Important growth in Important growth in Important growth in Important growth in information flowsinformation flowsinformation flowsinformation flows

Smart Distributed

New New New New elementselementselementselementsGeneration

Smartmetering

Distributedstorage

Distributedgeneration

Transport & Distribution

Demand

� High frequency consumption measuring (~6’’ intervals). Need to manage high volumes of information (Big Data approach)

Distributedstorage

Distributedgeneration

Smartmetering

� Enables demand management

� Enables consumer’s electric appliances identification (load signature)

� Solar PV: Competitive by 2020 (Grid Parity )

� Relevant for supply of individual homes

Smartmetering

Distributedstorage

Distributedgeneration

� Capture of high share of future demand growth

Positive Positive Positive Positive feedbackfeedbackfeedbackfeedback looplooplooploop

Distributed generation & storage

Smartmetering

Distributedstorage

Distributedgeneration

Higher T&D operational

costs

Lower customer base to

share costs

Higher competitive-ness of self consumption

Higher retail cost

per customer

� Evolution driven by different industries, such as electric vehicles. Competitive in the beginning of next decade

Smartmetering

Distributedgeneration

Distributedstorage

� With distributed generation, allows for self-sufficiency

� Drives changes of demand curve shape. Reduces uses of peak shaving plants

HighHighHighHigh valuevaluevaluevalue in new in new in new in new segmentssegmentssegmentssegments

Distr. Generation

Today Evolution

Distr. Generation

Services

retail

Metering

Distribition

Transport

Generation

� Need of Transport and Distribution networks upgrading…◦ Allow for multidirectional flows

◦ Smart control systems

� … having a small or even negative demand growth◦ Due to self-consumption and higher efficiencies

PlayerPlayerPlayerPlayer SectorSectorSectorSector

na Data management

Consumer servicesConsumer services

Smart metersRetail

Solar panel installation, financing and management

RisksRisksRisksRisks OpportunitiesOpportunitiesOpportunitiesOpportunities

Falling cost of capital for new players:

• Leasing• Crowdfunding + VC• Low interest rates

High size and low cost of capital

Consumer vs. connecting Experience in services and Consumer vs. connecting point

Experience in services and financing

Low level of I+D Customer base

New players with experience in other businesses

Presence in whole value chain. Potential synergies

Cross subsidies in regulated costs

Network upgrading

� Utilities face a revolution as deep as the one telecommunications faced in the last two decades

� Trend towards datification of business and leisureTrend towards datification of business and leisure

◦ Domotics and the internet of things will give consumers high control over their consumption

◦ More widely, information flows allow for a higher integration of all kind of services (smartcities)

� Utilities need to capitalize their current advantages before they erode. Even if that means hurting current businesses

� Early positioning (joint ventures, start-up support) may be done at a small cost, Early positioning (joint ventures, start-up support) may be done at a small cost, compared to the impact of not acting

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IBEX

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DAX

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GNF

Iberdrola

GSZ

EON

RWE

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400Market value

GNF

Iberdrola

GSZ

EON

RWE

Germany is pioneering distributed energy penetration. It’s utilities have lost an important share of value compared to European peers.

� Resource Resource Resource Resource RevolutionRevolutionRevolutionRevolutionHeck, Rogers y Carroll, Abril 2014

� Retail EnergyRetail EnergyRetail EnergyRetail EnergyBrock, Lehrke, Saleh y Yousif. BCG Perspectives, Junio 2014

� Distributed Energy: A disruptive forceDistributed Energy: A disruptive forceDistributed Energy: A disruptive forceDistributed Energy: A disruptive force� Distributed Energy: A disruptive forceDistributed Energy: A disruptive forceDistributed Energy: A disruptive forceDistributed Energy: A disruptive forceBake, Maciel, Dean, Sesahdri y Gee. BCG Perspectives, Julio 2014

� The disruptive potential of solar powerThe disruptive potential of solar powerThe disruptive potential of solar powerThe disruptive potential of solar powerFrankel, Ostrowski y Pinner. McKinsey Quarterly, Abril 2014

� Grid Energy StorageGrid Energy StorageGrid Energy StorageGrid Energy StorageU.S. Department of Energy, Diciembre 2013