Utility chiefs address how to adapt to ‘slowest train wreck in history’

GE chief digital officer Steven Martin vividly captured the present state of flux affecting the global power sector at a London conference last week.

Top executives from Innogy, Enel, E.ON and General Electric were on hand to discuss the transformation of the global energy system at Bloomberg’s New Energy Finance conference.
BNEF Summit panel debate 2017 day 1
“We’re going to reach some point where the marginal cost of energy is zero,” Martin told the audience at the London event. “Not to put too fine a point on it I do think we are witnessing the slowest train wreck in history.”

Martin was keen to impress on industry peers that complacency was not an option as the traditional model continued to unravel. Decarbonization, decentralization, digitization, and electrification are the major areas for uncertainty and opportunity in the energy value chain

“In 1926 Tesla predicted the iPhone and facetime. Predicting the future is the easy part. Doing something about it, that is where the challenge lies.”

The GE digital chief predicted that the next generation of the grid will be controlled more by the management and ‘magic’ of software rather than hardware.

“The other thing that will be big is analytics, going from day ahead to minute by minute. There is a request and reply model we can build”, he said, adding that adapting the grid for something it was never designed to do in incorporating the extent of renewables incoming, along with the added complexity of distributed energy resources, presents huge challenges.

“Today is the easiest day we are going to have with any of these topics,” Martin wryly concluded, while warning that a lot of telecom companies no longer exist, not because they didn’t know what was coming, but rather that they refused to face up to the challenge.

Earlier, Innogy boss Peter Terium said decarbonizing the power sector alone would not be sufficient in meeting climate targets set at Paris, with agriculture, heat and transport through electromobility also important, along with reducing demand through energy efficiency.

“Although roughly 40 per cent of the co2 emissions come from generation and it’s the biggest emitter and it’s good to start there, if you want to meet the Paris Accord, just taking care of the conventional power sector will not do the job.”

Terium, speaking on a panel alongside Enel chief executive Francesco Starace and the COO of E.ON’s networks and renewables division Leonard Birnbaum, remarked that the energy transition promised to be a “staggeringly interesting” time for energy companies and insisted it would be “fun”, but was quick to stress that the change would not be without its challenges.

He said it would be up to utilities to partner with companies from other sectors in order to participate to the fore of development of technologies such as electric vehicles, energy sharing, big data and blockchain.

“It’s the Uber model, not the Google model,” he said.

Speaking about the work of the Energy Transitions Commission, Terium added that ‘electrification is the single most important instrument in meeting the global climate targets’ and asserted that decarbonization is possible without compromising economic growth.

Leonard Birnbaum, E.ON Networks & Renewables’ chief operating officer expressed confidence that the industry can meet the ongoing challenges it faces.

“We are talking about complete sectors converging on the electricity industry,” he said. “Why should we be nervous? We should be figuring out a way to make that work. The way to make money [from an industry] is to be in that industry.”

Serving customers, Birnbaum added, was a “great heritage of our industry, but we need to combine it with the will to innovate”.

At the end of last week, Innogy served notice of their commitment to clean energy, announcing $1.2bn investment in e-mobility, solar PV and glass fibre networks by 2019.

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