2016 Power and Utilities Industry Outlook
Interview with John McCue
John McCue, US Energy & Resources leader, Deloitte LLP, provides his take on the opportunities that lie ahead for the US Power and Utilities sector.
- Take for 2016
- Examples of exponential technology
- Impact on electric power industry
- Other industry impacts
- Additional resources
Last year we discussed the ongoing electric power industry transformation and the opportunities that were beginning to come into focus. What’s your take for 2016?
Exponential technologies are accelerating the momentum behind the electric power industry transformation as we move into 2016. These technologies, such as advanced analytics, robotics, artificial intelligence, and others, are helping electric utilities optimize the grid to reach their goals for reliability, resiliency, efficiency, affordability, and environmental responsibility.
At the same time, they also support products and services that open the electric power industry to new entrants. Along with these technologies, policies such as the proposed Clean Power Plan will act as an additional accelerant, moving the industry toward renewable energy, energy efficiency, and other low or no carbon emission alternatives.
The opportunities are even clearer now and the momentum behind the industry transformation is accelerating, thanks in part to the growing impact of “exponential technologies” on grid modernization as well as the form and functionality of many customer interactions. These technologies are the same, or similar to those that are continuing to transform many other industries, such as: Telecommunications, Financial Services, Retail, Automotive, and others.
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What are some examples of these exponential technologies and what changes are they enabling?
The best examples are three core digital building blocks whose performance relative to cost (and size) is roughly doubling every 24-30 months:
- Computing power
- Data storage
- Bandwidth utilization
These core technologies are fueling the growth of other composite exponential technologies like advanced analytics, artificial intelligence (AI), robotics, drones, additive manufacturing (3D printing), and wearables. And these technologies are in turn being combined to enable exponential change in the business processes and customer interactions of many fields, including energy.
Artificial intelligence is helping to solve a wide variety of challenges, from simultaneous language translation to new drug development. It’s also what helps people tag their friends’ photos on Facebook.
Robotics were first used to perform tedious, repetitive or even dangerous tasks, like defusing explosives and inspecting hazardous environments. Now they are moving on to knowledge work, like gathering and interpreting data, and determining actions based on their own analysis. Additive manufacturing allows us to “print” whole objects layer by layer, reducing manufacturing and assembly costs and enabling new designs, for everything from toys to jet engines.
Exponential technologies like advanced analytics, artificial intelligence, robotics, drones, additive manufacturing, and wearables are being combined to enable exponential change in the business processes and customer interactions of many fields, including energy.
What are some examples of how exponential technologies are impacting the electric power industry?
The good news is that exponential technologies are already helping electric utilities optimize the grid to reach their goals for reliability, resiliency, efficiency, affordability, and environmental responsibility. At the same time, exponential technologies also support products and services that open the electric power industry to new entrants, like renewable energy and energy efficiency providers.
Thanks to these exponential technologies, electric utilities can now deploy devices such as smart meters, voltage monitors, and heat sensors across their systems, link them through high speed communication networks, and combine them with advanced analytics to enable sophisticated decision making and problem solving in real-time. Some are linking in remotely controlled robotic devices and drones to inspect and maintain distribution systems and assess storm damage.
Similarly, gas utilities are deploying progressively more sophisticated robotics to inspect pipelines inside and out for damage or leaks. This overall “Internet of Things” is increasingly enabling utilities to monitor, control, and optimize grid and system resources, improving performance, and asset utilization.
The “Internet of Things” is increasingly enabling utilities to monitor, control, and optimize grid and system resources.
What else could significantly impact the electric power industry in the next year or so?
Most of this discussion has focused on the accelerating pace of change as exponential technologies are becoming part of the value stream of a very old industry. However...
We can’t walk away from policy implications, such as the impact of the proposed Clean Power Plan.
The plan will likely be litigated in the courts, but assuming it’s implemented in some form, states would need to submit plans by September 2016 and ensure power plants achieve CO2performance goals between 2022 and 2030.
Measures would differ from state to state, but in general it will act as an additional accelerant, moving the industry toward renewable energy, energy efficiency, and other low or no carbon emission alternatives.
Policies such as the Clean Power Plan have the potential to significantly impact the electric power industry in the next year.