Industry Trend Analysis - Technology And Electricity: A Primer On Four Disruptive Trends - DEC 2017


BMI View: The growing penetration of f intech, blockchain, drones and cyber-security is a trend that will have a profound impact on the power sector. In this note we outline how these technologies have the potential to transform the way the power grid is organised and how people interact with it, creating new opportunities but also significant threats to jobs and sensitive infrastructure .

Over the coming years the electricity industry is likely to undergo a transformation that will change business models and infrastructure that have operated in the same way for decades. This will be the result of the growing penetration of a number of technologies, including fintech, blockchain, drones and cyber-security. This article provides an initial primer of what each of these trends will mean for the power industry, as well as references to research BMI's has already produced on the subject.

Fintech

The ability to pay electricity bills through mobile telephones is allowing the installation of rooftop solar power arrays and microgrids in communities in Sub-Saharan Africa that had previously lacked access to electricity ( see ' Microgrids Key To SSA Electrification Efforts ', January 26 2016 and ' Solar System Partnerships Support VAS And Data Strategies ', November 30 2015). In addition, linking fintech applications with the blockchain has the potential to radically transform the power sector in mature electricity markets - as we highlight in the section below.

Blockchain

Blockchain can be seen as an enabler of fintech applications to the power and renewable energy sector. The impact of blockchain-fintech technologies on the industry is very high because they have the potential of transforming the way in which the power grid operates, and by doing so shifting value among stakeholders and even eliminating some of them altogether. The basic principle of the blockchain is the creation of a distributed, secure and automated ledger; applying this to financial transactions across the power grid means that middleman figures such as power retailers could become obsolete as customers are able to buy electricity directly and at wholesale prices. Enabling this is the mission of a number of start-ups that have recently emerged; among these, we highlight PowerLedger and Grid+, which have raised AUD34mn and USD40mn, respectively, in October and September 2017. As blockchain makes peer-to-peer electricity trading possible, it empowers prosumers - customers that are both consumers and producers of electricity - and create the conditions for a faster transition towards a more distributed power grid.

Drones

Although their impact is more limited in scale than the technologies considered above, drones have started to play a role in the power sector ( see ' Drone Proliferation To Drive Cost, Efficiency Gains ' June 22). Drones are allowing utilities to remotely inspect power lines and other infrastructure, and as such their use is resulting greater efficiency and lower costs for utilities, as well as lower health risks for workers. While drones will unleash less fundamental changes relative to those stemming from blockchain applications, the growing penetration of drones is likely to have a disruptive impact on jobs in the utilities sector as automation of maintenance operations means fewer workers will be needed.

Cyber-Security

The power grid is one of the most vital pieces of our economic and social infrastructure. As power plants and other components of the grid become increasingly digitalised and connected to the internet, they also become exposed to hacking and malevolent interference. While the potential of a cyber-attack to the US power grid is well in the focus of the US Department of Energy and US utilities, the most significant case of attack on power infrastructure so far was registered in Ukraine in December 2015 ( see ' Ukraine Cyberattack Emphasises Risks To Vital Infrastructure Worldwide ', February 5 2016).