Monthly Spotlight

Digitalisation at the heart of the Future Energy Systems– but Cultural Change too!

Ms. Laura Sandys, CBE, Former Chair, UK Government’s Energy Digitalisation Taskforce

Expert Views

June 20, 2024

India is at the forefront of many of the industrial revolutions facing the globe not least around energy and it is both an exciting and crucial time to re-engineer the energy sector.

Our wonderful engineers, energy managers and CEOs have grown up in a system that was top down, centralised and command and control. All of this is changing with deep electrification of the economy and some of the accepted practises and mindsets have to be changed – or challenged. 

Imagine – or just look around– that 1.4 billion people in India have one or two more electrical devices that can either become a parasite on the system – or an asset to the system. Imagine that in some wealthier parts of India’s cities every home will have 4 to 5 high electricity consuming devices all concentrated in small geographies. In addition, consider that the industry and commercial sectors will transfer from gas systems to powering their processes by electricity.  

In the UK by 2035 the number of EVs on the system will require the equivalent of 3 nuclear power stations if all charging at peak. If smart charged then EVs can become the greatest asset to soak up currently curtailed renewable energy and also act as an important storage vector for peak. It is our choice if we enable this or not!

You have an option – to build to meet these needs or to optimise the system to reduce the investment needed and deliver customers benefits for being “part” of the system.

Your customer base is also rapidly becoming much more demanding, needing much more electricity and less and less tolerant of outages. The perfect storm!

While the great engineers in our sector can meet the challenge, it will take a mindset change, new skills, new regulatory approaches, and most importantly a new focus on customers. At the heart of this transformation is a digitalised system design and architecture. Our current analogue system design will collapse under this level of complexity and interaction – and yes, the lights will go out!

The Importance of Digitalisation:

The most important enabler of this new system where you will have to deal with a much more complex and dynamic system will be the deep digitalisation of the system. But digitalisation of the system is not about buying some whizzy IT platform but is much more fundamental with real system, processes and attitude changes. Some issues that you might want to consider are:

  • Nothing New Here: An important thing to state is that all that we need to digitalise the energy sector is common place in other sectors from logistics, the food system, trading and automotive just in time processes. So first action is to recruit people from outside the sector with the deep digitalisation skills and change management experience.  Of course you cannot transfer directly approaches from other sectors but much of the core architecture is out there and we don’t have to make the mistakes that others have had to endure.
  • Changing your Processes: It is not good enough to layer digitalisation onto your current processes and that is why you need process architects from other sectors who can design new energy system management models to enable you to deal with the complexity and distributed actions and assets.
  • Customers First: Digitalisation will be crucial to understanding and managing the customers assets and actions. While the energy sector has always talked a good game on customers it has been woeful at really understanding and designing processes around customers. The new energy system will not just be supplying customers but working with customers as part of the system. You have to treat them as if they were a massive asset or vulnerability on the system, equally to how you treat your generation assets – and many of them will be generators too. Consider what has happened in South Australia with the huge increase in solar penetration and how they have had to re-engineer their networks to focus on the demand and supply offered by their customers.  Digitalisation will be crucial in managing, supporting, delivering price signals and managing dynamic grid movements.
  • Regulation Change: Regulators are not often very digitally savvy and need to rethink their market development approaches, and drive much deep digitalisation across those that they regulate.  Regulators should adopt the approach in the UK that all regulated entities data is “presumed open”.  This is essential and there are lots of tools available to drive this forward.   In addition with a much more distributed system design they cannot “process” regulate but need to change their approach to “outcome” regulation otherwise they will stifle innovation and customer centric models.
  • Data and Digital Governance: Regulators will have to establish some new functions or a new organisation established to manage the governance of data and digital tools.  There are some key requirements here from enforcing opened data, shared digital assets and algorithm interactions.
  • Coordination and Clarity on Roles and Responsibilities: The regulators’ crucial role will be to determine the roles and responsibilities of each actor otherwise with a complex matrix system overlap and underlap for accountability will emerge.  In addition they will have to drive much greater coordination and collaboration between players with open data moving throughout the system.
  • Interoperability across multiple data generators: All systems and actors cannot be expected to use similar systems in a command and control fashion. However the ability to ingest and utilise data sets from other players requires some minimum “ingest” protocols to enable mini/midi/macro system interoperability. This can be realised by the development of a Digital Spine or Data Sharing Infrastructure that enables all parties to share data and system status without commercial prejudice but enables the system to have visibility and ensure resilience.  This has lots of guardrails and should be totally safe not least in terms of commercial interests but is very important to ensure best operation of the system.   The best analogy here is the World wide web that has developed simple but totally rigid engagement tools (HTML).  
  • Customer Control: In addition customers consent is important and there are many great models for a standardised consumer consent portal that will offer customers control and benefits.

The UK has developed a digitalisation strategy that has put these key measures as the drivers of transformation.  While the world of digitalisation is changing all the time these might be useful principles that can guide an Indian response to an exciting challenge.

I have a dream

Imagine an energy system that was designed for and shaped by consumers actions and needs, anticipating and adapting to their changing preferences, served by frictionless retailers rewarded for outcomes not inputs.   Where consumers could have a whole system carbon account revealing their carbon consumption. 

Where new business entrants were able to tailor and shape new propositions to a wide and varied range of customer needs, access markets and value with many more plug and play options rather than expensive, clunky navigation around an overly complex market place.

Where networks are able to manage their network dynamically responding to changing needs and opportunities creating integrated market options for their capacity management, and being able to offer options to a wide and varied number of participants to deliver their growing DSO function.  Where network interventions are reduced, physical interventions are predicted and mitigated before any outage, and the regulator and networks can actively plan investments getting more from less.

Where the system operator is able to predict, visualise and have an overview of the key drivers of imbalance, anticipate responses utilising the most cost effective, direct response to deliver system stability, providing an open and accessible market portal that triages options autonomously driving down costs and utilising existing assets.  

And then there are the small, medium and large generation and storage assets that in a more dynamic renewables environment will require much more information about the demand profile, maximising their utility and their value through greater responsiveness.   

All of this is possible by looking at other sectors and their journeys to manage complex customer centric systems and services with digital tools and processes.  It however takes one key change … culture change!

So changing people’s mindsets is at the heart of this challenge… and the most difficult to crack.