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Are distribution businesses at risk of losing their power?

Accenture digitally enabled grid

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Are distribution businesses

at risk of losing their

power?

Copyright © 2016 Accenture All rights reserved. 2

Targets and constraints from regulators

Competition from new players in the value

chain

Rising costs from increased complexity

Distribution:

A business under threat

Change in customer behaviors and

expectations

Disruption in demand from new energy

technologies

Pressure to drive greater network

reliability from aging infrastructure

Copyright © 2016 Accenture All rights reserved. 3

Consumer behaviors and expectations are changing

% of consumers who would consider investing in becoming

power self-sufficient and not having to buy energy from their

energy provider

of consumers see reliable energy

delivery as an important factor to build

trust with their energy provider

91%

of consumers are interested in energy

management programs

69%

57%

Source: Accenture’s New Energy Consumer research program.

Copyright © 2016 Accenture All rights reserved. 4

Grid-related technical risks are a struggle

% of utility executives that expect an increase in grid faults (2016):

56% 54%

38% 37% 36%32%

Distributed renewablegeneration (low-voltage

connection)

Large-/utility-scalerenewables (medium-voltage connection)

Plug-in electric vehicles(PEVs)

Distributed combinedheat and power (CHP)

Microgrid operation Distribution-levelstorage

2014: 61%

2013: 41%2014: 53%

2013: 33%

2014: 42%

2013: 37%2014: 26%

2013: 19%2014: 40%

2013: 41% 2014: 28%

2013: 14%

Source: Accenture’s Digitally Enabled Grid research program.

Copyright © 2016 Accenture All rights reserved. 5

Competition from all sides is expanding

Products and

services

Utilities, digital energy

retailers, non-energy

providers, community

projects

Access to

capital

Value to

shareholders

License to

operate

Copyright © 2016 Accenture All rights reserved. 6

The biggest challenges distribution business are currently

facing

d

North America

• Controlling operating costs

• Increasing end-consumer

expectations

• Aging assets

• Aging workforce

Europe

• Reducing allowed regulatory returns

• Integration of distributed generation

• Maintaining the quality and reliability of

the power supply

• Aging workforce

dChina

• Increasing end-consumer expectations

• New competitors entering the value chain

• Decreasing demand

• Maintaining the quality and reliability of the power supply

• Aging assets

• Access to skills

Utilities executives believe these to be the biggest challenges currently faced by the distribution business

(Top three challenges including ties)

Source: Accenture’s Digitally Enabled Grid research program.

Copyright © 2016 Accenture All rights reserved. 7

The traditional electricity distribution model is no longer fit-

for-purpose

45%

of utility executives report facing significant

to major issues with a traditional

transportation model for distribution to

provide a sound foundation to meet their

distribution’s technical and financial

challenges

Source: Accenture’s Digitally Enabled Grid research program.

What new role will

distribution companies play?

Copyright © 2016 Accenture All rights reserved. 8

Copyright © 2016 Accenture All rights reserved. 9

Accenture believes that the most sustainable model will be the

distribution platform optimizer

Looking ahead in the next 10 years

Platform access

provider

Provides neutral

access to network to

independent players

expect their company’s

role to evolve towards

one that integrates

distributed energy

resources (DER) and

facilitates the market

for DER services—a

distribution platform

optimizer

66%

Europe

73%

Decoupled

integrated

utility

Removes volume

bias and

disincentive to

optimize

Smart grid

operator

New technology in

existing

management

paradigm

Distribution

platform optimizer

Provides optimal

outcome for overall

system

Utility executives

looking ahead in the

next 10 years

Copyright © 2016 Accenture All rights reserved. 10

What’s next?

Accelerate transition to

being a digital utility

Take action on talent and

culture gaps

Define roadmap of initiatives

in “no-regrets” capabilities

Invest in strategic assets –

battery storage, electric vehicles

and alternative fuels, grid

automation/sensing/control

Investigate corporate venturing,

partnership and joint venture

Define your plays in demand

response and beyond the meter

Pilot new solutions microgrids,

distribution communities, virtual

power plants

Copyright © 2016 Accenture All rights reserved. 11

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