The power and utilities sector is in a period of immense transformation. Infrastructure investment, big data and analytics, market and policy reforms, evolving regulatory frameworks, new market entrants and empowered customers are changing the way power and utilities think and operate.
Consider, for example, the case for capacity markets in Europe. Energy supply security has long been a delicate balancing act for the region. Now Europe’s power and utilities companies are putting their support behind market arrangements that compensate them for keeping backup generation capacity on tap. In EY’s most recent publication, Utilities Unbundled, EURELECTRIC Markets Committee Chairman, Juan Jose Alba Rios, explains why capacity markets have the potential to enhance competition, attract new entrants to new territories, provide clarity for investment decisions and even bring consumer prices down.
Whether you’re in favor or against capacity markets, one thing is for sure: the renewables revolution has entered a strong second phase. The issue at hand is no longer how to boost their use, but how to integrate renewables into our energy systems. Fast uptake of wind and solar power in Germany has created a major challenge for the country. Grids built 30 to 55 years ago are struggling to integrate the flood of decentralized power generation from renewable energy systems. In Utilities Unbundled we looked at how one of Germany’s largest network operators, EWE NETZ, is tackling the challenge of integrating renewables. It is putting innovative planning concepts and intelligent technologies into practice and testing the waters for other countries that are likely to find themselves in a similar situation.
We know that big data and analytics is one way companies can unearth new solutions to the challenges facing the sector. But many still struggle with how to turn information into action, and justifying expensive investment in new technology without a guaranteed return is particularly tough for public utilities. South Korean energy giant KEPCO is one company cautiously exploring the possibilities of big data and analytics without taking risks that may violate its mandate as a public entity. KEPCO CIO, Hoi-Chang Lee, outlines how the company’s two pilot programs, tackling customer engagement and grid operations, are a positive start to finding new ways to leverage big data in the public sphere.
The power and utilities sector is evolving at an unprecedented pace. Companies can’t afford to ignore the change underway. Forward-thinking companies are those realigning priorities, rethinking business models and exploring new strategies and value-added service offerings to ensure success in today’s market.
To access Utilities Unbundled, and past issues, visit ey.com/utilitiesunbundled.
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