Countries around the world are recognising the urgent need to address issues such global warming, CO2 emissions and the need for energy savings. Electricity generation is the single largest contributor to global CO2 emissions, but also offers the greatest potential for reducing such emissions in the short and medium term. Utilities around the world are in a race to upgrade their decades old infrastructure to make it more intelligent (ie smart grids). This will allow utilities the ability to better manage their network, limit electricity loss, prevent outages, loadshed and provide customers with in-house information and tools (smart meters) to better manage their own energy use. In addition, utilities will be able to reduce their carbon emissions, which will offer interesting opportunities on the carbon trading market.
Smart is now well and truly on the agenda of most electricity companies, and indeed on many of their governments’ political agendas. It has become increasingly clear that smart grids are able to transform the energy industry, and that a much broader group of industries are also affected by this. The other industries involved are IT, telecoms, white goods, renewables, management consultants, storage, transport, etc. The electricity grid is becoming the enabler in all these changes, and by making it an intelligent grid and adding telecoms to it, the power will shift away from the electricity companies to the customers – and the appliances that will be developed will assist this process; some of that on a M2M basis.
This industry transformation will lead to a regulated monopoly in relation to the infrastructure, while a range of new services and applications that are becoming available over the infrastructure will create increased competition, as, with many new companies entering this retail field, that market will become truly contestable. This will, of course, also lead to friction with the existing players. Disruptive energy developments from new energy service providers, who will build new business models around distributed (renewable) energy, will also add to the dynamics of the emerging market.
A significantly large part of the population is interested in reducing energy costs and lowering their CO2 footprint and there is evidence that savings of around 30% are possible. This could largely offset the increases in electricity prices.