EY utility survey suggests digital grid investments of $500 billion worldwide over next 5-7 years
Written By: Stratton Report
November 14, 2016
On November 14, EY announced that its survey of utility executives revealed that for 46% of respondents that the digitalization of the grid is a top strategic target for investment over the next year, with fully 92% confirming some investment plans over the next 12 months. Per the firm, over the next 5 to 7 years, investment in digital grid is expected to be in the region of $500 billion.
According to EY, respondents cited growth in renewables, improvement in infrastructure operations and performance and cybersecurity risks were cited as the primary drivers for investment in this area.
Paul Micallef, EY Global Power & Utilities, Digital Grid Leader, noted:
“Today’s power-hungry world demands more resilience and flexibility from the grid. Digital grid will serve as the backbone for smarter, more reliable future energy systems – and that fact is not lost on utilities. The acceleration of renewables, connected homes and devices, competition from new entrants and other disruptive forces are compelling utilities to prioritize digital grid. And we’re seeing that reflected in large-scale, widespread investment programs.”
However, when asked about barriers to such digitalization investments, 48% of respondents identified difficulty making a business case, immature technologies and supplier inexperience, and a lack of understanding of the implications as the top barriers to digital grid adoption.
Per EY, some 56% of respondents agree that non-traditional utility entrants will completely transform the sector because new competitors – from telecommunication and technology companies to energy aggregators and energy service companies – are investing in offerings that have the potential to erode traditional utilities’ returns on digital grid investment. This includes connected home products, home energy management solutions and off-grid solutions among other products.
The firm stressed the many innovative approaches undertaken by utilities to manage disruption from new entrants, including developing a virtual power plant based on battery storage, promoting a “bring your own battery” business model and testing blockchain for electric vehicle charging.