Blockchain Technology – a Threat to Distribution Network Operators? 

Are distribution network operators in Europe threatened by a potential application of blockchain technology in the energy sector? This seems to be the pressing question that was at least partially the motivation for a recent report on blockchain in the energy sector by eurelectric, which is the European association of the distribution grid operators. From our perspective, this report reads like an attempt by the industry to reassure itself that its core business model – asset ownership and operation of the electricity networks – is not threatened by blockchain. While this might be true for asset ownership, this is different in the case of network operation.

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What Energy Utilities can learn from Kodak when it comes to digitalization

Will digitalization help utilities sustain the core business model of selling electricity or will digitalization result in more approaches like FreshEnergy that use electricity consumption as a vehicle to access new revenue streams, which might ultimately result in zero costs for energy consumption? If the latter is the case, then utilities should take a closer look at Kodak and secure to not make the same mistakes. Kodak had the chance to lead the digital camera market, but did refuse to do so to protect its established products. Will utilities make the same mistake? 

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Digital Transformation of Energy Utilities – Shifting Gears?  

Utilities’ investment in digitalization is increasing but still follows an asset-based approach. Investment in software, however, seems to be lagging behind with no increase in budget over the last three years. With respect to new software solutions, like AI, the energy sector currently comes in last compared to other sectors and will do so in the future according to the survey by BCG quoted in this post. Nevertheless, there are currently many solutions based on AI, machine learning or other digital approaches available to the utilities. Which leaves us with the question whether utilities will pick up the challenge to adopt these new technologies like AI and apply them to their core-business?

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European utilities focus on regulated business models – a good strategy?

The sudden decision that Peter Terium, the CEO of Innogy, will leave the company points at an ongoing struggle in the utility sector: The shift to regulated business models that are combined with retail businesses requires high capital investments and increases the vulnerability of the company against increasing competition and dropping margins in the retail sector. How will utilities adapt to this challenge? Will they make use of digitalization to increase their earnings from retail business? We discuss data from the IEA and results of a recent survey among European retailers to find some answers to these questions. 

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The German energy sector in 2016 – Competition gains, but digitalization…

How did the German electricity sector develop in 2016? This question is answered by the annual monitoring report by the Federal Network Agency in Germany (BNetzA). In this post we summarize the key findings of this report: Competition in generation and retail still on the rise, gas power plants the big winner 2016, renewable capacity increased, but production remained stable and wholesale prices dropped again. 

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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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Digitalization in the Energy Sector – Challenge accepted?

Utilities are at a crossroad: They can follow their established paths and focus on their traditional long-term business models. Or they face the challenges of digitalization and adapt to the faster innovation cycles related to digital business models. We discuss the utilities' strategies related to digitization and find arguments that support both scenarios. Which way are the utilities going to take? Let's see. 

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