Is energy disruption a real phenomenon or just over-hyped business jargon?

Published on 10th July, 2017

“Disruption is a critical element of the evolution of technology – from the positive and negative aspects of disruption a typical pattern emerges, as new technologies come to market and subsequently take hold” – Steven Sinofsky

The above quote by the ex-Microsoft executive responsible for the development of Windows, Internet Explorer etc. reflects the fact that the concept of “disruption” came to prominence in the mid-nineties as the modern technology boom took hold.

Clayton Christensen wrote an article entitled “Disruptive Technologies: Catching the Wave” and since then disruption is a term that is commonly used to describe the application of technology in new business environments. Recent famous examples of disruptive technology include the growth of Uber into a £multi-billion business which threatens the traditional taxi industry and Wikipedia which has virtually destroyed the printed encyclopaedia business. In fact, there is nothing particularly original about using new technologies and business models to disrupt existing industries – the transportation market was dominated by horse-drawn vehicles until the debut of the Ford Model T in 1908 – the nature of such developments has been around for decades.

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In the electricity industry, development of turbine and nuclear fission technologies led the drive towards economies of scale and centralised electricity dispatch after the second world war. By the 1980’s, further technical progress created the momentum for smaller, flexible plant and the subsequent break-up and privatisation of the electricity supply industry. Today, the development of more efficient renewable generation technologies and falling costs, notably in wind, solar and commercial scale battery storage is pushing the electricity industry towards the so-called smart system with growing emphasis on decentralised generation, demand-side management and consumer participation.

As suggested above, the concept of “disruption” is in reality just another buzzword to describe a continuous process of technological change that goes back many years.

However, there are other developments which suggest that disruptive technology may have a new and profound impact on the future shape of the electricity industry. These developments relate to the ability of micro-processing technology to capture, analyse and unlock value from the large volumes of electricity market information. This industry has always been “data rich” but historically the focus was on the use of generation asset data to optimise central dispatch. What is new are that the circumstances have developed in which the widespread availability of unprecedented computing power can be combined with the spread of smart energy technology – decentralised generation, smart meters etc. – to create the potential for huge new commercial opportunities.

New players are entering the fields of energy management and data analysis; Silicon Valley companies and their counterparts around the world are investing in so-called Big Data and block chain technology, with significant focus being placed on how these concepts can be applied to the energy sector.

Whether these opportunities will ultimately amount to a major threat to the established “order” remains unclear at this stage. However, here at EnDCo we have looked at these developments and reached the conclusion that they are important enough to warrant investment of time and effort in working with companies active in these fields to see where the benefits might lie for our customers – even if, at this stage, it is too early to tell how all the possible benefits of disruptive technology can be captured and commercialised.

For further information, please email me at: les.abbie@endco.co.uk

Les Abbie, CEO, EnDCo