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What the Future Holds for Utilities – IDC Energy Insights' View

Roberta Bigliani's picture
Associate VP IDC - Energy Insights

Roberta Bigliani is vice president for IDC Energy Insights, IDC Government Insights and IDC Health Insights in EMEA. In her role she provides strategic directions for these groups and advise both...

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In a multi-speed world, utilities' challenges polarize to two opposite extremes. In fast-growing emerging markets, which are expected to account for more than 90% of net energy demand growth by 2035, utilities seek to add capacity as quickly as possible to be able to keep up with surge in demand. This has a direct impact on investments in power assets (including renewables and distributed generation) and network infrastructures (including microgrids).  In more mature economies, utilities' traditional business models are under attack, directly and indirectly. The risk of utility disintermediation is becoming more apparent, and digital disruptors and innovators are working for a future market scenario where value-added services are provided to the consumer by non-utility companies. This is the context into which our team of analysts from different part of the world developed its 2017 predictions (see table below).

One of the predictions specifically focuses on distributed generation, which is continuing to grow at a rapid pace, driving utilities to invest in distributed energy resource management systems. Distributed energy resource management systems (DERMS) comprises hardware and software applications that provide utilities system data, insight, and actions that can help integrate, manage, and control flexible and intermittent distributed energy resources (DER) and demand. The analysis and actionable intelligence can be applied in efforts to keep the transmission and distribution system in sync with an efficient and reliable supply-and-demand balance that best optimizes both DERs and traditional centralized generation.

While utilities adapt to the abundance of new variable supply being introduced to the grid (e.g., wind and solar power), new technology and processes will be needed in order to support the power system. In addition to ensuring reliability and efficiency, utilities will invest in DERMS to create a new distribution system model that will provide electric consumers more choices. The pace of rooftop solar, the option to sell power back to the grid (i.e., net metering in the U.S.), and customers' voluntary involvement of demand response (DR) programs is making technology upgrades to the distribution system a priority for many utilities. Furthermore, as DERMS mature, these systems will enable the expanded buildout of microgrids and provide a distribution system platform, which will create an energy trading market at the distribution level.

One additional element to be considered is the fact that prosumers, more than utilities, are going to be the owner of the new distributed generation assets. This means utilities will need to integrate in their control systems data originated from different external sources. They need to be prepared to configure, operate, and maintain an IP-based network of devices exponentially larger than in the past. And this will furtherly increase the appetite for aggregation platforms, and eventually industry collaborative cloud.

This is just one out of our Top 10 predictions for Utilities. IDC Energy Insights recognizes that the industry is in the midst of a profound transformation and overall predicts that the utility industry will be reborn in 3D: decentralized, divergent, and digital.

Roberta Bigliani's picture
Thank Roberta for the Post!
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Chris Chen's picture
Chris Chen on Dec 1, 2016

Do you think regulatory decisions on who the distributed system operator (DSO) will be will have an impact on how much utilities will invest in DERMS?

Roberta Bigliani's picture
Roberta Bigliani on Dec 12, 2016

Hi Chris,

Thanks for you comment.

Regulation will definetively have an impact, different in each and every country in the world. Nevertheless DERs are already an important reality (just think about PV in Europe) so utilities will have to deal with that. They can do it in a clever way and have an active role (as  active as the regulation will allow) or just suffer the consequences. 

 

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