their role in repowering economies.
Back to basics
They will, therefore, have to go back to basics to maintain a healthy balance sheet and reprioritise projects to focus on the reliability of the grid, ensuring industrial areas where the economy is being relaunched are well served and focus on retaining critical talent.
“In the medium term, they will have to redefine themselves and invest intelligently in the diversification of their value. They will have to embrace the notion of pushing toward distribution and then powering distribution to find their value in this universe. They will also see significant opportunities in the establishment of digital platforms in distribution, more involved consumers in energy production and consumption, renewable energy, and clean energy, including gas. We also foresee some of the centralised generation facilities losing to more distributed energy,” said Ballout.
He added that in the long term, diversified portfolio providers will emerge with electricity only being one of their offerings. “This could include a wide range of intimate services, considered essential to the end-consumer as well as more intimate relationships. We can expect to see things like machine-to-machine (M2M), industrial IoT, artificial intelligence, high-speed connectivity to key communities such as schools and hospitals, and smart cities to name a few.”
According to Ballout the time has come for utilities to disrupt their thinking and embrace change.
“They need to determine where their future value will lie, and what the impact of that will be on their processes, how they do things, who they are hiring, and where they invest their dollars. To transform they need to attract and augment their cultures by injecting different and broader thinking into it. They must, therefore, stop thinking about project-based deployments, moving away from that way of thinking to find a way to fund innovation overall.”
Ballout concluded that the value of technology innovation lies in transformation. “In the past technology was viewed as a necessary evil to support the operations of the utility. Now technology has transformed into becoming a strategic asset to the utility. The digital platform has moved beyond being an enabler to becoming a strategic asset that is going to keep giving the utility value and the value chain is going to be a source of diversification for the utility, to bring reliability to distribution and the distributed energy market.”
This article was published in partnership with Nokia.