European Utility Week: ‘The confidence is coming back’

The energy transition is becoming ever more apparent among power companies, as was evident at the European Utility Week event in Paris. The show, which from next year will be rebranded as ‘Enlit’, showcased the hopes and fears of energy companies.

It’s not just about the utilities any more. After merging with rival event Powergen this year, European Utility Week included representatives from the power generation industry in Paris this week, alongside energy providers, and the show will be rebranded “Enlit” from next year.

Promising to represent the energy industry “from end to end”, as European Utility Week director Paddy Young explained, the switch to the new brand is likely to coincide with greater representation from renewable energy generators.

The show promises to be the destination for anyone who wants to work with utilities and stay on top of energy sector developments. Although not everyone in that bracket had a booth at this week’s expo, they were sure to be present mingling on the show floor.

The origins of the trade fair, which sprung out of the smart meter industry, were still evident at this year’s event, with a section devoted to meter data management (MDM), a necessary concern as the large number of smart meters already deployed is busily generating a mass of data.

Data management

Energyworx presented a solution which uses the Google cloud to store and process smart meter data, as director of solutions Rinse Veltman explained. The company, which numbers French energy giant Engie among its investors, leaves data handling to the Silicon Valley giant and places its MDM system on top. The Energyworx solution can be adapted by customers to their needs and Veltman said it could be used to monitor PV systems and control battery storage, with some adjustments.

Tracking down solar module and inverter presence was a more demanding task although Siemens, one of the show’s main sponsors had put aside an inverter table and Georges Makdessi, global account manager for inverters, said he had seen considerable interest from utilities. Siemens has boosted its central inverter offering by retailing Kaco string devices, partly under its own brand.

The change being effected by renewables penetration took center stage at the European Association of Distribution System Operators’ (E.DSO) second stakeholder and innovation council event, which considered the questions posed to utilities by the energy transition.

Assistance required

“We are convinced that we need external input,” said E.DSO chairman Christian Buchel. The organization approached the topic from three standpoints: Grid edge transformation through flexibility; customer engagement by design; and innovative resilience. “In the wake of new challenges and emerging threats – including extreme climate conditions, cyber threats and market disruptions – DSOs [power distribution system operators] must adopt a ‘resilient by design’ concept”, announced the association in a press release.

The term utility is becoming increasingly obsolete, as energy companies take many different forms, from the traditional, monolithic provider of energy services model still dominant in France to the market-forces led approach seen in Germany which involves the old power giants breaking up into separate segments of the industry under pressure to accelerate the phase-out of nuclear and coal.

“The interesting thing will be about which of these approaches is going to work: EDF and Engie’s cross-value-chain approach, or E.On’s focus on networks and solutions, or RWE’s generation focus?” said David Linden, director for power and renewables consulting at Wood Mackenzie.

Unbundling vs monopolies

Power companies which intend to focus on generation are under pressure to move to a renewable energy portfolio, said Linden. Fixed-payment power purchase agreements (PPAs) which still dominate the renewables industry guarantee a revenue stream and enable generation project developers to sell off parts of their investment to free up capital once generating energy. However, the old unified utility model could prove an asset with the increasing rise of merchant models for selling renewable energy. Having in-house power trading knowledge should provide an advantage in less certain power markets.

But the power giants will have to get used to the idea they no longer have free rein to do as they wish, warned Linden. “It will be interesting to see what new entrants will do and how this will change the market dynamics and structure,” he said. European oil multinationals including Shell, Total and BP are investing in renewables across the electricity value chain. However, it is still far from being close to their core business; at Shell, clean energy accounts for less than 10% of overall investment.

Shell, at least, has declared its intent to become an electricity supplier. U.S. based peers such as Exxon and Chevron have not taken the same path because public and shareholder pressure is not sufficiently intense, according to the WoodMac consultant.

The renewables age

The pervasive influence of renewables is also manifesting itself in the financing of power companies. “In the first six months [of the year] half of the utilities issued their bonds as green bonds,” said Sean Kidney, CEO of green investment campaign the Climate Bond Initiative. Such eco-friendly bonds are rewarded by investors who feel they future-proof the companies concerned, according to Kidney, as well as offering more resilience in the event of severe market downturns.

More needs to be done on the green bond industry, said Kidney, whose company check such investments to confirm they are not linking to the same projects more than once. At present, only around 30% of such bonds are certified, although a European taxonomy which is being formulated and which is expected next year could help things along.

A few years ago, utilities and other energy industry stakeholders might have been regarded – and possibly have regarded themselves – as dinosaurs but the buzz at this year’s show, and the inclusion of Powergen, showed confidence has returned, according to expo director Young. The conference program reflected an energy-industry-wide outlook which included renewables.

A section devoted to commercial and industrial energy provision which considered PPA variation across different nations illustrated the evolving nature of European Utility Week. With natural gas, “renewable gas” and power-to-gas also in evidence, from next year the European show – and its Asian and Australian sister events, organized by Clarion – are ready to be Enlit-ened.

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