Digital grids and markets: the impact of emerging and disruptive technologies Sean Casey, Head of Energy and Assets, EY 2020 National Power Summit
Agenda 1. Introduction 2. A sector in transition 3. Focus on emerging technologies 4. Impacts across the value chain 5. What does this mean for customers? 6. Where is the future value?
1. Introduction
EY Advisory Our global presence has increased by 50% in the last two to three years, working with leading organisations across all markets delivering value ~ 4,500 ~ 1,200 Global Sector Advisory Sector Specialists Specialists Smart Wholesale Operating Model PM Services Metering Energy Markets Transformation Over 120 people currently working within the energy sector in Ireland Cyber Security Strategy Risk Management Internal Audit £ Building a Better Working World Energy Planning Price Control IT Security Services
2. A sector in transition
A sector in transition: Decarbonisation, Decentralisation & Digitisation are further accelerated by the rise in electrification & changing stakeholder expectations More renewables in the generation mix Bringing new challenges in forecasting supply/demand, maintaining network stability and ensuring security of supply Rise in distributed energy generation Bringing the need to be better equipped to accommodate energy flows in all directions Exponential growth in connected devices Stakeholder Digitisation of the sector is required to manage the decentralised Expectations energy system causing an important data challenge Increase in electricity demand due to electrification Adoption of heat pumps and electrification of industrial processes will lead to rise in electricity demand Stakeholders increasing their expectations Government pressure, ever-changing regulatory expectations and demands, investors and public expectations, customer needs, … Page 6
EY research shows that the energy sector will be impacted significantly The future energy system will be shaped by three tipping Digital and innovation will be the key enablers of this points change Electricity and A building block of the new energy system Birth of the new Digital energy mobility industry energy system marketplace convergence Digital building blocks for the platform required to integrate, 800 control and steer all DER in a new (to be build) energy system Grid cost parity of non-utility 700 solar plus storage systems 600 EV & ICE parity (cost + performance) A new level of efficiency 500 $/MWh 1 Digital and technology as crucial elements to improve operational 400 T&D parity with non utility excellence of the current business – releasing cash for required solar + battery LCOE 2 300 investments in a new energy system 3 200 100 An enabler of new business models 0 Digital technologies fueling the development of new services and 2015 2020 2025 2030 2035 2040 2045 2050 business models, generating new revenue streams in defense or in Non utility solar + battery LCOE Fully delivered cost of electricity offense Cost of transmission and distribution Source: EY Countdown Clock model Note: The above representation reflects views for Europe and Oceania which are leading in this journey towards a new energy ecosystem. EY has similarly projected views for other regions as well. Page 7
The take up of key technologies will determine the pace and depth of the energy transition and are critical to the digital energy marketplace Key technologies driving the ‘tipping points’ Solar PV Battery storage On-site batteries used to store electrical energy, Distributed solar systems, producing energy on-site including both stationary as well as EV batteries that can be consumed, stored and sold Home and building energy systems Peer-2-peer energy exchange Energy management systems that enable the most Technology which helps prosumers to exchange excess efficient and cost effective measurement, monitor, electricity with other consumers control, and optimization of energy consumption Microgrids Electric vehicles A group of distributed energy resources (DER) and Plug-in passenger EVs, including battery electrical electrical loads with clear network boundaries. Can vehicles (BEVs) and plug-in hybrid electric vehicles operate in island-mode. Controllable as a single entity. (PHEVs) Grid edge technologies Smart meters Includes devices, such as syncrophasers/smart grids, Records consumption of electric energy in intervals of which helps record, monitor, control and optimize an hour or less and communicates the information energy distribution back to the utility for monitoring and billing every day Artificial intelligence Cloud Defined by public cloud sharing of electric utility AI/cognitive systems that formulate possible answers spending on software, server and storage. and automatically adapt based on available evidence and training by ingesting vast amounts of data Page 8
3. Focus on emerging technologies
Emerging and disruptive technologies are also driving a significant amount of this change in the sector UNIQUE FIELD OF PLAY FOR UTILITIES ADDRESSING DECARBONIZATION, DIGITALIZATION AND DECENTRALIZATION Page 10 Page 10
AI offers utilities a range of innovative applications across the value chain ► Smart building data management Innovative AI solutions are rapidly emerging ► Analysing asset usage data ► Energy optimisation brings practical applications of deep learning and AI to customer service operations – as a sixth sense - with their chatbot leverages AI to do the arbitrage for the trilemma - sell, store or consume your energy ► Customer service automation ► Customer churn analysis Verdigris’ smart sensors and AI cloud solution collects data about the buildings ► Deciding ToU rates to make better decision, reduce costs and automate the response Page 11
RPA use-cases continue to gain maturity across the utility value chain ► Energy grid management Innovative RPA solutions are rapidly emerging ► Monitoring energy delivery ► Electricity pole surveillance is a France-based company writing software for off-the-shelf drones, automating the entire drone inspection ► Remote O&M process - from the inspection activity to the reporting ► Sub-station diagnostics ► Grid de-energization ABB’s Power Transmission Systems improves grid reliability and efficiency by automating the grid via completely engineered systems Page 12
Utilities can unlock the untapped potential of IoT solutions through multiple use cases We notice a rapid evolution coming from different actors ► Energy consumption insights ► Improving load forecasting ► Consolidate multiple IoT data points has developed a real-time monitoring and automation system, enhancing the reliability, efficiency and profitability of grid operations delivers a technology platform for smart buildings, providing sensor technology and scalable network for real- time data collection and high-value applications is an industrial automation development ► Transactions management company, creating sensor technologies, data analysis and monitoring solutions. ► Real-time energy usage insight NAS’s IoT hub offers secure and easy way ► Energy metering to connect, monitor, and analyse the data of multiple devices in real-time Page 13
4. Impacts across the value chain
This disruption will cause a range of value shifts in the industry which will produce significant winners and losers Transmission Distribution Retail Generation ► Increased deployment of storage ► Renewables growth led by solar and ► Shift towards point to point ► New competition solutions to manage distribution offshore wind development ► Rise of P2P trading network load ► Focus on Nuclear for baseload ► Leveraging storage to balance the ► Growth of aggregation services ► Rise of microgrids electricity grid ► Availability and pricing of gas a critical ► Capturing the potential of EV revenues ► Transition from DNOs to DSOs factor
5. What does this mean for Customers?
The energy system must change to become dynamic and flexible enough to cope with multi-directional power flows and an influx of prosumer connections Paradigm shift Current epicenter of energy Future epicenter of energy Generation flows downstream to Consumption and generation become an consumption interconnected, two-way network Page 17
From a retail perspective, customers are demanding a frictionless, digital and self-servicing experience, which suppliers must respond to Customer interaction with service providers has moved forward. Retailers need to act upon these preferences to build stronger relationships with customers. 82% of customers in Australia demand to communicate via social media and other non-traditional channels Customers expect to reach their service providers 24/7 – across multiple platforms Customers prefer using a mobile application before calling the service center 75% of customers in UK want utilities to use technology to make their life easier 35% of customers in UK now use price comparison websites to choose their energy supplier Page 18
6. Where is the future value?
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