May 24 – May 25
SMX Converntion Center, Manila Philippines
Radical Changes for Electricity Utilities
There is no doubt that the current business model of most electricity utilities around the world is under enormous pressure, from many different directions – political, environmental and economical.
While one obvious direction is to develop new businesses around renewable energy, micro-grids, smart street lights, EV, etc, the problem will be that once such models become successful the question will arise as to whether they should be delivered through the monopoly model of the utilities or through the market. We already see in some of the European countries that the regulator has stepped in on the request of other market parties and ruled that, for example, the operation of EV loading stations should be left to the market.
An option is to look at the utilities in a totally different way. If we look at the current business model it is hard to see the utilities surviving in their current form, and perhaps as early as the next decade serious structural industry failures will start to occur. Sure, the current models can be propped up through government regulations (eg, forced price increases for consumers), but this will be unpopular and unsustainable moving ahead. There is no doubt that the current value of the utilities for their shareholders is diminishing.
There is no doubt that we can talk about an energy revolution. Not only is the nature of energy changing from fossil-generated energy to renewables. At the same time the total distribution structure is changing, with less focus on centralised distribution and a shift towards distributed energy. We can talk about a perfect storm as several developments are now coming together. These are all revolutions in themselves and include:
- Revolution one – customers pushing the industry out of the driver’s seat: With an increase in energy prices, customers have become energy-aware and are now driving energy savings. They are becoming very inventive at this and energy savings have become the latest barbecue discussion topic, overtaking telco issues. Customers will look for applications (services) and devices (hardware) that will assist them in this.
- It is interesting to see that customers have rather suddenly decided to invest in energy apps, devices, renewables, batteries etc. This is an interesting development as they have hardly ever invested in energy products before. As in telecoms, customers will play an increasingly decisive role, as co-investors, on where the market will be going. This will drive the development of new consumer products and services (similar to the impact of the smartphone on the telecoms industry).
- Revolution two – smart micro-grid versus big iron grid: With a focus on renewables, batteries, micro-grids and smart homes the focus of ‘smart grid’ investment is moving away from the ‘big grid’. These new developments are based on open standards, interoperability and sharing. This is the opposite to what is happening in the so-called ‘big iron’ smart grid developments, which are taking place within the industry and are still largely proprietary-driven, with little standardisation and based on closed rather than open systems.
- Revolution three – sharing versus owning: New technologies and organisations around them are developing totally new business models based on sharing and utilising the technology to build business models (Uber and Airbnb are the poster children here, but there are already thousands of sharing networks in place). It is only a matter of time before disruptive sharing developments will take place in the electricity industry. Could there be one big grid connection to a community, a street or a new housing development – just for emergency – and the rest based on sharing renewable energy?
Power & Electricity World Philippines 2017, running from May 24th in Manila is the Philippines’ largest energy conference & exhibition. Bringing together the government, leading utilities, power producers, project developers, investors and solution providers it allows new business opportunities and valuable connections to be made and generating genuine business connections. It is committed to showcasing new products, ideas and innovations.
For more information see – Power & Electricity World Philippines 2017