In depth: How to create value in digital energy networks

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digital energy networkIn the next few decades, electricity consumption will nearly double as the world’s population approaches 10 billion people, the middle class in emerging economies adopt new electronic devices, urbanization accelerates and transportation goes electric, writes Henry Bailey, global vice president of the Utilities Industry Business Unit for SAP.

This sounds like great news for power generators, distributors and retailers, but deregulation, decarbonization and decentralization are destroying the century-old hierarchy of centralized power generation, transmission, distribution and retail.

The consequences for the utilities industry are dramatic. Proven business models and business plans based on enormous capital investments in plants and grids collapse. New market entrants such as Google and Tesla disrupt the value chain. Mass ‘prosumers’ collect solar energy on their roofs and store it in their basement or in electric vehicles for later consumption. Communities and companies go ‘off the grid’ with private wind parks or solar farms.

Big change always comes with big risk, but also offers opportunity for innovators. After all, the digital economy needs affordable, reliable and sustainable electric energy for smart appliances, clean and connected mobility, digital communication and distributed manufacturing.

Currently the utilities industry is facing the challenge of operating the existing infrastructure cost effectively under the changing paradigms. Leading utilities are re-evaluating their physical assets and customer relationships to:

Re-imagine business models to find new revenue and profit sources. Re-imagine business processes and use digital technology to optimize business outcomes by converging information and operational technologies. Re-imagine the role and structure of the workforce to support future business by incorporating wearable technology, 3D printers, and geospatial technologies.

This ‘re-imagination’ of the utilities business requires a digital energy network that overlays and complements the power supply system. All participants – utilities, consumers and new non-utility players will use digital innovation to anticipate real-time demand and supply, automatically control energy generation and storage, operate self-healing grids and innovate customer experience. This continuously optimizes the business outcomes for innovative and adaptive participants in the digital energy network.

Our vision is to help the world use energy and natural resources responsibly for today and tomorrow by providing reliable, sustainable and affordable energy for…

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