Colombia. What drives electric distribution companies to digitize, decarbonize and decentralize their businesses?, Schneider Electric, a leader in the digital transformation of energy management and automation, provides an overview of the situation.
One of the eight factors leading to change is the need for decentralization. A complete adjustment of the business model has been required. For example, the strong and necessary entry into play of renewables to the grid changes everything from infrastructure to pricing and distribution. What is the result of the move to decentralized energy? Companies will have a better way to access cleaner, more reliable and more flexible energy, with reduced transmission losses, while better meeting demand.
Changing consumer behavior and expectations
Innovations and technological advances have created a new type of energy consumer. Customers have a long list of expectations that includes greater control and visibility of their consumption, the demand for more competitive prices, the desire for greater use of renewable energies and the ability to act as a prosumer. In this sense, this should be recognized as an opportunity to propose initiatives for change and improve technology such as smart meters, which serve to increase ROI.
Technical risks related to the network
Moving to a digitized network is a step toward reducing blackouts and other technical risks. The new automated and integrated controls allow continuous monitoring that collects real-time information for operators and improves the resilience, safety and efficiency of the same. This makes it possible to prevent and resolve problems before they become a crisis.
Distribution services companies are moving into a more digitized energy world with increased automation, but with that comes the rise of cybersecurity threat concerns. This is a crucial risk management issue and it is essential that companies design a security plan that identifies threats, risks and vulnerabilities, and find solutions to mitigate them in order to protect their network and assets.
Increasing competition and new entrants come from all over to be part of the dispute in the distribution market. Renewables in particular are disrupting the landscape and attracting new players, such as third-party suppliers of products such as photovoltaics for residential markets.
In this sense, distribution companies must focus on the innovation and efficiency of their services, while maintaining their prices to compete, since customers want to have technology and innovation without increasing the payments they are making for the supply.
Consumers' needs and desires are changing
Particularly the growing demand for cleaner energy, distributed energy resources and renewable energy. To meet these requirements they must invest in improving infrastructure and technology, to modify and adjust the cost-income model destabilized by the evolution of demand. Realigning with the demands of the developing market will allow to improve performance, so while it may mean changes to the traditional model, it also allows to create a new innovative model focused on emerging capabilities preparing for growth and success.
Another point to take into account in the panorama is the uncertainty due to changes in regulation, in goals and policies, around the world, energy legislation is in a state of flow. Regulations differ by country and region, but the overall impetus is to seek dramatic improvements in sustainability, CO2 reduction and increased use of renewables to achieve the ambitious targets set out in the Paris Agreement and the 2020 Package on climate and energy.
The energy market is no longer focused on the direct business of selling and supplying energy through power plants
Now there is greater complexity and there must be a redefinition of the energy market, for several reasons, distribution companies are being pushed into new situations that force them to juggle traditional delivery methods and a changing infrastructure. All of this adds complexity, but it's undoubtedly where the market is, and it's been for some time.
Distribution companies can take advantage of the competition by leading the energy transition and providing a cleaner, more flexible and more reliable grid.
