THE ENERGY INDUSTRY TIMES - JUNE 2016 Final Word 16 Shaking up the world Junior Isles hen the young Cassius Clay, EDP, and President of Eurelectric told already being managed through intel- operations. “I don’t know how many who later changed his name delegates that the power industry is ligent digital platforms. New digital of you are thinking of the new strategy Wto Muhammad Ali, cap- being “Uberised”. products and services are being cre- today but those of you who are looking tured the world heavyweight boxing Mexia told delegates that the power ated and customer segmentation is forward should be doing that.” title in dramatic fashion, he changed sector is “undergoing rapid transfor- now possible. Mexia noted, however, There is already evidence of this the course of both boxing and human mation fuelled by innovation, digi- that utilities are not alone in the new happening in the industry, and not just rights for African Americans. talisation as well as by political will energy space. because of the changing electricity The recent passing of “The Great- and social trends” and stressed that Competition is coming from all sides generation landscape. est” was, as expected, global news of “the electricity sector has to be at the – from innovative start-ups, big tele- Moody’s said in a recently published a scale rarely seen. But it was to be front line” of this revolution. coms and IT companies and utility report that lower commodity and just the first of two huge news stories It is expected that renewables will customers themselves. power prices have prompted Centrica in what turned out to be a tumultuous need to provide 50 per cent of the “Electricity was once a commodity to accelerate its strategic shift away month. As the world still mourned the EU’s electricity needs if it is to reach over which consumers had little from electricity generation and oil and loss of the best-known sportsman its 2030 emissions target. The move choice. Technology allows choice gas production toward “downstream” that ever lived, the British public, less to an electricity infrastructure capable with regards to providers, use and activities in energy retail, services and expectedly, voted to leave the EU. of handling a high penetration of storage of electricity… Utilities once technology when commodity prices And while the legacy of the man who renewables and balancing supply were only asset managers, today the fell sharply in 2015 and early 2016. “shook up the world” is clear, it is still and consumption from distributed focus is clearly on customers and so- The report said Centrica’s future too early to assess the full impact of sources in the optimum way, presents ciety,” said Mexia. focus, as set out in its July 2015 the Brexit vote on both the EU and both challenges and opportunities. “The biggest retailer today, Ali Baba; strategy review, will be customer- the UK. “Accelerating innovation in the EU the biggest hotel chain, Airbnb; the facing supply, services and technol- What is certain, however, is that it power sector will be worth €70 billion biggest taxicab/vehicle hire company, ogy businesses, as well as “distrib- will add to the disruptive effect that by 2030,” said Mexia. “The digital Uber; none of them have assets. We uted generation” – managing or renewables, the transition to a low transformation of the sector is already have seen enormous change in a lot of part-owning small-scale flexible carbon economy and the move to- under way. Smart grids are being industries and we need to see what is generation which is able to profit from wards digitalisation are already hav- deployed – at least 80 per cent of happening in our sector because, as peaking prices. ing on Europe’s utilities. electricity customers in the EU should someone recently told me, everybody Speaking on the sidelines of the During the Annual Eurelectric be equipped with smart meters by will be Uberised.” Eurelectric conference, Colle com- Conference in Vilnius, Lithuania, in 2020. This translates into more than The term ‘Uberisation’ comes from mented on utilities’ response to the early June, the shaking up of the 200 million intelligent meters that the company name Uber, which devel- disruptive changes in the market. He electricity sector saw the use of a term will transmit user data closer to real- oped a mobile application that allows said: “I can easily imagine that some that is new to our industry. Antonio time.” customers to submit a trip request, of the big corporate utilities will not Mexia, Chief Executive Officer of Indeed distributed resources are which is then routed to Uber drivers exist in the same form as they are who use their own cars. today. Some of them, such as E.On Uberisation refers to the use of and RWE, are organising fundamen- computing platforms, such as mobile tal changes themselves already.” applications, to facilitate peer-to-peer In the coming years utilities will transactions between clients and probably focus on trying to protect, providers of a service, often bypass- manage and optimise their asset base, ing the role of centrally planned while protecting balance sheets as corporations. Unlike a traditional much as possible. There will certainly business, the model has very low be more investment in renewables or, operating costs since the business as Colle put it, “risk-neutral” assets. does not own physical assets. Energy transformation strategies Serge Colle, EY’s Power & Utilities was the topic of a conference organised Leader for Europe, Middle East, India by the Financial Times at the start of and Africa, believes that Uberisation June. Viren Doshi, Global/EMEA is coming. “Uberisation, or you could Energy Consulting Lead, PwC noted: call it dis-intermediation, could hap- “The example that Uber has set can pen really fast – probably faster than affect far more than we think.” we expect but maybe slower than Speaking in the same session, Paul some hope for. Some [utilities] will Gilding, addressed the question: will respond successfully but others will the fossil fuel industry transform and not… I am confident there will be a what is the evidence to suggest it is stronger push [by utilities] to embrace likely? Gilding, an independent the new digital world.” writer and corporate adviser on sus- Dalius Misiunas, CEO of Lietuvos tainability, is the author of several Energija and President of the Lithu- books, one of which is called The anian energy association NLEA, also Great Disruption. He argued that, in anticipates increased competition and the face of climate change “it is integration as a result of digitisation. pretty clear that if we don’t transform “It will make the integration of new dramatically and radically, we face players easier – I’m talking about economic collapse”. prosumers, small-scale generators,” He said: “It’s straightforward. We he said. are going to move to a low carbon Yet despite the threat, he also sees economy, the question is timing, opportunity. Misiunas told delegates: technology and who will get us there: “The digital change is affecting the is it today’s players or is it tomorrow’s entire energy value chain. From gen- companies?” eration to customer relationship ex- Utilities in Europe have finally ac- perience, there are opportunities that cepted that things are changing fast can bring additional value into our and most are open to a new way. companies. Experience from other Closing the Eurelectric conference, industries show these can be bigger Mexia said: “Today we are much more than anticipated… [so] we should not open to debate, much more open to be afraid of it.” controversy and different opinions… He noted the digital transformation because the frontier between the was not just about increased informa- [electricity] sector and other sectors is tion or more efficient operations. “It being blurred. Blurring of frontiers will help us as an industry to be the brings new minds and fresh ideas to main player in achieving a cleaner and the table.” more sustainable economy. It will give Disruption is not always a bad thing. renewables a more convenient plat- Ali was in many ways a disruptive form to participate in the wholesale force but we have all seen what he market.” was able to achieve. Perhaps we could He stressed, however, that it is ur- all learn a thing or two from the man gent to review business models and simply known as “The Greatest”. Cartoon jemsoar.com