Logica debates examine how to make Smart a success
Smart metering and solutions that balance energy demand and generation intelligently will play a key role in delivering sustainable, reliable and affordable energy in the coming decades. However uncertainties still remain around how consumer attitudes will develop in response to these changes, and how the market will evolve in different regulatory environments.
To help move the conversation forward, we ran two international debates in 2011 that brought together a host of senior level industry representatives from European utilities companies. These exclusive debates allowed delegates the chance to network with peers and share how they are overcoming the challenge of delivering sustainable energy within the right infrastructure, while managing changing consumer demands and resources. Both pointed to one irrefutable fact: that if the energy industry does not act in an integrated way across the various stakeholders and value chains it runs a real risk of failing to realise the full benefits from their investments in Smart and cope with future energy demands.
Much more than an infrastructure project
The Smart agenda is driving utilities to reassess their businesses and operations. To succeed utilities are realising that Smart is all about creating the physical and commercial infrastructures that enable consumers to benefit from an affordable and reliable supply of sustainable energy. Robust economies are founded and maintained on a reliable, flexible energy infrastructure that is open to new entrants and healthy competition.
To ensure that this infrastructure is scalable, three core components are needed. A more intelligent physical grid infrastructure that manages supply and demand in real time (Smart Grid); common market processes that help to reduce barriers to entry and costs (Smart Market); and a customer-centric market for energy and energy services that responds to evolving consumer attitudes and demands (Smart Retail).
The "Get Smart in Utilities" debate discussed how Smart projects can, and must, bring increasingly positive results and benefits for utilities and their customers, as well as deliver a return on investment.
Smart business models: Change is the norm
While the need for and benefits of Smart energy are clear, the approach to rollout and programme scope depend heavily on the regulatory environment. The liberalisation of energy markets, particularly in Europe, has produced the need for market mechanisms which can viably accommodate all the players, from DSOs to the end consumer. Central market systems are essential to enable retail competition, providing more choice to the consumer and helping to make market processes more efficient.
During the "Get Smart in Utilities" debate delegates highlighted the problem that many countries do not recognise the business case for Smart. Many see it as a short-term cost and fail to fully grasp the long-term benefits that Smart can bring. It was recognised, therefore, that regulators are key to creating the energy market structure and set the rules that enable Smart. Without clarity of energy policy and market regulation there would be no investment in Smart. Many operate in different regulatory environments under government energy policies that weight value differently. Often the benefits of Smart do not accrue to those incurring the costs.
The importance of regulation
In a Smart world, security, affordability and reliability of energy are essential – and clarity of energy policy and market regulation crucial to success. As part of our commitment to helping define a vision for Smart across European markets, Logica brought together a community of key European central markets companies from the energy sector to share ideas, learning and best practice at our "Utilities Central Markets" debate.
The debate highlighted the variety and difference in governance models across European utility markets. The role of central market bodies is defined by several different stakeholders, depending on the local market structure, and is often directly linked to the level of local regulation. What became clear during the Logica event was those markets that clarity in policy, supported by the necessary legislation and regulation, operated more effectively.
The Smart challenge
These debates provided some genuine insights into how Smart can and should be implemented across Europe. The challenge is in successfully deploying the meters and engaging consumers. Utilities must find the balance between innovation, consumer interaction and ROI if they are to succeed.
Download PDF (1.5mb)
Logica
Skip to content
