Digital Grid: Utility Industry Trends Worldwide 2017

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The traditionally stable electricity sector is being transformed by distributed and digital technologies and a push to decarbonize. 1. DECARBONIZATION: Energy production and use account for two thirds of global GHG emissions. The energy industry is under pressure to decarbonize. Policy and regulatory action have been driving decarbonization, however economics is becoming the main driver as clean technologies become more competitive. Wind costs have fallen 50% since 2009; solar module costs have fallen 80% since 2008; PPA for wind: $30 / MWh (Morocco); PPA for solar: $36 / MWh (Mexico)
2. DECENTRALIZATION: At the same time, rapid technological development is making decentralization possible through distributed generation and storage solutions. Decentralized energy will grow 40% faster than global electricity demand to 2020.
EV lithium-Ion battery pack prices will have fallen 77% between 2010 and 2018; Global distributed solar PV grew ~16% annually since 2011 . AMI adoption is currently ~40% in the United States (>60% in the West)
3. DECRNTRALIZATION An explosion in the number of connected power-consuming devices and of smart sensors on the power grid now enables data and electrons to flow both ways along the grid, allowing in return consumer decision making based on dynamic prices.

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1. Utility Industry Digital Transformation Initiative The electricity industry: uncovering value through digital transformation KEMA Consulting | June 2017 The views expressed in this summary of a White Paper are those of the author(s) and do not necessarily represent the views of th e KEMA Consulting or its Members and Partners.

9. 9. To find out more about the Digital Grid project, visit How can electricity companies become digital champions? ‘Developing No regrets’ capabilities Develop a digital strategy and roadmap Capture, understand and leverage data Build and maintain a high-quotient digital team Build a digital talent strategy “Data first mentality” - launch a change programme for corporate culture Accelerate the pace of digital innovation Design a delightful customer experience Partner and invest in the electricity ecosystem Engage regulators around market redesign Seek industry consortium to discuss interoperability, data privacy and cybersecurity Bold plays

3. 3. To find out more about the Digital Grid project, visit The convergence of physical and digital technologies across the value chain enable power and data to flow in multiple directions Generation and fuels Transmission Distribution Retail Customer Electrification Meter Energy efficiency Distributed generation Flexibility 7.4 billion devices across t he power value chain by 2020 Cost of bandwidth decreased x40 in past 10 years Cost of processing decreased x60 in past 10 years Technology trends: 1. Mass Personalization 2. Platforms 3. Intelligent enterprise Data Points:

2. 2. To find out more about the Digital Grid project, visit The traditionally stable electricity sector is being transformed by distributed and digital technologies and a push to decarbonize Source: Annual Meeting in Davos; 2016; Governors meeting Survey of 35 CEOs from leading companies in the Electricity sector Decentralization Three big trends disrupting the sector: Decarbonization Digitalization

11. 11. To find out more about the Digital Grid project, visit THANK YOU!!! References For a full list of sources and references, please refer to our in-depth report available at KEMA Consulting publications on the topic • Digital Transformation of the Electricity Industry (2017) • The Future of Electricity in Fast-G rowing Economies and mature markets (2016) • Attracting investment to build tomorrow’s electricity sector (2015)

10. 10. To find out more about the Digital Grid project, visit Digitalization of the electricity industry – key messages 1. Digitalization is impacting the electricity sector across its value chain , creating economic value, improving the system’s resilience and supporting its decarbonization. 2. Along with digitalization, distributed resources that are digitally connected are giving rise to a decentralized customer-centric model . 3. This is having a transformative action of the power sector. We are witnessing a shift of value creation from centralized conventional generation towards the end of the value chain. 4. The industry alone cannot deliver the transition: new cross-sectorial partnership models will be needed to unlock the value (examples: Enel and Nissan, Tesla and SolarCity, Opower and Oracle, Philips and Ericsson) 5. Data as main value generator; hardware is commoditised

8. 8. To find out more about the Digital Grid project, visit 4. Beyond the electron Digital Initiatives Creating new value through ultra-tailored non-energy services What : Sensor-rich objects, smarter devices, and seamless nature of connectivity – all of the above will create a wealth of consumer-related data. The use of cloud computing and analytics will allow for the creation of non-energy services tailored to the consumer needs. Impact : Services that move beyond the electron will have a meaningful impact on consumers’ quality of life. Developing an ecosystem of partnerships will be a critical success factor for electricity companies in ‘beyond the electron’ initiatives. • Living services A new integrated consumer experience can be delivered by combining sensors, the cl oud, connected smart devices and real-time analytics. The connected home is a key locati on for the provision of living services. • Industrial services These services cover areas such as m anufacturing and industrial processes, energy, power, data security, lighting and safety. Al l operate from a single platform and continually ev olve using insights from data analytics. • Municipal services Citizens will experience real-time interactions with service prov iders and receive a tailored service (food, transportation, e mergencies, sanitation, etc.). Case study: Singapore (municipal services)

5. 5. To find out more about the Digital Grid project, visit 1. Asset lifecycle management Optimizing asset life cycles: from generation to distribution What : Technology solutions to enable real-time monitoring, remote-control or predictive maintenance. Impact : Will increase operating efficiency of generation, transmission and distribution infrastructure. 30 60 387 302 124 Industry Society • Asset performance management Monitoring and predictive forecasting enabled by analytics and robotics. Lower repair & maintenance costs, lower assets downtime • Digital field worker Digital technology to empower field workers with data and tools to drive operational efficiencies. • Smart asset planning Predictive analytics, machine learning and robotics to improve capital project execution, installation and decommissioning. Value at stake ($ billion; 2016-2025) Digital Initiatives Case study: Iberdrola (asset performance management)

7. 7. To find out more about the Digital Grid project, visit 3. Integrated customer services Value at stake ($ billion; 2016-2025) Digital Initiatives Reinventing customer service through digital innovation What : Innovative, digitally enabled products and services relating to energy generation management and consumption, bundled into an integrated customer service. Impact : Will empower consumers to manage their electricity, creating new revenue streams through add-on services. Electricity shifts from a being commodity to a service. • Energy solution integration New services from integrators t hat help customers optimize energy production and use. Supports integrat ion of renewable resources. • Energy management Energy information displays and c ontrols to allow prosumers to manage generation, storage and flow of energy. Customers can benefit from lower costs and re-selling excess energy back to grid. • Digital customer model Multiple channels – web, mobile and soci al – for customers to interact with their electricity supplier, improving customer engagement. Case study: PowerShop (energy solution integration) 97 69 142 147 58 30 Industry Society

6. 6. To find out more about the Digital Grid project, visit 2. Grid optimization and aggregation Value at stake ($ billion; 2016-2025) Digital Initiatives How can digital help build a more fl exible and resilient electricity grid? What : Real-time load balancing, network controls and end-to-end connected assets, devices & advanced monitoring and V2G (vehicle-to-grid) Impact : Real time info on energy usage (consumers) and production (utilities). The system can dispatch the most economic, reliable and sustainable sources to meet demand, delivering higher efficiency • Energy aggregation platforms Bringing small-scale distributed resources onto a single platform, enabling clusters of end-users to act as one large power plant. • Real-time supply and demand platform Monitoring and communicating current load supply and demand, paired with a discriminatory pricing framework. • Real-time network controls Enabling real-time adjustm ents to changing loads. • Connected and interoperable devices Device-to-device connectivity, and the collection and display of energy consumption, linking devices to the distribution network. Case study: Alliander (real-time supply & demand platform) 73 113 191 68 323 142 608 61 Industry Society

4. 4. To find out more about the Digital Grid project, visit Uncovering value in the electricity industry through digital transformation We assess four digital themes with great potential to unlock value and to transform the electricity sector: 1. Asset lifecycle management 2. Grid optimization and aggregation 3. Integrated customer services 4. Beyond the electron Asset   performance   management Digital   field worker Smart   asset   planning Real ‐ time   supply   &   demand   platform Real ‐ time   network   controls Interoperable   devices Energy   storage   integration Energy   aggregation   platforms Energy   management Digital   customer   model Energy   solution   integration Digital   Initiatives Generation Market   Trading Transmission Distribution Smart   Meters Commercial   &   Industrial Residential Digital transformation of the electricity system could deliver $ 3.3 trillion of value, in OECD markets in the 2016-2025 time horizon: • Value to industry: unlocking $1.3 trillion of value for the electricity sector through digital initiatives • Value to society: unlocking $2.0 trillion by creating 5.3 million jobs and reducing carbon dioxide emissions by 6.7 billion tons


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