To adapt to new energy models, utilities should be encouraged to experiment and allowed to fail half the time, according to Dr. Franz Strempfl, managing director of the Austrian power company Energienetze Steiermark. Strempfl made the remark during a panel discussion at Electrify Europe, an industry event held this month in Vienna.
“You want me to ensure security of supply, have a huge amount of availability, invest a lot in the grid and make it cheaper as well?” he asked, summarizing the challenges faced by utilities as lawmakers push for decarbonization of the electricity system.
Energienetze Steiermark is having discussions around these topics with the Austrian regulator, which is pushing to make the system more efficient, he said.
But these efficiency gains demand investments in infrastructure, which conflict with the utility’s need to spend on innovation and take into account the needs of consumers who are increasingly becoming energy producers in their own right.
“We need incentives to invest, but we also need incentives to make innovation,” Strempfl said.
Today’s regulatory frameworks hardly favor this, he said. Instead of encouraging energy companies to try new things, most utility regulation restricts what the companies can do.
That is why “we need more free room to make pilots, to make new, innovative projects,” Strempfl said. “Maybe 50 percent of these projects will end in disaster. It’s not a pity to have this, because we learn from failure way more than from success.”
Being allowed to fail works well in academia and fast-moving industries such as technology but is almost the opposite of what energy regulators look for. If a utility invests heavily in a project that doesn’t work, the regulator is bound to ask why, Strempfl noted.
The issue is an important one because “we can’t solve the carbon dioxide problem only with electricity,” said Strempfl.
Instead, decarbonization programs are forcing electric utilities to partner with or even act as players in adjacent markets, from district heating to automotive refueling.
To illustrate the opportunities that utilities now face, A1 Digital International’s director of vertical market solutions, Francis Cepero, said: “If I was a utility company, I would buy parking companies. That would be a natural place for autonomous cars in the future.”
Having a car park full of autonomous electric vehicles would not only give the utility a ready market for spare renewable energy, but also a significant amount of battery storage that could be used to help cope with peaks in electricity demand.
Going one step further, Cepero said, the utility of the future could also lay claim to the spare computing capacity that autonomous vehicles would have at their disposal. The utility could build a data center based on the brains of cars at rest in the car park, he said.
Another speaker on the panel, Engie’s senior vice president for external relations, Jean-Marc Leroy, said energy use and generation is currently segmented in a way that makes it difficult to maximize efficiency and help cut carbon emissions.
It was up to utilities to argue the case for a more holistic view of the energy system, he said. "If we don't break the silos, new, innovative companies will break them for us,” he said.
The words came a week after oil giant BP released its 67th statistical review of world energy which showed that recent gains in energy efficiency have slowed, while coal consumption in 2017 rose for the first time in four years, led by growing demand in India and China.
In a press release, BP group chief executive Bob Dudley said: “2017 was a year where structural forces in the energy market continued to push forward the transition to a lower-carbon economy, but where cyclical factors have reversed or slowed some of the gains.”
These factors, combined with rising demand for energy, have resulted in a material increase in carbon emissions following three years of little or no growth, he said.
BP’s study also “astonishingly” shows that the share of coal in the power sector is the same now as it was 20 years ago, Dudley said.