FlexPond™ Marc Crauwels – VP Utility Sales September 2019 Asian Utility Week – Kuala Lumpur - Malaysia The integration of DR into a Utility Service Division STRICTLY CO CONFIDENTIAL This document is intended for private use. Any use of the information contained herein for purposes other than those mentioned, is prohibited. Unauthorized distribution is prohibited.
£1bn >2k £700m 2022 annual Enterprise Investment revenue customers to 2020 target Centrica Business Solutions has been We assist organisations to improve their operational efficiency, ensure site resilience and unlock new sources of value with created to develop new thinking, new energy insight, optimisation and technical solutions. technologies and new ways of working to help our customers. Wholesal Energy Energy Energy Energy e supply solutions insight optimisation energy
Who am I? Marc Crauwels marc.crauwels@admiraldynamics.com +32 475 70 94 62 VP Utility Sales Centrica Business Solutions + 17 years in financial and IT services + 25 years in energy and utilities Goal: to help companies think in a disruptive manner
The integration of Demand Response into a Utility DSM service division
Challenge 1: How a production driven environment has changed to a demand driven environment!
THE PARADIGM SHIFT In the OLD PARAD ADIG IGM, M, the starti ting g point t for the power r market t was the load forecast on the electricity grids… POWER TIME FORECAST TOTAL LOAD
THE PARADIGM SHIFT …and centralized, fossil fuel and nuclear based power plants, were scheduled to track this load forecast... POWER TRACKING PRODUCTION TIME FORECAST TOTAL LOAD
THE PARADIGM SHIFT …resulting in a (mostly) balanced and stable power grid. POWER TRACKING PRODUCTION TIME FORECAST TOTAL LOAD NET GRID POWER IMBALANCE TIME
THE PARADIGM SHIFT In the NEW PARADIGM, due to renewable penetration, the starting point for the power market is the load and production forecast on the electricity grids… POWER FORECAST X TRACKING PRODUCTION PRODUCTION TIME FORECAST TOTAL LOAD
THE PARADIGM SHIFT …which is threatening grid stability, especially in Europe. The burning question is: how can we resolve this in a reliable and sustainable way? POWER TRACKING & FORECAST PRODUCTION TIME X FORECAST TOTAL LOAD NET GRID IMBALANCE POWER TIME
THE PARADIGM SHIFT The most sustainable ( and as it happens: reliable and cost-effective ) way to keep the grid in balance, is not to build more power plants, but to adjust power demand to available production POWER TRACKING & FORECAST PRODUCTION V TIME ! FORECAST & TRAC RACKING TOTAL LOAD NET GRID POWER IMBALANCE TIME
Challenge 2: The speed of change of the Utilities industry and the depth of change!
We’re in the middle of the Fourth Industrial Velocity Revolution, and it’s The current speed of change has no historical precedent changing everything Scope The digital revolution and global economic The impact is felt across all areas transformation are putting markets under pressure of global businesses like never before, with the velocity, scope and breadth of change being felt across all aspects of life. Breadth The extent and depth of change to entire systems is pronounced Centrica Business Powering business 1 Solutions advantage 3 13
Businesses are struggling with this complexity, while facing the demands of growth, cost control and risk 88% 76% 66% 33% of businesses view of businesses view of businesses are concerned of customers’ purchasing improving energy innovation in energy about growing energy choices are influenced by a efficiency as a priority technology as a priority management complexity business’s sustainability Businesses that UK energy 30% of global $287.5 billion have never non- electricity can now invested in suffered energy commodity be produced from global clean failure costs have wind and solar PV energy underestimate the risen in the long term technologies effect on their by over 17% in 2016 revenue by 70% since 2015 Source: Centrica internal data Source: International Energy Agency, Source: Centrica research, Source: Bloomberg, Clean Energy https://www.iea.org/topics/cleanenergytechnologies/ energy resilience report, 2017 Investment End of Year Report, 2016 Centrica Business Powering business 1 Solutions advantage 4
Challenge 3: The EC has given strict targets to decarbonise!
Europe 2020 strategy Climate change and energy targets by 2020: Greenhouse gas emissions 20% lower than 1990 levels 20% of energy coming from renewables 20% increase in energy efficiency
Green House Gas Emissions
Green House Gas Emissions
Renewable Energy Share
Renewable Energy Share per Country
Primary and Final Energy Consumption
How do Utilities react to these challenges?
The good bank: creating an energy services division Integrated Solutions Platform Optimisation Insights Solutions Demand Side Management Demand Side Response Energy Insights with Panoramic Power FlexTreo FlexPond Neas Direct E-Power ; Granular monitoring Granular Sub Metering 3 rd Party FlexTract of individual circuits and monitoring of main Metering / power lines and large & devices Utility Meter devices Device Level Flexible Energy Flexible Insights Generation Storage Demand CHP
There is long list of players trying to establish an energy service division
What kind of traction is there in the market?
2017 European energy majors investments and acquisitions January March June September September October October October October November December December Q1 2017 Q2 2017 Q3 2017 Q4 2017 Acquisition Investment Source: Wood Mackenzie Power & Renewables Grid Edge Data Hub
European majors make 19 investments in grid edge companies in 2018 Company acquisitions and majority investments Source: Wood Mackenzie Power & Renewables Grid Edge Data Hub
0 1 2 3 4 5 6 7 2017 Deal count by grid edge market in 2018* and PER GRID EDGE MARKET DEAL COUNT PER COMPANY AND E-mobility, 7 E-mobility, 4 Energy Storage, 4 Energy Storage, 1 DER Developer, 2 Solar, 3 Demand Respose, 1 Demand Respose, 3 Connected home, 1 Connected home, 1 CHP, 1 Thermal Storage, 1 Residential Retailer , 1 Residential Retailer , 1 7 2018 Blockchain , 1 201 Energy efficiency , 1 0 1 2 3 4 5 6 7 2018 Deal count per European company in 5 4 3 Source: Wood Mackenzie Power & Renewables Grid Edge Data Hub 2 2 1 1 1
European energy majors creating American Energy divisions with recent acquisitions Not part of CBS but can provide Companies making up Centrica Business Solutions support (CBS) The four acquisitions that make up Centrica Business Solutions add up to a disclosed value $244 $60 $212 $81.4 undisclose Million of approximately $353.4 million (597.4 million Million Million Million d with the Neas Energy acquisition). Recent acquisitions that can be bundled into Energy Services Acquisitions that make up Engie Services North Engie Services Distributed America with a focus on + generation North America undisclose $335 Million undisclose d d The Group had plans to make € 2 billion in investments by the end of 2018 to expand undisclose its portfolio for growth in energy services. undisclose d d Electric vehicle charging undisclose undisclosed undisclosed d Companies making up Enel X Recent acquisitions that can be bundled into Energy Services $45 Million 1 $300 Million $150 Million • The three acquisitions that make up Enel X add up to a disclosed value of approximately $495 million. • Through 2021 Enel plans to spend 1.1 billion euro on Enel X. • As he three companies come together under the umbrella of Enel X they will begin to offer more integrated services. Source: Wood Mackenzie Power & Renewables
Shell makes 7 deals in the past two years and partners to provide bundled services In November 2018 Shell launched “Shell Energy Inside” as part of Shell New Energies, the division tasked with the provision of low carbon solutions. Investments and acquisitions in 2017 and 2018 The service bundles behind the meter optimization of electricity consumption via the intelligent orchestration of e.g. lighting, HVAC, back-up generation, battery energy September October December January February May May December storage, electric vehicles coupling the offering with the identification of demand response opportunities and retail power supply procurement. 2017 2018 Acquisition Investment Source: Wood Mackenzie Power & Renewables, Shell
What is Centrica Business Solutions strategy?
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