Digitisation, energy and the future of Europe

Peter Terium, CEO of RWE AG, looks at how digitalisation and the increased demand on power is the third industrial revolution

The electrification of Europe from the late 19th century transformed our society every bit as much as the industrial revolution that preceded it. Indeed, it is hard now to imagine how we ever got by without electricity. Today we are in the midst of a third great revolutionary trend: digitisation. There can be no denying that society and the ways in which businesses and consumers interact with one another are changing as a result of this ever-evolving process. So shouldn’t electricity supply also be changing in line with these developments?

Our digital world is hyperdependent on electricity, yet electricity is still mostly generated centrally, in a model that has remained unchanged for well over 100 years. This model is, however, increasingly regarded by many as out of date. We now realise that the electricity industry fundamentally has to change to keep up with the requirements of a modern, digital world.  

New approaches to electricity generation and distribution are becoming more common. The generation and consumption of electricity, for instance, is increasingly taking place at the same location – solar panels at home and wind turbines in the backyard are prime examples of this trend. Decentralised generation platforms such as these are driving huge changes in the energy sector.

Home energy usage, meanwhile, is being changed completely by digitisation. In today’s "smart" connected homes, increasingly innovative systems are becoming available to measure, monitor and analyse all aspects of domestic energy management. This trend is leading towards the internet of things in the home; smart devices that communicate with each other, their owner and the power company about their energy use (we have already seen the beginnings of this with the introduction of smart thermostats and meters).

In the near future, people will be able to see exactly how much energy is used in their homes, helping them better manage their energy profile while providing energy companies with invaluable information for managing supply and demand. Digitisation is the key enabler for the smart house: self-learning smart homes, which actively help people to live more sustainably.

Ubiquitous demands for electricity

But what happens outside the home? Today it seems everything requires electricity. Even books, in the form of e-readers, are now plugged in. Importantly, many of these devices are mobile. We increasingly want to take our devices with us wherever we go, and that means they must be powered remotely. Something clearly has to change to meet the daily energy demands of our mobile, digital lifestyle. New and more efficient batteries will play an important role in meeting these needs, but that will only be a small part of the solution.

In Europe, many electricity producers are having difficulty keeping up with the pace of change digitisation and sustainability are forcing on them. The liberalisation of the energy market and a policy focus on renewables, sustainability and efficiency has rocked the European energy sector. Today’s electricity producers face rising energy prices for consumers; conventional power plants that are no longer financially viable; and inflexible energy grids that are reaching their limits.

It is clear that digitisation, combined with our move towards a low-carbon economy, requires the complete re-invention of the energy market. This needs to go beyond merely monitoring and controlling our energy consumption, for example, and more actively using smart solutions. To succeed, change must come from the entire energy sector including: a move from classic fuels to new fuels; a shift from centralised to decentralised power generation; and a change from fixed-line power to mobile power transmission. These changes will only be possible through innovation.

Just as our digital society is an international society that has little time for land borders, Europe needs to evolve to a supranational energy future. A truly pan-European energy grid is the only way for our society to grow and prosper further still. After all, if our economy is an international economy, why can’t our energy supply be an international energy supply? In such a model, efficient energy networks called smart grids would be capable of achieving a perfect balance of supply and demand, ironing out peaks in demand in one region with surplus power from another.

Continued digitisation in Europe means new approaches to energy must be taken to enable our society to develop without difficulty and face up to international competition.

Peter Terium (pictured) is CEO of RWE AG, the German electric utilities company which owns Npower

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