The Impact of the Energy Cloud on the Power Sector Part 2 of 2: Utility Strategies

Sep 8, 2015 12:22:00 PM by NuEnergen

energy productionIn our post last week regarding the energy cloud, we explored the topic of what this cloud actually is and how it is completely transforming the power sector. Although these changes have occurred (seemingly) quite rapidly, they really shouldn't be surprising. The utility industry is, after all, only the latest major sector that is being faced with the requirement to adapt to technology disruption. Those who have trudged this road before, such as telecom providers to the IT sector and even media, have all proven that in order to survive these alterations, the industry as a whole must be willing to pursue new technologies and business models.

Why should this matter to you, though? After all is said and done, the way that utility operations choose to react to these fundamental changes will make a big difference in how you obtain and utilize power. As a result, it's in your best interest to be "in the know" with regards to the strategies that utilities will need to undergo in order to remain afloat. Should the industry fail to follow the suggested procedures, we could see a dramatic shift in the way that the nation regards energy. Should they adhere to these changes, the US will adapt to working with utilities in a different manner. Either way, the times are a changin'.

Utility Strategies in the Energy Cloud

Embracing the energy cloud demands that the power sector be flexible not only in terms of shifting away from the traditional utility model of "poles and wires", but also when it comes to offering tailored services to increasingly involved customers. This can be accomplished, for example, through virtual power plants (or VPPs). These enable businesses to offload both the control and management of their valuable DER assets while simultaneously realizing the greatest possible profit from ownership. By accommodating this, utilities can reap the benefit of being able to manage transmission and distribution assets with increased precision and flexibility. This can work to pay for any investments in new plants, as well as in upgrading their existing grid infrastructure. When handled correctly, everyone should win. Of course, this means that utilities will need to rethink and rework the following:

Operations -- Utilities have always been focused on increasing the return on capital investments whilst reducing operational costs, but the importance of capital and assets management will only grow as the energy cloud spreads. This is especially true with regards to the procurement and decommissioning of stranded assets. Utilities will also benefit from building or acquiring DERs and other disruptive technologies while still maintaining the reliability of power through climate change and similar shifts.

Regulation -- Utility operations are going to have to recognize that the energy cloud is going to have a profound impact on regulatory policy. This is especially important when you consider the fact that this industry is a vital part of our global economy. Although the outcome of these changes is yet to come, utilities must be prepared to deal with them accordingly in order to meet consumer needs while thriving.

The energy cloud's ability to envelop incumbent grids on a global scale will heavily rely on forces that include the maturity and availability to technologies, investments, government policies, and more. This is an important area to keep your eye on, though. The sheer impact of maturing tech such as wind and solar show just how quickly change can occur, and we all have to be ready in order to get the most from it. Keep checking back for more updates on the energy cloud and feel free to reach out to the experts here at NuEnergen for more information and insights.