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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%
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 servicesUtilities, digital energy retailers, non-energy providers, community projects
Access to capital
Value to shareholders
License to operate
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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.
8
What new role will distribution companies play?
Copyright © 2016 Accenture All rights reserved.
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Accenture believes that the most sustainable model will be the distribution platform optimizerLooking ahead in the next 10 years
Platform access providerProvides 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 integratedutilityRemoves volume bias and disincentive to optimize
Smart grid operatorNew technology in existing management paradigm
Distribution platform optimizerProvides 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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