6 principles for a market design that enables the energy transition

The current market design in the energy sector is challenged by decentralization and digitalization. In this post we discuss six economic principles that provide a framework for an efficient market design that is capable of facilitating the energy transition towards renewables and digital services. Among others we discuss the requirement that the market design needs to become more flexible to adapt to local market failures and to an increasing speed of innovation driven by digitalization. 

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German Utilities struggle with digitalization – especially the retail sector

Utilities in Germany and around the globe strive to become service-based energy providers to address the challenges arising from decentralization and digitalization. In this post we discuss two recent surveys that show two things: Utilities are struggling to enter the smart home market and their adaption of existing digital solutions is very slow. Especially the retail sector does not apply many digital solutions, even though retail is at the heart of a service-based utility. One response to these shortcomings by some utilities are digital attackers that are launched now in Germany to digitize retail business. Is this the right strategy?

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Blockchain in the energy sector – three takeaways from the EUW2017

At the European Utility Week 2017 and the side event EMART2017 blockchain was among the most discussed topics. For us, three events at the EUW2017 & EMART 2017 were especially remarkable: enerchains first live-trade of electricity and gas, the launch of the test network of the Energy Web Foundation & Grid Singularity as well as the initiate! Startup Award for electron. In this post we discuss the steps taken at the EUW17 by these projects. 

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Blockchain: The basis for disruptive innovation in the energy sector?

The potential for an application of blockchain technology is one of the most discussed topics in the energy sector at the moment. Though blockchain technology is often described as a disruptive technology, we stress in this post that blockchain is a fundamental technology that provides the basis for new applications that in the future might become disruptive innovations in the energy sector.  

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Disruptive innovation in the energy sector – definition & application to renewables

Disruptive innovations are supposed to destroy established business models in different markets. For the energy sector, the debate is heating up to which extend certain technologies (e.g. renewables or battery storage) & new digital applications (e.g. AI or blockchain) might disrupt the business case of energy utilities. With this post we provide a basis for this discussion. We built on the definition of disruptive innovation by Christensen and apply this theory to renewables to show that they are actually disruptive for the incumbent energy businesses. 

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Where do the DSOs in Europe see their future? Survey results discussed

Last year the Vlerick Business School published a survey among 108 executives from DSOs that represent the majority of all customers in Europe. In the survey, 72% of the DSOs mentioned that they are planning to transform their business to a service-based company. But what does that mean? Three services are discussed in this blog post: Data Hubs, active control of decentralized generation/demand response and balancing responsibility

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Asset- vs. Service-based Business Models – Where Lies The Future For Utilities?

In Germany, E.on and RWE (innogy) separated their core business units into two different companies and it became inherent that utilities have to change their business strategy to survive in a future distributed energy system. Now, what do the two strategies of Innogy and E.on tell us about the future of the utility business in general? In the following we will present to you different business models that have been introduced by PWC (2014). We will try to show how the current strategies of E.on and Innogy fit into this framework.

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The Future Business Model for Energy Utilities in the US: Quo vadis?

Decentralization, decarbonization and digitalization drive incumbent utilities to change their strategies and business models. But how could the future business model of a utility in the US look like? In this post we pick up this question and dive deeper into the current discussion in the US. 

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Digital platforms in the energy sector – definition & first applications

Digital platforms are on the rise in many sectors. Currently, the question is raised which role digital platforms could play in the energy sector, especially in distributed systems based on renewable energies.  However, there seems to be no clear understanding of what a platform or a platform market acually is. Therefore, we provide a definition of platforms and platform markets and discuss some potential applications of these in the energy sector.

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Regional Flexibility Markets in Germany - Quota vs. Market Models

Regional flexibility markets are widely discuss to tackle three issues: First, distributed generators and consumption should be able to provide flexibility to network operators. Second, other market parties should get access to flexibility as well to develop new market products and thereby increase the value of distributed generation and reduce the costs of the energy transition. Third, DSOs and TSOs should coordinate their balancing activities. In this post we introduce the current discussion in Germany how to organize regional flexibility provision.

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Regional Flexibility Markets – A European view on the TSO-DSO interface

Decentralization is one important aspect of the energy transition. Decentralization drives the need for more coordination between TSO and DSO to secure grid stability. Regional flexibility markets might be one solution to establish efficient coordination between the network operators, the network users and market parties. We discuss in this post 5 concepts that are discussed right now in Europe. 

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TSO & DSO coordination – key for the integration of renewables

The increasing shares of renewables increase the pressure on the existing electricity system in Germany. The network operators are increasingly applying congestion management measures (redispatch, feed-in management) to balance the grid in times of high production from renewables. While this is currently a primary task of the transmission system operator, the distributed character of the energy transition requires a more decentralized approach. Now, the question how to organize the TSO-DSO coordination efficiently becomes a very important issue.  

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The Coordination Problem: A key challenge for Smart Grids

Coordination between distributed generation and the network operators is becoming a key issue for the energy transition. With smart grids, the complexity of the coordination issue is increasing. What is the coordination problem, how does it relate to liberalization and why is it becoming a pressing issue for smart grids?  

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How Third Parties pushed E.ON & RWE in Germany to change strategies

E.on and RWE, two of the largest European utilities, significantly changed their strategies in 2016: Both separated their renewable generation business from conventional generation in two independent entities. In this post we discuss the key driver that forced E.on and RWE to change strategies: Competition from third parties that operate renewable generation.   

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The Future of DSOs: Digital Platform Provider vs. pure Asset Ownership

With digitalization and increasing shares of renewables on the distribution grid level the question is raised whether the distribution network operator should be assigned with the task to facilitate regional market platforms for digital and physical transactions on a regional scale. We discuss concepts from New York and California and their potential implications for regulation of the network operators in the US and Europe. 

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Why we need competition between data management models for smart grids

Belgium, the Netherlands, Denmark and others are currently developing centralized data management systems for smart grids. These data hubs shall secure the efficient exchange of data from smart metering. While there are good reasons to proceed with this approach, we argue in this post that competition between different decentralized models for data management might increase the level of innovation compared to centralized approaches.  

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Data Management Models in Smart Grids: An Evaluation

Managing data from smart metering is a new task in the energy sector. Currently, three different models are discussed in Europe to manage the data exchange from smart metering. Some countries already have introduced concepts to apply one of these models. In this post we evaluate the models against seven institutional/economic criteria and discuss the strength and weaknesses of each model. 

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Data Management Models in Smart Grids

Who should manage, store and distribute the data from smart metering? A regulated entity like the distribution grid operator, a new monopoly under the supervision of the regulator or shall we apply a market based approach and see who does best? 

In this post we provide you with a brief overview about the existing data management models as they are discussed in Europe and the US. 

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Smart Meter Data Hubs - Europe vs. Germany

How do we organize the data exchange from smart metering? In Europe, several countries are developing central data hubs to address this question and to establish a data management system. These data hubs taget the retail market and shall reduce market entry barriers for new and third parties in the electricity sector. In Germany, the discussion has a different focus: In Germany it is discussed to develop a data hub for network operation and not for retail purposes. The energy information network (Energieinformationsnetz) is the headline of this data management discussion. One approach for the energy information network by the TSOs porpoises a central data hub for network operation: I this the way to go for Germany? 

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Cleantech startups: German utilities bridging the valley of death?

Cleantech startups suffered from several challenges in the past. Most prominently, many startups failed to acquire enough venture capital for a market rollout. This is currently changing in Germany. We discuss in this post what exatly is changing in Germany and how three factors together increase the chances of cleantech startups to succeed in the German energy market. 

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