Connectivity and

the digital future

of Energy
How can connectivity help energy
providers adapt, grow and thrive
as their industry changes?

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Connectivity and the digital future of Energy 2

Most sectors experience change, with new ideas and initiatives altering
the way things are done for good – and hopefully for the better.

But few sectors experience that change from quite as many angles as
energy, where political pressure, consumer demands and environmental
obligations are combining in a series of industry-level transformation
imperatives that demand action.

From RIIO-2 to renewables, the energy sector is
being asked to transform and modernise to meet the
expectations being set by its stakeholders. Meanwhile,
the sector is also looking at ways it can become
smarter in how it collects, stores, uses and monitors
gas and electricity. All of this forms part of a wider,
smarter society, which is making everything from
household devices to cities and roads more data-
dependent and consumer-focused.
This puts the IT, telecoms and technology leaders
within energy centre stage, as their companies look
to them for the infrastructure and innovation that will
support their strategic ambitions – as well as their
societal obligations.
But, as ever, demands are high and budgets are tight.
It’s essential that these energy changemakers are
able to respond with improved network technology,
partnerships with telcos and a clear, methodical digital
agenda for the future.
That all starts by attaining a full understanding of the
challenges and in turn opportunities that are going
to shape the digital landscape within energy over the
coming years.

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Connectivity and the digital future of Energy 3

Trends and traffic

IT leaders in the energy sector are subject to a multitude of challenges
in their current environment. But there are three overriding factors that
dominate, and are worthy of greater focus:

The move The transition Smart grid

1 to RIIO-2
2 from DNO to DSO
3 adoption

1. The move to RIIO-2

Due for implementation in 2021, RIIO-2 is the new
energy sector price control, intended to encourage
competition and ensure fair pricing for consumers.
It’s also intended to put the consumer at the heart of
all decision-making that happens within the energy
sector, as well as reducing costs, boosting safety and
accelerating the low-carbon economy - a vital part
of the future of the energy industry.
For all the good intentions behind RIIO-2 and the clear
benefits this brings the sector, its introduction does
bring challenges with it. Ofgem has been clear that
digitalisation strategies will be a crucial part of
RIIO-2 preparations, as part of the impetus to support
data needs, ensure data visibility and provide a better
consumer experience – among other things.
Naturally, most (if not all) energy companies will be
on a digital journey to some extent. But RIIO-2
accelerates the need for greater digital capabilities
– and in tandem puts greater pressure on the IT
networks those capabilities will depend on.
Coping with this, and succeeding when RIIO-2
becomes the standard, will inevitably rest
on infrastructure modernisation.

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Connectivity and the digital future of Energy
2. The transition from DNO to DSO
The impetus to move to a more efficient,
environmentally friendly energy sector is not new
news. Companies have been behind this for years,
with reasonable strides already made in the UK.
But there’s always more to be done, particularly
when the UK has a target to source 15% of energy
consumption from renewables by 2020 (under the
EU Renewal Energy Directive).
Where the challenge sits for energy companies is in
the changing model upon which they work, moving
from distributed network operators (DNOs) to
distributed systems operators (DSOs). This is partially
driven by a greater need for flexibility in the sector, and
to account for the increasing number of people who
generate their own energy and return it to the grid.
Similar to RIIO-2, the DSO business model serves a
highly digitised function that hugely depends on data
to monitor grid performance, supply, consumption
and efficiency. As a result, further pressure is put on
energy network infrastructure.
Leaders in the sector have already acknowledged this,
and the role telecommunications companies are going
to play in the DNO to DSO transition.
ssetelecoms.com 0345 070 1997
4
What the sector says
These statements are taken from recent SSE
Enterprise Telecoms research into the concerns
and priorities of energy sector leaders around
DNO to DSO.
“We need more monitoring equipment at
different levels and different sites – it’s got to
be bi-directional so we know how much
power is going through those lines.”
“As we move to this more distributed,
decentralised system, clearly devices are
going to be talking to one-another more...
we are going to need more and more comms
in order to make these levers work.”
“There are communications challenges with
peer-to-peer services. More complexity and
differing needs. Getting that right could help
in aligning generation projects with locally
based demand.”
enquiries@ssetelecoms.co.uk
Connectivity and the digital future of Energy 5

3. Smart grid adoption

Energy companies are at the centre of a smart boom. Energy generation sources by stated governmental
There’s a dramatic increase in the number of smart policy intention versus global sustainability goals
devices going into UK homes, cities and workplaces 2018-2040 (IEA)
(predicted to be around 75 billion in number as soon
as 2025). All of these will require constant connection 50 thousand TWh

and, as such, constant power – thereby contributing to

McKinsey’s claim that, by 2050, electricity will account 40
for a quarter of all energy demand. The graphs
opposite expand on this, showing a general direction 30
of travel for increased demand.
20
Underpinning the DSO model is the smart grid – listed
by the International Energy Agency (IEA) as an essential 10
integration technology, with the potential to decrease
supply costs, reduce outages and increase synergy 0
across the energy sector while the boom in demand 2018 2020 2030 2040 2018 2020 2030 2040
is underway. It works by balancing the supply and
Stated governmental Global sustainability goals
demand of energy provision, understanding who is policy intention (Paris agreement)
using what and when.
Coal Gas Oil Nuclear
While the benefits of the smart grid are clear for
providers and consumers, making it a reality in the UK Hydro Wind Solar Other renewables

is a tough ask for IT leaders. In the most basic terms,

much of the network infrastructure in place today is
not sufficiently prepared for what the government
and consumers will demand tomorrow (in terms of Electricity demand per sector by stated governmental
vast data use and real-time monitoring). This means policies versus global sustainability goals
infrastructure modernisation is essential in the 2018-2040 (IEA)
sector – and the clock is ticking.
50 thousand TWh

40

Multiple challenges,
30
a single strategy
20
Despite the various hurdles that the energy sector is
having to overcome to become a more consumer- 10
centric, sustainable and efficient industry, a common
thread of digitalisation unites them, and makes the 0
task of meeting multiple objectives slightly easier. By 2018 2020 2030 2040 2018 2020 2030 2040
prioritising digitalisation and modernisation, energy
Stated governmental Global sustainability goals
companies can hit the markers set for them by their policy intention (Paris agreement)
various stakeholders, and grasp the opportunity
provided by an evolving, exciting marketplace.
Industry Residential Services Transport

Other final Power services

uses

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Connectivity and the digital future of Energy
Your digital agenda
Big steps have been made in the energy sector around digitalisation
Today we can see it improving energy efficiency, and
the way in which sites, devices and equipment are
connecting to communicate with the grid. Energy
distribution is also being managed with greater
efficiency than ever before. The IEA itself cited
this in a report on efficiency in 2019.
However, the energy sector is a little way behind some
of its peers – particularly with adoption of leading-
edge data and telecommunications technologies.
Banking, for example, has moved much closer to
consumers through initiatives such as open banking,
which evolves the ways data is managed and moved
to the benefit of the end users. Meanwhile, the media
industry has undergone wholesale change to cater for
new consumption models.
ssetelecoms.com 0345 070 1997
6
Among others, McKinsey has reported on how
banking and finance in particular has seen huge
benefits through this – in the way that consumers
use their services, and in the efficiency of how those
services are provided. Energy now needs to follow suit,
but can every company claim to possess a clear digital
agenda? Some risk missing a massive opportunity to
change and thrive, while others will forge ahead and
dominate the market of tomorrow.
The question for all leaders in the sector is what
should your digital agenda prioritise?
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Connectivity and the digital future of Energy 7

The shape of the agenda

Flexibility
It’s estimated that a more flexible energy system
could save the UK £17-40 billion across the electricity
system by 2050, by facilitating production or
consumption modification in response to variability,
expected or otherwise.
As things stand, progress with flexibility in the UK has
been slower than anticipated. The IEA has identified
that integration of systems, improved storage and
better deployment (among other things) will be
key to changing that story.
Visibility
The new priorities in energy mean network pressure
and high demands on the core systems of providers.
A key watch word in all this is ‘performance’.
Without a clear view on network performance and
potential issues, it will be all too easy for issues to
arise that compromise the smart, consumer-centric
way things will be done in the near future. And for
the benefits energy companies should see to be
compromised with it.

IT leaders will need to accommodate this with

infrastructure that can reliably scale up or down
to meet demand as and when it is needed.
Monitoring and control
One of the key aspects of the smart grid is being
better able to understand capacity needs, demand
and the level of supply. Then to flex according to the
demands of consumers and businesses. To do this,
energy companies will be installing more and more
sensors across the grid that will provide them with
the oversight that they need.
A time-stamped opportunity?
Revenue generation for smart cities is on the
rise – predicted to grow 18.9% from 2019
figures. And much of the investment will be
focused on smart grid initiatives. But it’s also
predicted that this high level of investment
will eventually decline over time.
The message to the industry is clear: act now
and with pace to take advantage of the potential
of the smart grid, or risk losing out.

IT leaders will be charged with doing this in sites

around the country. As they develop plans, they
should keep in mind the networks that have to
support data collection and transference.

Smart means being able to understand capacity,

supply and demand in real time. IT leaders need to
ask themselves whether their current network would
allow this to happen and, if not, how those gaps
are bridged.

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Connectivity and the digital future of Energy 8

Telecoms for trends

Innovation and modernisation in the energy sector has occurred at
a slower rate in recent years than many other sectors. A lack of
incentivised innovation and complex sector requirements are
among several contributing factors holding businesses back.

However, the global move toward renewable, Getting through that door however, relies on IT leaders
green energy and emissions restrictions has spurred having a clear understanding of what partnerships they
progress in the industry. Now, Ofgem has stated need to develop with technology companies,
that it ‘recognise(s) the need for technology, data and what tools they need on board.
and engineering competencies and capabilities to
fully unlock the benefits of the developing energy
system.’ All of which has opened the door for purpose-
led innovation across the sector, and widescale
technological modernisation.

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Connectivity and the digital future of Energy
Data management
and movement
RIIO-2, the smart grid and a renewable-focused
energy market – where consumers may both generate
and sell their own energy – means unprecedently
higher demands for data management and movement.
From real-time grid performance information to
providing customers with a clear view of their
consumption and billing, data use will be huge,
notwithstanding the millions of connected devices
that will proliferate in the next few years.
Legacy network infrastructure is simply unable to
cope with this. IT leaders should be looking to fibre
connectivity solutions that will provide them with the
low latency data transfer they need to monitor sites
and keep people connected, as well as the high
levels of reliability essential services like gas and
electricity need.
Energy firms will need to partner with companies
that possess a thorough understanding of the energy
market and of issues affecting national and local
connectivity infrastructure. Working with companies
experienced in major connectivity modernisation
programmes will also be of great benefit.
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9
Network visibility
Beyond pure performance and reliability, IT leaders
will also need a better view of their own network
performance and any issues that may impact the
efficacy of energy supply and storage.
SD-WAN is an ideal tool to implement in this regard.
It provides IT and telecommunications leaders with
clear network performance detail as it happens –
enabling responsive and reliable decision making
about the network. It’s also easy to install, which is
key when so much of the modernisation work taking
place as part of RIIO-2, renewables and smart grid
transformation can prove disruptive to the
day-to-day work of energy providers.
An added benefit is that SD-WAN provides a view of
an entire IT estate, from the head office to regional
energy storage sites or substations. Deployed in
coordination with a high capacity Dark Fibre solution,
IT leaders are provided with a holistic, company-
wide view of their network, and will be better placed
to ensure that it’s enabling their transition to a more
modern, more efficient and ideally more profitable
way of supplying energy.
enquiries@ssetelecoms.co.uk
Connectivity and the digital future of Energy 10

Achieving your smart

future - together
Energy faces an exciting, if at times uncertain, future.
There’s a lot of opportunity out there as the sector
About SSE Enterprise Telecoms
switches to more consumer-led pricing, a new way
SSE Enterprise Telecoms provides class-leading
of operating and a renewable, greener model to
connectivity and data centre services that deliver
power Britain. But without the right digital agenda
very high performance, cost efficiency and a
and technology partnerships in place, those
competitive edge.
opportunities could be missed.
The company operates a 20,000km private telecoms
SSE Enterprise Telecoms has wide-ranging experience network and an estate of 80 commercial data centres
of working on major connectivity infrastructure that span the UK. With its extensive telecoms and
modernisation projects, and has a history of data centre operational expertise it offers commercial
partnering with mission critical utility and service security with unrivalled in-house engineering resource.
providers around the UK. Our collaborative,
partnership-led approach is designed to create
solutions that will help energy providers meet their
commercial, environmental and customer goals –
with connectivity that’s fit for the future of UK energy.

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0345 070 1997

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