Energy Ireland Yearbook 2019

Insights

Energy Ireland Yearbook 2019

Innovation in the energy sector

We use digital technology in an increasing variety of ways in our everyday lives. It provides us with data that enables us to make informed choices on how we live, work and play, delivering improved user experiences and control.
Digital technology also provides increasing opportunities for data collection, which businesses can harness to inform decision-making. Companies need to be aware of technologies that could have a damaging impact on their business and those that can allow them to innovate to improve or expand their business.

Deloitte’s recent report on the retail power sectori stated that the pace and consequences of disruption in the retail power sector is increasing and identified five potential areas that may require additional focus from global power companies:

  • rapid development of battery storage;
  • ecosystem convergence;
  • new market entrants;
  • regulatory environment; and
  • cyber threats.

These appear relevant to a range of participants in the Irish energy sector, from energy users to owners of generating assets, transmission assets owners and managers, in addition to energy supply businesses. They can create potential risks and opportunities to be assessed, so that appropriate responses can be determined.

Increasingly, there is a convergence of sectors and business offerings in a number of areas. For example, in its assessment of the Future of Mobilityii, Deloitte highlighted the interconnectivity of smart city infrastructure relating to the increased usage of Electric Vehicles (EV). This has implications for the energy sector in terms of reducing fossil fuel consumption and changing the volume and timing of electricity consumed. When coupled with transport related aspects such as autonomous vehicles, car sharing, charging infrastructure and the associated impacts on parking, there can be a significant impact on the revenue models for cities around the world.

Deloitte’s researchiii shows the pace of global EV adoption rising from two million in 2018 to 21 million in 2030, pointing to two factors in accelerating uptake: growing consumer demand for greener vehicles, coupled with government policies that offer financial incentives while placing inner-city restrictions on other vehicles.

Ireland has recently moved to the Integrated Single Electricity Market (I-SEM) - the design of this market will provide signals to participants and to potential investors and developers of electricity projects and will influence the future make-up of our electricity-generating portfolio. The system operator will seek to balance the level of expected electricity demand with the available sources of such power, taking into account the increasing levels of renewables, the potential benefits of demand side management units, battery storage and the need for ancillary system support services.

In its 2018 Annual Reportiv, the Sustainable Energy Authority of Ireland (SEAI) stated that we must continue to use less energy as we develop our local renewable sources of energy, which will create significant economic opportunity and support the transition to a more sustainable economy.

Increased data on electricity consumption and the potential for dynamic pricing signals that smart meters could provide would play a role in reducing electricity consumption, especially at times of high system demand. Demand side management measures, including reductions in energy usage and changes in the profile of that demand, together with a larger number of EVs and higher levels of renewable energy generation, will lead to changes in energy consumption.

Companies that plan appropriately in assessing the implications of the expected usage of assets over time, with effective management of ongoing operations and maintenance costs can expect an improved financial outcome over the whole lifecycle of those assets. Better planning at the earlier stages of a project and harnessing digital data to manage maintenance interventions during an asset’s operating life can pay significant dividends to asset owners. The usage of drones to capture data on the physical condition of wind turbines demonstrates the way in which innovation in technology and data usage can deliver improved availability for such assets and financial benefits for owners.

In its most recent Tech Trends publicationv, Deloitte has outlined the incredible pace of technology-driven change underway and pointed to three new trends that are growing rapidly in importance: digital reality, cognitive technologies and Blockchain. The report points to the need for business leaders to harness the value that such tech forces can deliver collectively.

In assessing corporate strategy, businesses have a consistent focus on the financial bottom line and on sustainability. Investing in new or improved technology relies on the underlying business model making sense. It is not just about the rollout of technology for technology’s sake, but with a purpose, such as driving efficiency or providing benefits to end users. As part of the business case assessment, digital innovation in the energy sector requires consideration of alternative financing solutions, structured to match appropriate funders to elements of the new business models that such innovation allows.

Ger Butler is a Director in Deloitte’s Infrastructure and Capital Projects team in Ireland.

This article first appeared in the Energy Ireland Yearbook 2019.

[i] Widening the lens: Big-picture thinking on disruptive innovation in the retail power sector (Deloitte, 2019)

[ii] Funding the future of mobility (Deloitte, 2018)

[iii] Press release: 21 million more electric vehicles expected worldwide by 2030 (Deloitte, 21st Jan 2019)

[iv] Energy in Ireland: 2018 Report (Sustainable Energy Authority of Ireland, 2018)

[v] Tech Trends 2019: Beyond the digital frontier (Deloitte 2019)

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