What does it take to compete when energy costs go to zero?

Recently, a client asked DNV GL Energy’s CEO, Ditlev Engel, “What does it take to compete when the cost of energy goes to zero?” The question was rhetorical of course, but contained an element of sincerity. Why? Because now that the efforts to make energy cleaner, less costly, and more reliable are coming to fruition, this prospect is viewed as an exciting challenge to some energy service providers, and terrifying to others.

The energy sector is going through deep transformation. Changes in the way energy is generated, priced, and used is creating an environment that doesn’t just encourage but demands innovation across the sector. The industry has responded, and the pace of innovation is staggering. What’s more, the number of directions and solutions being proposed and tested is almost overwhelming. There is no shortage of winners and losers, and as one drops out several more join in. There’s no one answer to the question posed above, but at the upcoming Energy Executive Forum, a panel of speakers on the leading edge of innovation are grappling with how to invest and innovate in anticipation of a cleaner, more reliable grid and a zero marginal cost environment. Here is how they are approaching the challenge and finding success:

OhmConnect’s innovation is an app that pays utility customers to not use energy. While demand response programs have been around for a long time, they have generally been targeted toward large commercial and industrial customers. However, this app is for the residential market. It monitors energy markets for spikes in power demand, and uses that information combined with data from a home’s smart meter to ask its users to use less energy.

Much like OhmConnect, Advanced Microgrid Solutions is also managing energy demand, but from a completely different angle and on a much larger scale. They are using energy storage technologies to save commercial/industrial customers energy from behind the meter and tap into it when demand is high. It combines real-time energy use, market pricing and data, and storage to create an energy management system for an entire building or portfolio of buildings.

While innovation isn’t the first thing most people think of when it comes to utilities, Southern Company in partnership with Energy Impact Partners is one of several electric utilities in the US testing new R&D strategies, with programs like their Energy Innovation Center and Smart Neighborhood initiative. Innogy New Ventures, LLC, a venture capital arm of one of Europe’s largest utility companies, is established in Silicon Valley and investing in digital innovations transforming the energy industry. Meanwhile, Constellation is actively collaborating with many global energy service providers to ensure innovations in blockchain enable more efficient and effective relationships with customers.

Each of these companies is shaping the future of energy through innovation, investment, and unusual partnerships as that marginal cost of energy trends towards zero. As Ditlev responded to our customer, “The best way to predict a business is to develop it yourself,” and the same goes for the energy future. What innovations do you see shaping our energy future? We’ll talk more about them at the Energy Executive Forum. Register now and don’t miss out on the conversation!

Clint Johnson
Director, Renewable Energy

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