In February, I exchanged my “retail hat” for the global leadership role in Accenture’s transmission and distribution group. As such, I’m pleased to launch our latest Digitally Enabled Grid report, The Charge for Change: Powering distribution businesses for the energy transition. It’s the seventh edition of this research, but my first since joining the T&D group. After 21 years working on the customer side of the utility business, I’m excited about the industry’s transition to cleaner, greener energy that focuses on customer demand, experience and social responsibility. And through that same retail lens, I can see how vital consumers are to the future distribution network.
Each year, as part of our research, we ask distribution utility executives about their perspectives and experiences on current or emerging industry priorities. This year’s findings are fascinating and prove out the level of disruption businesses are facing amid the evolving energy transition. In fact, all 250 executive respondents report already experiencing some form of energy transition-related disruption in their operations.
What shines through is the urgency with which distribution companies need to move toward building more a data-driven, intelligent and visible energy system. There are many opportunities and threats to manage, grounded in external trends including increased distributed generation (DG), electrification of transport (EVs) and heating, energy-efficiency demands and more active, environmentally conscious consumers, many of whom are also prosumers.
Prosumers and EVs as major triggers
We’ll be hearing a lot more about tipping points for disruption from the energy transition—86% of respondents who expect a tipping point to occur believe it will be triggered within the next 10 years.
Residential solar generation is creating a growing number of energy prosumers. And the current grid can only cope with so much prosumer activity before it becomes untenable. This disruption can show up in reliability issues or in complications with outage resolutions. EV growth can produce similar impacts. For example, we found that 72% of respondents believe EV growth will be more rapid than the grid capacity can be built to accommodate them. While EVs are great for the overall energy transition, the cross-industry impact between automotive, utility and manufacturing needs to be acknowledged in a planful way.
Globally, the majority of executives believe the growth of grid-connected DG will be the most common tipping point trigger. A more flexible grid—one with better visibility of smart devices at the periphery and a deeper understanding of customer requirements—can help distribution businesses delay or avoid at least some of the huge capital costs required to upgrade network capacity and respond more speedily to customer requirements.
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Flexibility solutions over network upgrades
One way to resolve issues of growing DG is to invest heavily in network upgrades, which comes with questions about how, where and who will pay for it. While this has been a more traditional move, in our research, we found that most will turn to technology first. One of the stand-out findings from this year’s survey: 94% of executives think deploying non-wire solutions will be key in delivering the energy transition at speed.
When asked about delivering increased flexibility, respondents point to four key priorities—three of which relate directly to visibility of the grid: power status, consumer demand, prosumer exports and grid-connected assets. The clear message: building distribution companies of the future hinges on technology and business models that provide greater visibility and control.
Distribution’s customer directive
It’s clear distribution must be ready to act and, when it comes to its customers, reinvent itself around consumer expectations for service and sustainability. Prosumers and consumers alike continue to expect safe, reliable and resilient service—but are now also open to new participation opportunities, visibility and rules of the road. There’s a level of social responsibility and sense of greater control driving this new generation. It requires distribution utilities to recognize that understanding those needs is critical and will be the difference between leading the energy transition and being left behind.
The risks of doing nothing are significant, endangering a distribution business’s operations, their ability to comply with regulations, fend off competition, and their reputation and relationships with customers. For example, customers won’t tolerate supply disruptions when charging their EVs or curtailing of the dispatch of their self-generated power onto the grid. Any such shortcomings could see utilities taking reputational hits for stalling the energy transition. Our survey shows that if distribution companies cannot deliver, consumers will turn to other providers—high tech, startups, automotive and others—all ready to jump in to fill a perceived gap.
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Leading the charge for change
As the transition continues, there will continue to be opportunities for distribution businesses to apply technology solutions—cloud capabilities, 5G, new grid management devices, edge, IoT and others. There will be new business models as well, such as programs for prosumers to contribute to supply, and initiatives that create affordability for entry. All will help increase visibility, control and ultimately, grid flexibility.
Beyond the technology and business models, a part of this move toward net zero is about distribution businesses understanding and anticipating customer needs, patterns, level of social responsibility—and partnering with an ecosystem of cross-industry product and service providers to be ready when grid flexibility is required at scale.
It doesn’t fall short to say that the energy transition could pose risks to all stakeholders—consumers, prosumers, utilities, regulatory bodies and society at large. But in this new world, transformation is the imperative. More than three-quarters of executives surveyed agree that current regulatory models are unfit for purpose to deliver the energy transition. However, 80% also believe that regulators are waiting for distribution to propose innovative models that incentivize greater flexibility. We agree: the utility industry are the ones to lead the charge for change.
It’s not just energy that’s in transition. It’s the very core of our world.