Now in its second year, the Accenture Digitally Enabled Grid research program provides insights and recommendations around challenges and opportunities utilities face along the path to a smarter grid—including views from utilities executives around the world.
In 2014, Accenture is exploring how new disruptive energy technologies will increasingly disturb network costs and performance, and existing business models.
Accenture analysis, based on extensive modelling and a survey of global utilities executives, estimates that energy demand could be reduced by more than 15 percent due to new energy technologies by 2025.
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Continued adoption of energy demand-disrupting technologies could drive down utilities’ revenues by between $18 billion and $48 billion a year in the United States, and €39 billion to €61 billion a year in Europe by 2025, according to the latest Accenture research.
In the face of such losses, utilities executives are under pressure to effectively manage the transition to a digital grid. Accenture believes that with the appropriate plan and effective monitoring and control, utilities can balance investment with an opportunity to establish a more cost-effective, optimized grid.
Our research shows demand could be disrupted as a result of changes in:
Energy conservation and demand response
Energy efficiency through insulation and efficient appliances
Energy substitution, such as the electrification of vehicles and heating
Distributed generation, such as photovoltaics (PV), storage and mini- and micro-combined heat and power.
We define three distinct scenarios, each with a range of potential revenue losses. With these outcomes in mind, we provide actionable insights and recommendations to help utilities chart a path to a new role in the electricity provision landscape.
Our Digitally Enabled Grid research comprises:
Accenture developed three scenario models to assess how distributed energy resources, energy efficiency, energy substitution and energy conservation and demand response would impact the network and business models.
We considered five drivers of adoption: Regulatory climate, technological innovation, electricity prices, macroeconomic factors and consumer choices.
Accenture conducted an executive survey among utilities executives worldwide involved in the decision-making process for smart grid-related matters in their companies. The survey results are based on questionnaire-led interviews with 85 utilities executives in 20 countries, conducted via telephone in 2014 for Accenture by Kadence.
Accenture identified three potential scenarios that could represent the impact of disruptive energy technologies on the industry:
Status quo: Assumes a steady projection of long-term historic trends in energy demand and electricity price, no major breakthrough on technology costs, withdrawal of subsidies by 2018 and relatively low consumer interest in the uptake of new energy products and services.
Demand disruption: Caused by a moderate reduction in load, this scenario is a result of the adoption of energy efficiency and distributed generation being possible without subsidies, leading to greater penetration from shifting consumer sentiment, falling technology costs and a moderate rise in electricity prices, especially across Europe.
Perfect storm: Perhaps closest to the industry phenomenon known as the “utilities death spiral,” whereby an increasing number of consumers migrate off the grid or use it only as back up. This scenario assumes that subsidies continue to the early 2020s, technology costs plummet and electricity prices must rise significantly to cover the subsidy and integration costs, motivating customers to accelerate energy technology deployment. In all, the perfect storm scenario leads to significant load reduction and revenue losses.
According to Accenture analysis, the most likely scenario is demand disruption.
Our research highlights that utilities are at a tipping point of change within the industry.
Some of our key findings include:
Continued adoption of new energy technologies could disrupt demand and drive down utilities’ revenues by tens of billions of dollars by 2025.
The risk to electricity demand is not from customers moving off-grid; but from the combined effects of exported distributed generation output, conservation and efficiency actions.
By 2015 solar PV will be at grid parity—equal to or less than the cost of power purchased from the grid—across Australia, many states in the United States and several European member states.
Electrification of space heating and transportation provide longer-term growth potential for electricity demand, but there are substantial uncertainties over their timing.
In the past year, utilities executives have become more concerned about the impact of some technology-driven changes to utility network economics and performance, as well as the potential for new competition.
Trends toward a digital grid: A year-over-year review of utilities executives' opinions
Explore utilities executives’ opinions on the complexity, cost implications and opportunities of the digitally enabled grid.
Accenture's Digitally Enabled Grid program provides actionable insights and recommendations around the challenges and opportunities utilities face along the path to a smarter grid.
Drawing upon primary research insights from utilities executives around the world as well as Accenture analysis, The Digitally Enabled Grid examines how utilities executives expect smart grid technologies and solutions to contribute to their future networks.