Preparing for transformation: The battle to satisfy future energy needs


London, U.K. — (METERING.COM) — December 11, 2008 – As a 2020 energy consumer, will you be an eco-warrior who leads an inspirationally energy independent life, an eco-sceptic who isn’t convinced of being able to have a positive impact on the environment at an individual level and for whom action around energy consumption is not a priority, a whiz-kid who can’t get enough of the gadgets to control energy consumption and bills, or a speculator who is both community spirited and commercially astute?

These are the four types of energy consumers that are expected to emerge by 2020, according to Logica in a new White Paper, “Energy in 2020. A vision for utilities and consumers: Meeting our future energy needs.”

These new consumers will drive the key innovations in the sourcing of energy. And moving forward energy companies will need to empower the consumers in order to survive.

The White Paper says the energy sector is entering an era of unprecedented transformation. Global demand for fossil fuel reserves is rising, energy price volatility is higher than ever, funding has become increasingly uncertain and climate change is firmly taking its place on the global political agenda. Energy producers, utilities and consumers seem to agree that what is now required is a fundamental remodelling of the way that energy production, distribution, trading and supply is funded and structured. New models require a smart information structure based around smart meters, to enable the use of real-time energy consumption data.

2020 will be a tipping point, for renewable energy sources at least. By then, wind, tidal and solar production methods will be well on their way to being commercialized, globally viable industries. Also by 2020 significant progress will have been made with regard to developing sophisticated electricity storage solutions that can mitigate the constant fluctuations in the levels of energy generated by renewable sources.

However, this massive growth in renewable energy sources – and the expected resurgence of nuclear power – will not be enough. At least for the decade up to 2020, there will also need to be widespread behavioral change, to make us all much more intelligent in the way we consume energy. Facilitating this change will rely on new information and communication technology solutions as much as on engineering and energy innovations. The challenge is to help consumers engage with their energy use through the provision of timely information that empowers them to use energy more intelligently. This will need to be achieved through a variety of channels, from in-home displays, to mobile devices and the internet.

A new breed of energy services company will emerge that will act more like an entrepreneur than a utility. These dynamic new businesses will be focused on investing in and developing profitable local energy production projects, based on green technologies.

Local energy “clubs” will also rise up, effectively allowing communities to buy and sell energy within their local distribution system. Much of this energy will be produced in individual homes, and communities may use energy service providers to help them do this. Balancing services provided by the operators of local distribution systems and the national grid will be vital to making this model work.

New energy storage companies will also emerge, selling storage capacity as a service.

This could involve storing electricity in large-scale batteries or converting electricity into hydrogen then using this to power fuel cells, as and when needed. It could also involve storing energy as hot water or using pumped hydro-storage schemes.

Energy distribution companies will need to respond to the new demands placed on them by the increase in localized generation, and the fact that their networks will now need to support the two-way flow of energy. The “smartening” of energy networks will become essential and distribution companies will move from simply managing a network to being operators of a true, local energy system.

Smart suppliers will transform their core capabilities, becoming information driven operations. They’ll actively employ smart in-home technology, allowing them to trade energy more effectively.

Smart users will also emerge who, over time, will progress from being simple energy buyers to energy producers, even running some of the local energy clubs themselves.

Each of these new models is underpinned by the need for detailed, timely information to enable effective decision making. The most successful businesses will be those that embrace this transformation to become market leaders within their arena of core competency. They will understand the importance of identifying customers’ wants and needs and developing products and services that are genuinely valued by the consumer whilst delivering a positive bottom-line impact for the company.

“Success in meeting the carbon challenge and delivering sustainable energy security will only be achieved through a long-term vision and a clear understanding of the complex inter-relationships that exist between all aspects of the energy industry. Such clarity of vision will ensure we can all continue to enjoy the benefits energy use brings to our everyday lives; and help us avoid the pitfall of taking decisions that limit the potential for innovation and competition in this brave new energy world,” says the White Paper.