Utilities need to adapt quickly amid threat from tech firms, warns industry research chief
Power utilities firms will need to change the way they operate to meet the challenges from emerging energy technologies that would change the competitive landscape, warns the head of a global industry research association.
Greg Tosen, chairman of International Electric Research Exchange (IERE) whose 63 members comprise global utilities and power generation equipment makers, said energy companies will face rising competition from technology firms that have come up with applications that can better meet consumers’ needs.
“The utilities of the future are going to be very different from what they are today … the pendulum is swinging to pro-sumer [consumer friendly] or distributed [energy] resources, as well as internet based and software solutions,” Tosen told the Post in an exclusive interview.
“It is not the typical utilities that are going to drive the change…the Amazons and the Googles of the world and the Elon Musks [CEO of Tesla] are now becoming our competitors.”
Tesla recently completed its US$2.6 billion acquisition of SolarCity, allowing the electric car giant to integrate the businesses of selling electric cars and installing solar panels, while start-ups such as US-based Stem are getting funded by venture capitalists to come up with consumer friendly energy storage and predictive energy software.
Tosen was speaking on the sidelines of the association’s annual meeting held in Hong Kong last week.
He said it is a challenge for utilities to accelerate their operational transformation to cater to consumers’ technology-driven expectations, since they are more used to taking 10 years to plan, design and build a large-scale power project, which has an operating life of 40 to 60 years and would take another 10 years to decommission.
“Utilities engineers tend not to react quickly, but [today’s] world is different … utilities globally have to react a lot quicker. I can assure you if we don’t, we are going to be out of business.”
Tosen was South African utility Eskom’s former general manager of business strategy and planning and also a former general manager of research and development.
IERE recently sent out a survey to some 150 researchers, utilities senior managers, industry advisors and regulators around the world to canvass their views on the top emerging energy-related technologies.
The 30-odd experts from around the world who responded shortlisted 25 technologies, of which pro-sumer, energy storage, big data applications, distributed energy generation and climate modelling made it to the top five.
So-called “pro-sumer” technologies enable end-users to become both consumers and producers of electricity.
This is achieved when consumers can sell excess power generated from their roof-top solar panels back to the power suppliers via the power grid.
Energy storage devices, which keep excess energy generated in chemical, mechanical or electrical forms for later usage, can be used by utility firms to reduce the excess generation capacity they need to build, or by end-users to reduce their power bills.
Distributed energy generation uses small-scale systems located close to the point of usage, usually powered by variable renewable energy together with more stable and cleaner-burning fossil fuels such as natural gas.