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3 Trends Affecting the Power Industry in 2020 and Beyond
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This item is part of the Special Issue - 2020-01 - Predictions & Trends, click here for more
The power industry is facing rapid shifts driven largely by the inherent market challenges of integrating renewable energy into power grids. The additional and related challenges of distributed generation are quickly shifting the power landscape, and market participants will certainly feel these effects in 2020.
Here are three power industry trends driving significant change in 2020:
Trend #1: More markets are moving to real-time settlement.
In 2021, utilities traders in Australia will move from 30-minute settlement periods to 5-minute settlement periods — increasing the number of settlements from 48 to 288 each day. As countries and utilities invest in greater renewable infrastructure, the move to real-time settlement is likely to be an increasing reality in other power markets around the globe as well. Already, markets like those in Ireland and the Philippines — driven by increasing reliance on energy sources like wind power — are reshaping markets to prepare.
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By moving closer to real-time settlement, utilities will be able to respond faster to changing consumer demand — ultimately reducing electricity costs for consumers and driving profit for utilities.
Trend #2: Accurate forecasting will be increasingly important to creating a stable power grid.
The rise in renewable energy will continue to challenge existing high-baseload structures in favor of distributed generation and volatile energy sources dependent on weather. As electricity generation grows increasingly volatile and decentralized, schedulers, traders, and risk managers will need to be able to react quickly to changing supply and demand conditions.
With the move to real-time and greater investment in renewables, accurate forecasting will be increasingly important to building a more reliable grid.
Trend #3: More organizations will adopt digitalization, artificial intelligence, and advanced analytics.
Outdated processes will no longer cut it as the power industry receives an influx of new data and decision points as a result of moving toward real-time markets and the adoption of renewables and distributed generation.
Power and utility companies must continue to build on their technological capabilities in order to mitigate new challenges like significant increases in data and more volatile power sources.
Technology like artificial intelligence and machine learning offer traders insights into patterns like changing wind power production and peak energy demand. They also narrow the margins of uncertainty, automate previously manual operations, and allow traders to focus on high-value activities.
Investment in advanced analytics will also be critical. Schedulers, traders, and risk managers need tools to help them analyze the wealth of new data created by real-time markets and decentralized grids in order to maximize profitability and minimize risk.
2020 is not the year for the power industry to stand still. Companies must begin preparing for fundamental shifts in the power market by integrating artificial intelligence, machine learning, and advanced analytics into their processes today to ensure they are prepared for the power markets of tomorrow.
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