According to a new EY report Digital grid: powering the future of utilities, digital grid is becoming a primary focus area for the global power and utilities sector, with 92% of companies surveyed planning to invest in the next 12 months. In the next 5 to 7 years, investment in digital grid is expected to be in the region of $500 billion. Forty-six percent of respondents confirmed that digital grid – the digitization of electricity, gas and water networks – is a top strategic program or a target for investment over the next year. Growth in renewables (72%), improvement in infrastructure operations and performance (72%) and cybersecurity risks (60%) were cited as the primary drivers for investment in this area.
An equal number of survey respondents (48%) identified difficulty making a business case, immature technologies and supplier inexperience, and a lack of understanding of the implications as the top barriers to digital grid adoption.
Fifty-six percent of respondents agree that non-traditional utility entrants will completely transform the sector. These new competitors – from telecommunication and technology companies to energy aggregators and energy service companies – are investing in offerings that have the potential to erode traditional utilities’ returns on digital grid investment. This includes connected home products, home energy management solutions and off-grid solutions among other products. The report highlights innovative approaches undertaken by utilities to manage disruption from new entrants, including developing a virtual power plant based on battery storage, promoting a “bring your own battery” business model and testing blockchain for electric vehicle charging. Download the report here.