Raül Blanco Generalitat de Catalunya DAY 1: SMART GRIDS TABLE 2: REGULATORY CHALLENGES AND BUSINESS OPPORTUNITIES ASSOCIATED WITH THE DIGITIZATION PROCESS, DEMAND SIDE RESPONSE (DSR) AND RES INTEGRATION INTERNATIONAL SUMMER SCHOOL “SMART GRIDS AND SMART CITIES” Barcelona, 6-8 June 2017
1. Global Trends 2. Industry 4.0: Concept and Technologies 3. Impacts and consequences 4. Industry 4.0 in Catalonia 5. Industry moves back to the city 6. Conclusions 2
1.Global Trends 3
FIVE TECHNOLOGICAL REVOLUTIONS IN 240 YEARS The ‘ Industrial Revolution ’ (machines, factories and canals) 1771 Age of Steam, Coal, Iron and Railways 1829 Age of Steel and Heavy Engineering (electrical, chemical, civil, naval) 1875 Age of the Automobile, Oil, Petrochemicals and Mass Production 1908 Age of Information Technology and Telecommunications 1971 Age of Biotech, Nanotech, Bioelectronics and new materials? 20??
Source: SIEMENS 5
EACH REVOLUTION LEADS TO A TECHNO-ECONOMIC PARADIGM SHIFT that changes the direction for innovation and organisation across the whole economy
The paradigm shift taking place since the 1970s Mass production processes Flexible/adaptable high volume or niche production Turning services into products Turning products into intangible services Closed pyramids/isolated firms Open networks and platforms /from local to global Tayloristic organisations Learning organisations Suppliers and clients Value network partners Fixed plans Flexible strategies Scale economies Plus network, scope or specialisation economies Inter-national trade Globalisation of the economy No environmental concern Environment as guide to innovation
Precisely because such radical changes encounter resistance EACH GREAT SURGE GOES THROUGH TWO DIFFERENT PERIODS INSTALLATION PERIOD DEPLOYMENT PERIOD INSTALLATION PERIOD DEPLOYMENT PERIOD Turning Point 20 – 30+ years 20 – 30+ years 20 – 30+ years 20 – 30+ years Degree of diffusion of the technological potential MATURITY Instability-Recession-Institutional change-Role switch Golden Golden “Creative “Creative destruction” age age construction” Battle of the new paradigm prosperity prosperity against the old Use of new paradigm for Concentration of investment innovation and growth in new tech across all sectors Income polarisation Social and institutional innovation Led by Major Major financial capital Spreading social benefits technology technology with unfettered Led by bubble bubble markets production capital Next aided by government From irruption Installation to bubble collapse From “Golden Age” to maturity period GESTATION Collapse Time BIG-BANG NEXT BIG-BANG We are here
THE HISTORICAL RECORD: FIVE REVOLUTIONS WITH A REGULAR PATTERN TURNING DEPLOYMENT PERIOD INSTALLATION PERIOD POINT Recession Irruption Bubble prosperity ‘Golden Age’ prosperity Maturity 1 st Canal mania Great British Leap 1797 – 1800 Railway mania The Victorian Boom 2 nd 1848 – 50 London funded global booms Belle Époque 1890 – 95 3 rd 4 th The Roaring Twenties Post-war Golden Age 1929 – 43 2000 – 03 2008 5 th Sustainable global ‘ golden age ’ ??? Dot com boom / Global ?? casino Led by finance Led by production and the State We are here
The adequate historical parallel for today is the 1930s
HOW DID ACTIVE POLICY IN THE POST WAR BOOM OVERCOME THE 1930s AND II WW? Apart from the Keynesian management of fiscal and monetary policy MASSIVE SHAPING OF DYNAMIC DEMAND FOR MASS CONSUMPTION AND PRODUCTION: • Infrastructure for low-cost suburban housing • Government guarantees for mortgages • Unemployment insurance and pensions • Official labour unions (maintaining salary increases with productivity) • Free education for the majorities (and in Europe also health) • Farm subsidies (prices low for consumers and profits high for equipment) • Military procurement • Massive government employment • High taxes to pay for all that • And the Bretton Woods institutions for international finance and trade
WE NEED BOLD AND CREATIVE POLICIES LIKE THE ONES FROM BRETTON WOODS AND WELFARE STATE CREATION. 12
KEYNES + SCHUMPETER + A NEW POLICY FRAMEWORK FOR DYNAMIC INNOVATION AND MARKETS IN THE INFORMATION AGE
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S. F. Weng et al. Can machine-learning improve cardiovascular risk prediction using routine clinical data? PLOS ONE , 12 (4), (2017). DOI:10.1371/journal.pone.0174944 Artificial intelligence can predict heart attacks better than a doctor. 18
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We're moving fast. But nobody knows where we're going @WEF on May 30 th !!!! 26
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From society to industry! It is a different path from the previous revolutions and it is happening faster than before.
One of the best books about technology and its impact written in recent years is The New Division of Labor , by Frank Levy and Richard Murnane, which came out in 2004.
The authors propose that Human beings still matter, because there are some common and important tasks that we accomplish effortlessly, but which pose daunting challenges to digital entities.
The results of the first DARPA Grand Challenge, held in 2004 , supported this conclusion. The challenge was to build a driverless vehicle that could navigate a 150-mile route through the unpopulated Mohave Desert. The ‘winning’ team made it less than 8 miles .
May 31th. 2017!
May 31th. 2017 • This report explores how a transition to driverless trucks could happen. • Reduced reliance on humans to move road freight offers many benefits. • It also threatens to disrupt the careers and lives of millions of professional truck drivers.
2. Industry 4.0: Concept and Technologies 35
About the 4.0 industry Industry 4.0 is the comprehensive transformation of the whole sphere of industrial production through the merging of digital technology and the internet with conventional industry. Source: Boston Consulting Group (BCG), PricewaterhouseCoopers (PwC), European Parliament and ACCIÓ.
About the 4.0 industry Everything in and around a manufacturing operation (suppliers, the plant, distributors, the product itself) is digitally connected providing a highly integrated value chain. Source: Boston Consulting Group (BCG), PricewaterhouseCoopers (PwC), European Parliament and ACCIÓ.
About the 4.0 industry Devices and systems cooperate among themselves and with others, allowing transformations in products, processes, organization and business models. Source: Boston Consulting Group (BCG), PricewaterhouseCoopers (PwC), European Parliament and ACCIÓ.
Source: Boston Consulting Group 39
3. Impacts and consequences 40
Producers: Transforming Production Processes and Systems Industry 4.0 affects producer’s entire value chain , from design to after- sales service: • Production processes will be more flexible and optimized through integrated IT systems. • Products, production processes, and production automation will be designed and commissioned virtually in one integrated process and through the collaboration of producers and suppliers. Source: Boston Consulting Group (BCG) and ACCIÓ.
New Demands and Defining New Standards Industry 4.0 affects the demand , with changes such as: • Mass customization • No difference among retail channels (internet, self service machines, apps, etc.) • Predictive insight of the consumption and usage habits • Crowd access to information (news, prices, opinions, publications, reports, etc.) Source: Boston Consulting Group (BCG) and ACCIÓ.
Impact on Occupation and Employment • In the short term, will increase the demand for workers with skills and competences in software development and ICT, and will decrease demand for low-skilled workers. • The World Economic Forum has estimated that Industry 4.0 will lead to a net global creation of 2M jobs in computing, engineering, architecture and mathematics. Optimistic? Source: Boston Consulting Group (BCG) and ACCIÓ.
4. Industry 4.0 in Catalonia 44
1. Competitive Environment Area: 32,108 sq km 17.4 million foreign tourists/year (2015) Population: 7.5 million (2015) € 63.8 billion exports (2015) GDP: € 214.92 billion (2015) € 76.0 billion imports (2015) GDP per capita: € 28,181 /year (2014) 16,422 regular exporting companies (2015) Companies: 584,369 (2015) 6,454 foreign companies (2015) Industrial companies: 36,383 (2015) € 4,783 million foreign investment (2015) 8,346 catalan companies abroad (2015) 8,830 innovative companies (2014) 1.47% of GDP dedicated to R&D (2014) 1.0% of world’s scientific production 16% 20% 23% 25% 45% OF SPANISH OF SPANISH GDP OF SPANISH INDUSTRY OF SPANISH FOREIGN OF SPANISH FOREIGN POPULATION TRADE MULTINATIONALS Business Innovation Unit
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