The transition to more complex value chains

The energy transition creates many new opportunities to generate additional value. Traditional business models will give way to a more varied and complex energy value chain, which is no longer linear, but diffuse and decentralized. What changes fundamentally is that utilities no longer own all of this infrastructure. As the energy transition progresses, utilities will own a diminishing proportion of infrastructure.

Instead, future energy infrastructure will be a multiparty system: a data infrastructure shared between stakeholders that drives efficiency and builds new business and revenue models. They include blockchain, distributed ledger, distributed database, tokenization and a variety of other technologies and capabilities. The strategic imperative is to ensure that the utility business model changes to maximize returns within the new environment.

The Me to We trend is particularly important for the utilities industry. The energy transition redefines the roles played by traditional stakeholders—utilities, power generation, regulators, and customers—and introduces new stakeholders—energy communities, energy service providers, transportation network operators. This level of complexity cannot be managed with existing infrastructure. Multiparty systems offer a new approach to address tomorrow’s challenges.

91%

of utility executives state that multiparty systems will enable their ecosystems to forge a more resilient and adaptable foundation to create new value with their organization’s partners.

In the future, customers’ social values will have an increasing impact on how we generate, transport, and consume energy. Initially, consumers will become prosumers, both generating and consuming energy throughout the day. But once prosumer markets become established, customers may want to donate or share energy with family members. They want the industry to devise new ways of using new energy infrastructure to address energy poverty.

Existing distributed energy resources (DER) already require more proactive approaches to distribution management. Future DER growth increases the challenge. Grid operators will have to manage the increasing intermittency of grid- and small-scale renewables, and the increased capacity required to accommodate the charging of ubiquitous electric vehicles. They can meet changing power demands by working with microgrids, which disconnect and reconnect to the grid. They can call on virtual power plants (VPPs) and flexibility aggregators to dispatch or curtail loads depending on demand and supply requirements. They can work closely with transmission operators and grid distribution operators to better plan. They will be relied upon by local governments and transportation network planners to support smart city initiatives.

Other parts of the value chain are becoming similarly complex. Retail will continue its transformation from energy supply to energy services. In the future, retail will be focused as much on energy management as it is on provision. Smart building technology will deliver significant cost savings to commercial property owners and occupiers. In a decade, hydrogen will be a new energy-carrying vector, with new stakeholders and a value chain that extends into industrial processes, chemical production and power generation. Iberdrola and Acciona are already developing integrated solar/wind and hydrogen plants. If these pilots are successful, a whole new ecosystem will emerge.1

Industrial clusters will rely less on power supply than they will on trusted energy advisors assisting them on optimizing energy use and reducing their carbon footprint. For example, Australia’s Horizon Power has developed energy services that are separate to grid supply. It has outfitted customers with renewable generation, storage and back-up generators which are utility-owned, but not connected to the distribution network. 2

Similarly, the co-operation between Associated British Ports, British Steel, Centrica Storage Limited, Drax, Equinor, Mitsubishi Power, National Grid Ventures, and SSE Thermal aims to reduce emissions and create jobs in the Humber industrial cluster in the UK.3

The transition from me to we

Individual utilities cannot manage all of this complexity alone. While energy will make the transition from fossil fuels to renewables, utilities need to make the transition from Me to We. Success in energy transition will be measured by the successful creation of collaborative, multi-stakeholder ecosystems, including a radically different role played by regulators.

Why are ecosystems so important? It is because utilities cannot deliver the energy transition alone. Utility strategies in the energy transition involve a series of calculated risks. Utilities are laying bets on where they are best able to generate future value. But individual companies, or even industries, cannot be everywhere and do all things – they will be limited by the skills of their employees, capital constraints, regulatory boundaries, and technology infrastructure. Leaning into multi-party systems creates a unique opportunity for a utility to be a leader of leaders in an energy ecosystem: they are positioned to define the incentives for how energy is produced, transported, and consumed.

Traditional utility business models will change, and existing infrastructure will change with them. Multiparty systems, where a utility collaborates with an ecosystem of other infrastructure owners, can help manage a more dynamic market environment. If the energy transition is taken to the extreme, the traditional business model no longer exists.

But there is still time for utilities to identify the areas they believe will create the most value, and to create the partnerships that will deliver this value. For example, The Electric Highway Coalition4 is made up of six large utilities American Electric Power, Dominion Energy, Duke Energy, Entergy, Southern Co and Tennessee Valley Authority. It plans to provide EV charging stations in the Atlantic Coast, the Midwest, South, the Gulf, and Central Plains regions.

The risk is to resist change, or to take a back seat. A utility’s relationships with stakeholders will also be transformed, but these relationships will erode if utilities are not recognized as a key player. Utilities are still masters of their own destiny, but if they do not seize these opportunities, others will.

The new relationship between Volkswagen and EDF is a good example of a utility company finding an opportunity to collaborate and enter a new segment, with the French company providing electric vehicle customers with guaranteed renewable energy offerings aligned to 2050 decarbonization goals.5

Data sharing. Sharing value

The trend of Me to We requires significant data sharing. The technology foundation of multiparty systems helps manage trust within the ecosystem. This will allow for much greater visibility across the value chain, grid planning, in-the-moment grid management, and customer ecosystem management.

90%

of utility executives agree that to be agile and resilient, their organizations need to fast forward their digital transformation with cloud at its core.

A grid operator will require visibility into the far-reaches of its network, sometimes beyond the meter and into the customer premises. A transmission operator requires improved visibility at the macro level, for example into renewable power generation potentially thousands of miles away, the status of transmission interconnectors, and other TSOs current and future demand. Trustworthy and resilient data sharing through multi-party systems will form the foundations for existing and future partnerships.

The future energy value chain will be as much defined by its technology—open data architectures, cloud computing, APIs, digital twins, AI, and 5G networks—as it will by its physical assets. Your moment is now. Seize the opportunity to take your place in this ecosystem, or risk being left out.

1 "Iberdrola will construct the largest green hydrogen plant for industrial use in Europe," Iberdrola.

2 "Horizon first utility to pull down power lines and replace with renewable micro-grids" Renew Economy, 3 Oct 2019.

3 "Zero Carbon Humber Partnership submits £75 million bid to advance UK’s first net zero industrial cluster," National Grid press release, 7 Oct 2020.

4 "Six US utilities launch Electric Highway Coalition" Energy, March 3 2021.

5 "EDF and Volkswagen partner on e-mobility in France" Smart Energy International, Jan 20, 2021.

About the authors

Paula Clark

Managing Director – Technology Consulting, Resources


Ruari Monahan

Managing Director – Strategy & Consulting, Utilities, North America


Nikoo Delgoshaie

Managing Director – Accenture Strategy


Nicholas Handcock

Director – Utilities, Offering Development, Customer Innovation


Jason Allen

Research Lead – Accenture Utilities

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