The power utility business is constantly exposed to regulatory constraints, policy changes, varying economics, technology and customer preferences.
In order to exist in this competitive market, utilities need to facilitate uninterrupted power supply with efficient load distribution and minimise downtime with timely maintenance.
As a result, technology innovations such as machine learning algorithms and artificial intelligence are entering the power distribution business at a drastic pace. Among other innovations, battery storage and internet of things are showing the promise of transforming the power business in the near future.
Ongoing research in storage technology has resulted in reduced cost of lithium-ion (Li-ion) batteries and an increase in their performance.
With this trend to continue, utilities in future are expected to switch to large battery banks as an alternative to building new power plants.
The advantages are manifold.
Firstly, battery storage can be effectively used to tackle peak demand. It is a known fact that demand varies not only on a daily basis but also seasonally and annually. Meeting the peak demand is a costly affair, as utilities have to either invest in additional capacity by building new power plants, which are not always optimally run, or buy power from independent power producers (IPP) during peak hours at higher prices compared to non-peak hours.
On the other hand, grid-connected battery storage can effectively inject the required power into the grid at the right time to meet the demand. Power from battery storage will not only save the utilities from the above-mentioned challenges but also help in maintaining grid balance.
GlobalData projects the global battery storage market to more than double by 2023 to reach $13.1 billion from $6.1 billion in 2018. The US alone is expected to account for 23% of the global market closely followed by China and Japan with 17% and 10% share respectively.
Utilities are attracted by the potential for storage to meet other needs such as relieving congestion and smoothing the variations in power that occur independent of renewable-energy generation.
Energy storage has begun to play a wider role in energy markets, moving from limited and niche uses such as grid balancing to play a larger role such as replacing conventional power generators for reliability, providing uninterrupted quality power, and supporting renewables integration.
The internet of things (IoT), billed as the next industrial revolution or Industry 4.0, has the potential to significantly transform the power sector by optimising operations, managing asset performance, and engaging customers to lower energy cost. The power sector is already reaping benefits from early consumer-oriented IoT applications: smart meters and smart thermostats.
The rapid growth in IoT is forcing traditional power utilities and industry participants to adapt, or be outpaced by strong new entrants possessing the benefits by these technological advancements. IoT and robotics have already found widespread applications in utilities, especially in demand-side management (DSM).
The advent of smart meters and IoT connected power appliances has enabled consumers to track and monitor their energy consumption and save money in energy bills.
Similar technology is expected to make aggressive headway in the power generation and transmission segments.
The global utility IoT and smart devices market is expected to reach nearly $15 billion by 2024.
The massive growth is directed towards efficient use of resources in power generation along with increased operational efficiency for meeting the growing energy demand.
For example, IoT-connected smart glass could help a maintenance engineer to draw up the schematics of a boiler and other service procedures. In case of a massive fault, the engineer can access collaboration software to get help from an expert from a remote location and ask for additional information if needed; saving both time and money as there is no need for additional personnel to be sent on site.
IoT will be increasingly important in resource allocation and process optimisation in distributed power generation.
The increasing need for monitoring of renewable energy assets in remote locations for scheduled maintenance and reduced downtime is also likely to make IoT popular in the utility industry. Smart grid and GIS (Geographic Information System) connected with IoT will also facilitate improved operational efficiency and grid reliability for the consumers in power distribution.
Once connected with IoT, the system can perform effective load balancing, load flow analysis, identify faulty transformers, and alert the nearby maintenance team for quick response.
In addition, increasing adoption of cloud-based platforms in government-backed grid modernisation initiatives in the US, China and India provide strong growth opportunities in utility-based IoT market. Moreover, because of the online or cloud nature of the technology, security, particularly cybersecurity are subjects of immense importance to power utilities involved in the transformation.
Disruptors such as IoT and energy storage are transforming the electric power sector at a rapid pace; this transformation has led to many traditional power company leaders to rethink and plan for adopting these digital technologies to stay competitive.
Power companies are facing unprecedented challenges and customer expectations; which mean these companies must operate, maintain and modernize their systems and business models to cope with the transformation.
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