Wednesday, 1 May 2013

Smart grids – Germany’s ‘biggest IT project of all time’

T-SystemsIn a guest column in the German daily, Die Welt, T-Systems CEO Reinhard Clemens talks about the challenges involved in the shift toward alternative energy and explains why the industry is on the verge of Germany's biggest IT project.

Most people think of the shift toward alternative energy as withdrawal from nuclear power and building new power grids so that we can transport renewable energy from wind and solar parks to areas that don't have much wind or sun. They think of conserving energy, maybe even of putting a photovoltaic system on the roof of their house. Few people are aware of the aspects involving information and communications technology. We're talking about the biggest IT project of all time. How are utility companies going to generate and distribute energy in the future? And how will consumers want to use energy? Right now, the energy industry is busy talking about these two key questions. They are also discussing the costs of this shift toward alternative energy as well as the construction of new power grids. But the switch over to renewable energy will have much more extensive consequences for utility companies than just transferring or storing energy.

Today, it is still enough to send customers an annual invoice stating how much energy they have used. Most processes are not automated and customer knowledge does not play a role. However, with a legal framework in place that makes it possible to quickly switch providers digitally, companies are suddenly starting to focus on unknown customers. Comparison sites give consumers a list of the most affordable providers with just a click of the mouse as well as tips on how to quickly switch providers. And suddenly, everything's different.

Former state-run telcos know what happens when customer loyalty disappears faster than new programmes to increase customer loyalty can work. Customers want everything to be fast, simple and practical. Other industries are familiar with this phenomenon as well. New online retailers for shoes, books, movies and everything that people used to buy at the department store or by mail order are doing business - from ordering to delivery, even returns - digitally and from one source. It is so easy, convenient and fast that mail-order companies had to throw in the towel right away. The energy industry is standing at these crossroads as well.

The shift toward alternative energy means investing billions of euros in systems and equipment that can coordinate wind and solar energy as well as traditional energy sources with fluctuating energy consumption. They are going to have to get closer to their customers as well, and in the age of smartphones and tablets, the only way to do that is by making sure that all of your business processes are well thought through all the way to the consumer's mobile end-device. Customer loyalty during the shift toward alternative energy will have to work via smartphones, or it won't work at all, if you will. That's why utility companies are restructuring, optimising and automating a large part of their business processes. They need to coordinate energy generation, logistics and consumption. Which means the industry is currently on the verge of what will be Germany's biggest IT project.

People who have photovoltaic systems on the roofs of their homes are open to technological innovation. They often turn to connected house concepts, are used to using apps on their smartphones and want to have this same level of convenience when it comes to the energy they generate themselves – using power themselves, feeding it into the grid or giving it to their neighbour, all with the push of a button. Smartphones have triggered a disruptive spurt of innovation in the energy industry. IDC analysts are expecting to see the largest and most dynamic growth on the entire IT market in this industry. Germany is on the verge of the biggest IT project of all time. Connected energy won't become a reality until it's over. And we won't find out who the winners and losers are in the battle for customers in the energy industry until then.

Reproduced with permission.


Review:  Reinhard Clemens’ comments emphasise the importance of ICT in the move to renewable energy. New types of generation and delivery combined with much more demanding customers, all within an industry that has been traditionally slow moving, means there is a major IT challenge in making it all work. Without significant ICT investment this is one area of sustainability that would hardly get off the ground.

Curious, though, that Clemens never actually mentions smart grids or smart meters. Perhaps it’s a deliberate move to emphasise the need to make renewable energy work without raising the negative ‘big brother’ connotations associated, in some quarters, with smart meters.

© The Green IT Review

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