Does ENGIE have a zero-carbon target?
Zero carbon is a bit of a slogan – it’s difficult to determine exactly what that means. We do have a goal of building 9GW of renewable assets, which is quite ambitious compared with where we are today. Only 4% of our generation is coal based, which will decrease to zero for sure. But we still have natural gas, ENGIE believes gas is still necessary to provide flexible load over the transition period. But greening the gas is a target as well, which is why we have created a hydrogen business unit and we are also looking at biogas.
We believe hydrogen is the energy carrier of the future.
We believe hydrogen is the energy carrier of the future and we have pilot projects where we can inject up to 20% hydrogen into the grid without the customer having to change appliances.
What additional services will you be able to offer customers once the smart meter roll-out is complete?
The key value proposition of smart meters is a better monitoring and thus control of consumption both for the customer and for the utility.
Based on real-time data, we can offer the customers apps via which they can see and control their consumption real time. No more bill-shock at the end of the month. Based on this data we can also offer them ways to reduce their spending. In France we are about to roll out a B2C solution for electric thermostats linked to the app, which will let customers set their heater according to either desired budget or comfort level. It will also give the customer a very good understanding of what one degree means in terms of their monthly budget. There are new smart electric radiators on the market today (Lancey is one that ENGIE New Ventures invested in recently) which have this function built in already, together with a storage capacity. In this way customers can decouple the time of use from the time of charge, meaning they can charge when it is cheaper, or even free.
For the utility smart meters are a huge help in coupling customer payments to real consumption and thus improving cash-flow and reducing collection costs. This is always one of the key KPIs for a utility, and a smart meter helps in knowing what is really happening rather than relying on assumptions and algorithms. If you only read the meter once a year you have a disconnect between consumption and payment.
But beyond this, the data we can collect real time helps us better project the demand curve and offer customers incentives to lower or displace consumption to help optimize grid congestion and generation capacity. Optimizing the system as a whole, and not just the individual, offers tremendous energy saving potential, and can avoid new infrastructure investments.
How do you plan to engage customers more?
Through the monitoring apps and other services we can manage to sensitize customers to their consumption habits, as well as educate them about the energy sources of electricity/ heating/cooling.
There is an increasing customer awareness about climate change and thus an increasing interest not just to consume less, but also to consume ‘green’. Our customer offers to buy green electricity, green gas, etc. have been very popular, and we are working on the next steps of this revolution, because customers will soon want full traceability of where their energy is coming from.
How will you balance the need for access to data to create the new services around flexibility and demand response with the desire for customer privacy?
We are not Facebook. The only data utilities have, and use are those pertaining to our customers’ energy use, which customers don’t consider private. It’s data that we always had and is necessary for billing. This data is now used to give customers more control over their consumption and spend, which is a positive development. We can also use this data to suggest improvements in terms of habits, or in terms of which of their home devices need an upgrade. This is an educational role which utilities have been mandated to do by the regulators in many countries. This training can now be more customized and thus much more impactful and appreciated. For utilities this is nothing new, the issue now is just how to keep it all secure.
Will regulators create the business case and the right policy framework for digital technologies?
Environmental targets can help by creating a need for compliance, but in general business case is not created by regulators. Business case is created by the emergence of new technologies (digital or otherwise) coupled with customer needs.
Regulators are as many as the number of countries whose markets they regulate. In Europe, GDPR has been created as an overall regulatory framework spanning all industries and focusing on data privacy. This is essential for all digital technologies, which all rely on massive amounts of data. But GDPR is also the nuclear bomb. The industries have taken this on board very seriously given the harsh consequences for non-compliance, maybe a bit too seriously, and maybe going beyond customer needs to customer frustration. It will evolve over time as we learn the boundaries of where it brings customer value and where it goes overboard to create unnecessary administration and overprotection.
The fact that there are new digitalised players who don’t have to respond to the same regulatory control is weighing heavily on utilities, and in other sectors like banking.
Some countries have very forward-looking regulatory functions, for example Singapore, which has put a lot of emphasis on supporting new technologies. Other countries struggle to keep their regulatory frameworks up to date with current technologies. Emerging economies have an opportunity not to copy paste legacy systems but to create something new. These countries also have a much larger young population, so I have faith they will make a difference. But the real actors of the energy transition today are less the countries and more the cities and private companies – it has become much more of a grass roots movement rather than regulator-driven compliance.
“What is good for our planet is also good for business" is no longer just a slogan.
How can utilities future proof long life assets?
As we are talking about digital technologies, we must not forget that energy is produced and distributed along long-life assets. Access to those assets may be changing as ‘as a service’ business models emerge, but it is still a common good to run and maintain those assets. Future proofing thus means we need to get them ready for new platform and subscription-based business models, for more transparency, and for ensuring a more sustainable source – greening our generation fleet, gas networks, district heating and cooling networks.
What else should utilities consider as they plan their digital strategies?
Utilities are used to doing everything in-house due to the special nature of a monopoly business under strong regulation in the past. With digital technologies it is impossible to keep up. With the deconstruction of value chains, it is essential for utilities to partner, to co-create, to bring new technologies inside, to find new pockets of customer value outside of their traditional services. Utilities are not very good yet at making use of data and transferring that into a value-added proposition. But they have to raise their skill set in this domain to make sure they get the most value out of the tremendous amounts of data they have.
Are there any particularly promising technologies?
Blockchain will be game changing – as energy becomes more decentralised and customers become prosumers, it will be needed to support peer-to-peer exchange of energy. There’s still a big question mark about what role utilities can take in that value chain.
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