Considering capacity issues, the challenge posed by residential storage deployment and distributed generation like solar photovoltaics (PV), plus pressures from regulators after COP 21 – the climate accords signed in Paris last year – electricity distributors are under more pressure to change than ever before.
To put this into perspective, looking at load issues alone, because of continued implementation of energy-demand-disrupting technologies, Accenture research estimates that by 2025 utilities’ revenues could drop by up to $48 billion (Bt1.7 trillion) per year in the United States, and as much as 61 billion euros (Bt2.3 trillion) a year in Europe.
For utilities companies around the world, the need to adopt new distribution models is palpable. In fact, our recent research revealed that 45 per cent of utility executives worldwide found the traditional electricity-distribution model was no longer fit for purpose.
The question is: What is the model of the future?
To understand what industry models will be optimal going forward, it is helpful to look first at some of the strains facing the current one.
Historically, utilities have been remunerated by building systems that supported total demand for kilowatt-hours, despite the fact their costs are driven by peak load. The problem with this model is that it can be costly for utilities companies and customers alike, as distribution capacity must be built in to handle the peaks. Even with more “prosumers” generating their own energy, peak demand has proved decidedly more resilient than total demand.
Managing demand is always a challenge for electricity distributors, but it’s far from the only one. PV generation is becoming far more mainstream, and with tariff and net metering price incentives, more and more consumers are investing in “beyond-the-meter” storage. Peak pricing can also drive customer deployment of standalone storage, to manage electricity costs, as can falling up-front investments.
Given the looming challenges facing distribution businesses operating in the current industry model, adoption of a new model should aim to manage peak load effectively through demand-response tools. It should also incorporate investment in storage capacity “in front of the meter” to bring greater flexibility in managing the network.
This is already well underway – our research revealed that more than three-quarters of utilities executives were already investing or expecting to invest in storage within the next 10 years.
The most advanced and comprehensive model that has emerged to solve these issues is that of the distribution platform optimiser, whereby digitally enabled operators will handle all elements end-to-end – including data-analytics-powered demand response, dynamic storage, and sophisticated, responsive pricing – to produce an optimal outcome for the whole system.
These operators will work with prosumers who have adopted residential distributed generation and storage to ensure they’re used to increased grid reliability. All components will be carefully aligned and integrated to help reduce costs, ensure reliability and level-out peaks in demand.
Furthermore, it is believed that the most successful distribution platform optimisers will need a high degree of location awareness to ensure tightly directed and effective demand response programmes that support network optimisation. This requires a new regulatory model that places greater importance on performance over capital, working in tangent with a deeper understanding of the grid’s operations and controls that comes from deployment of a digitally enabled grid.
Ultimately, the platform optimiser model can advance grid performance, including better asset management, delivery, efficiency and utilisation of distributed energy sources, and has the potential to create new revenue.
As the industry undergoes a major transformation, companies need immediately to assess the distribution platform optimiser model’s relevance to their business, and create a road map for implementation.
How are you going to plan for the future?

Pakorn Suriyabhivadh is senior manager, Accenture Resources, Accenture in Thailand.