There is no doubt that we are in the midst of an energy revolution. Not only is the nature of energy changing from fossil-generated energy to renewable – there is a total change in the distribution structure occurring with less focus on centralisation and more on distributed energy.
Concerns about issues such as energy security, environmental sustainability, and economic competitiveness are triggering a shift in energy policy, technology and consumer focus. This, in turn, is making it necessary to move on from the traditional energy business models.
Disruption is happening and the challenge for the electricity industry is to run with it. However in some cases it is hard for the electricity industry to take a leadership role due to current government policies, regulations and its own outdated business models which are inhibiting change. Where we do see leadership and innovation is in places where cities are still operating their own electricity networks.
Smart energy signifies a system that is more integrated and scalable, and which extends through the distribution system, from businesses and homes and back to the sources of energy. A smarter energy system has sensors and controls embedded into its fabric. Because it is interconnected, there is a two-way flow of information and energy across the network, including information on pricing and usage, for example. In addition to this, it is intelligent, making use of proactive analytics and automation to transform data into insights and efficiently manage resources.
This links with the telecoms development known as M2M or the ‘internet of things’ (IOT). The telecoms companies are looking at the broader market of M2M as a key revenue earner for the future and BuddeComm estimates that sensors and other devices installed within energy infrastructure will constitute 40%-50% of the overall M2M market. So the electricity sector is a key target market for telcos which are transforming for the future and operating in the M2M space.
Customers are beginning to have an influence on the direction of the energy industry, similar to what we have seen in the telecoms industry. 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).
With a better understanding of the complexity involved in the transformation of the electricity industry the words ‘smart or future energy’ are becoming more prominent. BuddeComm believes that the term ‘smart grids’ is too narrow and that eventually ‘smart energy’ will become the accepted terminology – especially once the communications developments in national mobile and fixed broadband networks start to converge with smart grid developments.
The transition from the old silo-based energy economy to the new open-ended, interconnected one is very complex, and this transition will be challenging. It is only a matter of time before disruptive sharing developments will take place in the electricity industry. A lot has been said about the disruptive effect that rooftop solar systems and distributed energy will have on traditional energy systems, but the emergence of smart technology and software may be an even bigger threat. Negawatts’, where energy is not consumed, rather than megawatts, is emerging as a major focus of industry analysts. While the rollout of solar systems may be highly disruptive, the biggest battles may be fought over software and other gadgets that will further lower the demand for centralised fossil-fuel generation. Several organisations are now including M2M-based smarts in many of their consumer products: smart TVs, smart cars, smart fridges, smart homes appliances, home-energy management systems, security products, and so on. This is great news for the industry as it opens up a whole new area of telecoms and ICT in general.