Role of smart energy in destabilizing utility revenues: Study

According to Accenture’s Digitally Enabled Grid report, by 2025, the annual revenue from utilities will be decreased as much as by $48 billion in US and by $95 billion in Europe.

Augmented growth of distributed energy resources and advanced energy efficiency measures can be pointed out as prime causes behind this decline.

The findings are based on three different case studies, piloted on the impact created over grid network and utilities by solar photovoltaics (PV), electricity storage, electrification of heating and transport, energy efficiency, energy conservation and demand response.

According to the study, loss of revenue at the lower end of the scale is most likely in a decade.

In addition, moderate reduction in load on the grid network will cause a loss of around $18 billion a year in the US and €39 billion in Europe.

This reduction is possible due to adoption of energy efficiency and distributed generation, which can be achieved without subsidies.

This reduction will further lead to better market penetration, tempted by shifting consumer sentiment, falling technology costs and a moderate rise in electricity prices, especially across Europe.

In addition, by 2035, 12 percent of customers in North America will become energy self-sufficient, compared to 11 percent in Europe.

Utilities executives are concerned about the impact of these technologies on future revenue streams.

They expect a moderate revenue reductions caused by distributed generation, compared to 43 percent last year, according to the study.

However, the number of consumers who will opt for grid electricity as a second resource during times of low renewable production will be comparatively small.

Meanwhile, according to majority of utilities executives, it won’t be cost-effective for consumers to go off-grid without any subsidies until 2030 or beyond.

The demand disruption caused by growing adoption of energy demand-disrupting technologies is a threat to utilities’ business models.

This causes financial pressure, operational challenges and increased technical stress on the grid and, opening the market to new competition for energy products and services.

To overcome this demand disruption, utilities have to transform their creation of distribution system operations services to manage a more complex and distributed grid.

This includes the adoption of new tariff structures, opening up new markets, aligning subsidies, investing in grid optimization like automation, sensing devices and real-time analytics and developing new customer products and services.

Sabeena Wahid
[email protected]