Electricity Utilities and IOT
More and more connected devices will require more and better electricity solutions. In many developing economies, more people have ready access to a smartphone and the internet than to electricity. For that reason, we have seen mobile telecoms operators starting to include power solutions (mainly through distributed energy systems, using solar panels) in order to sell more phones and telecom services.
This shows how important access to electricity is.
In developed economies, people have universal access to electricity, but here we see an increased requirement for more efficient and effective electricity products. Energy is needed everywhere nowadays – by smartphones, thermostats, kitchen appliances, electric vehicles and a range of wireless-operated consumer devices.
Requirements include more efficient use of electricity, cleaner energy, better battery life, wireless supply, distributed energy solutions and so the list goes on.
While the internet of things (IoT) will not have solutions to all of these issues, it will be essential to enable the provision of a more reliable, scalable, flexible and modular infrastructure that will be better equipped to face these new challenges.
At the moment, electricity companies are lagging behind the needs of their customers and we see customers themselves taking a lead in finding better solutions. They are already installing solar systems and battery storage will follow soon. With the push for electric vehicles coming from car manufacturers, we will also see a hockey stick curve coming into play once the price of these cars comes down. The amount of money already invested in these last two developments will most certainly create their own energy revolutions.
At the moment, the need for LiFi (Light Fidelity – a bi-directional, high-speed and fully networked wireless communication technology similar to WiFi, using LED lights for distribution) might not be clear, but this is another development that can lead to disruption. The development of wireless electricity is another area to keep an eye on, which is already being used in several pilot projects around the world.
So far, few electricity companies are leading these new developments. Nearly all are initiated outside the traditional industry. However, it is critical for the future of the industry – and the integrated nature of the national electricity networks – that the electricity companies step up their activities here.
In the case of the disruption of the telecoms industry, we saw a massive increase in the need for telecoms capacity. However, the disruption in the electricity industry has the opposite effect – the use of energy is decreasing.
While telcos saw the value-added telecoms market passing by, their basic revenues still increased. Electricity utilities don’t have such a buffer. Their revenues are going down and down and, if they are to survive, they will have to become involved in the disruption of their industry. They also can’t rely on the government to continue allowing them to raise consumer prices as the effect of that would be more people going off-grid, with the result of even less revenue – the so called spiral of death.
There certainly are no easy solutions for an industry with a business model and culture that will be very difficult to transform. Nevertheless, something will need to be done, since energy supply is critical – not just to the viability of their own organisations but also to the society we live in and to the economy.
So what are the options the industry should consider?
It will first of all have to ask itself what its role is in all of this. What are their customers expecting from them? And accordingly they will have to make changes to their business models so they can remain relevant in this rapidly changing marketplace. In order to be a player in the smart energy market, electricity companies first need to ensure that their participation is based on a smart organisation. This requires a massive business and culture transformation that can take up to two years or even more to achieve.
Once such a structure is in place, the electricity players could look into some of the following options:
- investment in batteries (back-up power is a key issue at the moment)a financial advisory and potential investment role for new distributed energy systems for companies, communities and citiesbecoming a retailer of a range of smart home appliances (including safety and security) linked to comms and energy infrastructure (perhaps in collaboration with other industry sectors)big data – providing energy-related data services
- becoming the key provider in electric vehicle infrastructure (potentially including operating car-charging stations)selling and managing self-generation and distributed energy productsor even all of the above
The pace of change and disruption is very fast and doesn’t work in favour of the utilities, which move significantly more slowly. But in order to remain relevant, they will have to quickly sort out how they fit into the evolving, new energy ecosystems – with new competitors from different industry sectors, businesses that are based on different skillsets and distribution retail systems. They need to rather quickly find out what their role is in this changing market, what new skills are needed and how to collaborate, especially with the information and communications technology sector. We already see companies from this sector aggressively entering the energy market on their own and, as mentioned, the car manufacturing market will not be far behind.
Global Seven News