Living at the edge: toward decentralized utilities
Do you remember your first mobile phone? For anybody over fifty, it was probably one of those clunky Nokias or Eriksonns. To begin with, we used them for more or less the same calls that their corded cousins offered – only mobile. But even in the early days, there was the feeling that something more was happening – that the power was now at your fingertips and not in some central telephone company. The telco, in effect, was decentralizing.
Right now, the same thing is happening in the utilities sector. The monolithic and centralized utility models we are used to are now challenged by one critical imperative: the transition to clean energy. To make this change requires a new type of energy infrastructure and a new business model – and both have decentralization stamped all over them.
When we think about decentralization in energy, our natural focus is on massively distributed renewables, on both macro- and micro-scale. It’s a major shift, but the change doesn’t end there.
Control of the power network itself is becoming more and more decentralized. In part, this is made possible by the increased computational and communication power of network devices.
In parallel, the utility business model becomes decentralized too. In the old model, monolithic utilities sold energy by the kilowatt: it was a straight commodity. In the new model, utilities can only create differentiation by offering high-value energy-related services. These new services are, in turn, designed to appeal to a new breed of advanced prosumers who expect engagement over smart digital business platforms.
For every utility, in both network operations and customer engagement, decentralization is now central to innovation and transformation.
The technology building blocks
So, what are the core technology building blocks needed to construct and develop these new decentralized operational and engagement models? I have summarized how I see them in the following diagram:
|1||Decentralized Network Management||Edge computing allows us to push processing power to devices right across the power network. This allows us to distribute and coordinate AI on an unprecedented scale. With swarm computing we are able to fully decentralize energy network control and intelligence. In effect, we can establish the digital twins we need to ensure that the physical and digital worlds are in lockstep – and that the latter become the ultimate in responsive control for the former.|
Even though the new decentralized network is massively automated, many important tasks will still be carried out by skilled engineers. The way that utility professionals work will, however, be increasingly enhanced by timely and contextual access to digital data of all kinds.
Augmented reality headsets, wearable sensors, robots and drones - all integrated through field-adapted collaboration environments – now become an essential part of the engineer’s toolset.
|3||Business Services Ecosystems|
The monolithic utility stood alone. The decentralized utility is part of a business service ecosystem. With domestic customers, the utility now needs to facilitate integration, for example, with smart home devices. With more advanced domestic prosumers, the utility needs to help customers manage and sell their surplus local renewable power.
The ecosystem encompasses mutually beneficial enterprise relationships too. These include: transport and automotive with electric vehicles; public sector engagements with smart cities; and the manufacturing industries, both in smart factory energy management and in the provision of enhanced services related, for example, to the energy efficiency of white goods.
Ubiquitous security remains at the heart of the new decentralized utility model. Power networks are now recognized as key targets for criminal and terrorist cyber-attack. The millions of customer relationships which utilities routinely manage must be protected with equal effectiveness.
In decentralized operational and commercial utility models, security also needs to change. Centrally imposed and managed security policies must also become both more adaptive and more proactive. Security must also be embedded in hardened edge devices, making utilities better able to anticipate and eliminate constantly mutating threats – especially those which target operational technologies.
Beyond these four key categories, there are, of course, many other technology developments which are set to have a major impact on newly decentralized utilities.
Foremost among these, perhaps, is Blockchain and its related hyper-ledger technologies. While not yet sufficiently mature to be applied to every challenge, we are already seeing interesting use-cases emerge to complement the decentralized utility stack. Microgrid management, peer-to-peer energy markets and electric vehicle roaming initiatives are just some examples of where Blockchain is already showing promise for utilities.
New models need new attitudes
For management, the transition toward a decentralized utility is neither fast or easy. Utilities will need to balance central generation with massively distributed renewables for years to come. Indeed, the fully decentralized utility may never happen for most established providers.
With this co-existence between centralized and decentralized models, utility companies are also under continuous pressure to integrate new services and modes of operation with their legacy systems and practices.
As decentralization gains prominence, utilities will need to learn to move more like shoals of fish and less like whales. They will learn how the multiple operational and commercial elements within their business, working together with an extended ecosystem of customers and partners, can follow a common general direction while remaining ready to flex and shift as conditions change.
Only by embracing decentralization can utilities gain the adaptability needed for business innovation, while delivering the overall efficiency required to ensure long-term sustainability.
This blog is part of the Atos Look Out 2020+ Utilities “From commodities to high-value service providers” where we explore the business opportunities and key technologies which will shape the future of Utilities.
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