Five Future Trends for Electricity Customers

Five Future Trends for Electricity Customers

THIS ARTICLE WAS WRITTEN BY Energy Watch | 02.08.19 | 2:43 PM

How do we energise a changing world?

Electricity is the fastest-growing source of energy demand in the world today, with the International Energy Agency (IEA) projecting it to account for almost a quarter of total global energy use by 2040.

While government and industry work to evolve the ecosystem from the top, it is the consumers who should ultimately benefit from positive transformation of this landscape. So how does that evolution look on the ground today?


Trend 1: Takes two to Tango

Consumers and producers are operating in an increasingly integrated system, where one-way electricity traffic is giving way to a future of two-way flow particularly in the distribution grid.

Distributed energy, or decentralised energy, are smaller electricity generation technologies, such as solar panels, located closer to the point of consumption. The rise of distributed energy is now paving way for consumers to generate their own power, rather than relying solely on central power stations. This enables significant opportunities for self-generation at home through initiatives such as Malaysia’s Net Metering solar power initiative. With this two-way connect, customers who generate electricity in their own homes also have the opportunity to feed back excess energy into the grid.

one-way electricity traffic is giving way to a future of two-way flow

Japan’s second largest power company, KEPCO for example, is exploiting this bidirectional energy flow by using innovative blockchain technology. According to KEPCO, blockchain has the potential to establish solar markets by facilitating transparent, direct trading of power between prosumers (consumers who also produce and sell electricity back to the grid) and other normal consumers without involving utilities.

 

In Europe, some industry experts predict that such rooftop solar facilities will soon become as ‘common as having a fridge’. This reality is already emerging in Australia, where over 2 million households have installed rooftop solar to not only to offset part of their electricity bills, but also inject energy to the local grid. Widely known as one of the jurisdictions with the highest electricity prices, analysts suggest that consumers with this technology are saving an average AUD540 annually on their electricity bills. As this trend catches on, energy utilities may have to deal with the growing technical, logistical and economic challenge of installing and managing this technology.


Trend 2: Market liberalisation

Market liberalisation is supported by many as a route to a more efficient, competitive electricity market, and an important move towards a sustainable national electricity network.

In Singapore, the Energy Market Authority (EMA) was set up in 2001, following which the energy sector was progressively liberalised and restructured over the years. Since 1 November 2018, the Open Electricity Market was extended to all residential consumers by zones, allowing over 1.4 million households and businesses the option of buying electricity from their preferred retailer on a price plan that best meets their needs. The ultimate goal is to provide more choice and flexibility for consumers via a more competitive market.

Vietnam is set to open up its own wholesale power market in 2019, following the successful completion of a one-year pilot. This follows a liberalisation agenda that began with the introduction of Electricity Law 2004, which was targeted to encourage saving, promote efficient electricity use, and provide a more sustainable ecosystem.

Meanwhile in Malaysia, the upcoming MESI 2.0 reform promises the next step in the country’s own market liberalisation. This is likely to include gradual reform to further enhance efficiency and market effectiveness through increased competition and a more flexible market model.

Countries around the world continue to plan their own route to a more open electricity market

Countries around the world continue to plan their own route to a more open electricity market, with strategies that range from sweeping changes to incremental steps. Japan, South Africa, Bulgaria and Cyprus are just some of the jurisdictions currently undergoing transformation or unbundling process in order to progress towards a more liberalised market.

Unbundling is an essential structural reform that often precedes extensive market liberalisation. It separates key operational features such as generation, transmission, and distribution, ensuring these key areas of the electricity industry are operated by separate, independent organisations. This helps form the foundation for a transparent, competitive market which is incentivised to deliver the best possible performance for consumers.


Trend 3: Customer empowerment

Informed and empowered customers are the future of the energy industry. Increasingly connected consumers are primed to expect more responsive customer service and flexible consumer choices by innovations such as social media, smart meters and digitalisation, mobile apps and chatbots.

Indian utility company Tata Power offers a prime example of the impressive use of connected technologies to meet consumer expectations, with integrated IoT services, online management tools and more. This has drastically reduced turnaround time and enhanced customers’ convenience with feature including automated billing. It also inspired the introduction of an all-women customer relations centre to provide a more inclusive environment for women, and involved the revamping of the online customer portal to enhance customer engagement.

In Malaysia, resources such as the Energy Commission’s Myelectricitybill.my attest to a similar focus in shifting to digitally-empowered consumer information. This resource contains detailed information about electricity tariffs and the contributing costs of generation, transmission and distribution. It also provides a bill calculator tool that enables customers to see a simplified summary of their electricity costs.

This trend may be further accelerated by industry liberalisation and competition, in which industry players have to win customers by “upping the game”. This can be achieved via projecting “the best choice” by pushing for better delivery of customer service.


Trend 4: Future generation

A 2019 report by the International Renewable Energy Agency (IRENA) expects that the electricity generated by onshore wind and solar photovoltaic (PV) technologies will be consistently cheaper than fossil fuel-generated electricity on a global scale by 2020. Bloomberg’s New Energy Finance predicts that over half of the world’s electricity will be generated by solar and wind power alone by 2050.

the average cost of electricity generated over a power plant’s lifetime, fell by 76% for solar, and 34% for onshore wind

The levelised cost of electricity, that is the average cost of electricity generated over a power plant’s lifetime, fell by 76% for solar, and 34% for onshore wind between 2009 and 2017. This reflects the growing economies of scale from improved manufacturing output, alongside increasing efficiency of photovoltaic cells. We will see further increase in renewable energy uptake as the supply chains for raw materials improve and become more cost-efficient, at the same time the efficiency of these technologies is expected to rise

Thailand continues to be the regional leader for renewables in Southeast Asia, benefiting from favourable conditions for both solar and wind power production. Calls are now emerging for a focus on smart grid opportunity to optimise the integration of renewable energy in the country. Locally, the Government of Malaysia has set new goals to support renewable energy transformation, with 20% of the nation’s installed generation capacity to come from renewable technologies by 2025.

Meanwhile China, the global leader in installed renewable energy, is pushing the next phase of its own evolution with significant investment in battery storage technology. This push for storage solutions will provide a catalyst for the next generation of green generation, addressing the challenges of intermittent energy supply that is generally associated with renewable energy.


Trend 5: Surviving the hydrocarbon transition

The increasingly competitive cost of renewable electricity generation explored earlier, alongside the growing need to move towards a decarbonised future in the face of global climate change, create a challenging puzzle for major hydrocarbon producing economies.

2019 and the years ahead will represent a pivotal moment for heavily hydrocarbon-exporting economies, as the nations of the world increasingly pushing towards a less carbon-intensive future. Russia represents the sharp end of this energy crossroads, with an increasingly precarious future for its economy in the face of changing energy needs. As major customers such as Germany push to decrease their import of fossil fuels, Russia must seek new markets and new opportunities.

Nations which rely heavily on exports of these hydrocarbon intensive fuels will have to move to reform their economies, creating either the most efficient, low-carbon global marketplace for these commodities, or pivoting towards emerging technologies such as renewable energy.


Unlocking consumer benefits through change

These global trends represent an evolving international ecosystem in which utility companies must be responsive to change. But equally important is their continued drive to respond to the demands of consumers.

The future energy outlook is one of growing demand, and a growing focus on efficient, sustainable generation and consumption across the entire energy landscape. As this evolution continues, it’s important to ensure that a better energy ecosystem for customers is at the forefront of this global transition.

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