The Australian energy sector is at an inflection point, and the changes are set to cause pain for incumbent utilities companies which are constrained by legacy systems. 

That’s the assessment from Joe Locandro, Chief Digital and Transformation Officer for the Australian Energy Market Operator (AEMO). 

The Australian energy sector is at a crucial inflection point whereby it’s had decades of one-way power flows and it has been fairly static,” Locandro said  during a panel on disruption in the utility sector at Gartner Symposium this week. 

Executives can no longer “kick the can down the road” and the players within the sector need to face up to the disruptive forces and figure out “ how do we model a new energy market?” 

Locandro identified four key themes emerging in Australia’s energy sector. 

The first one is the increased level of complexity in the ecosystem, not just rules and regulations but also the changing dynamic as renewable energy sources take hold and consumers start producing their own power and selling back to the grid.  

Renewables also create a lot of complexity of having to get the power to where it is needed at the right time, according to Locandro. 

“The complexity of distributed energy resources and the associated technology required to keep that all in sync 24/7” is a market shift, he said. 

The second major disruptive element is the exponential increase in data. For example five minute settlement rules where retailers must be able to adjust prices every five minutes rather than the current interval of 30 minutes will create a huge amount of data. 

“What that means is meter reading alone will go from 88 million reads per annum to 2.3 trillion meter reads per annum,” Locandro said. 

That “big data problem” will hit organisations with legacy investments putting pressure on their backend systems to curate, manipulate and use the data, let alone trying to get insights from it. 

The third change is the energy ecosystem has expanded. AEMO now works with the CSIRO and the Bureau of Meteorology about how energy is used in industries.

“The whole ecosystem [will] just keeps expanding because we will have new players emerge.”

The growing amount of data in the sector will also give rise to aggregators and entrepreneurs who want that data to create new business models. 

“The provisioning of information, the provisioning of technical services and the provisioning of the whole ecosystem is just going to get bigger and bigger.”

The fourth element, which has played out in other industries, is the move to customer centricity. 

“What you see is power moving back to the consumer and that the consumer is driving change in the industry” 

Locandro highlighted the consumer data right, which will soon be introduced to the energy sector and allow consumers to get their last 12 months profile and then potentially shop around to find a better deal. 

Rebecca Chenery, chief digital officer of Watercare in New Zealand noted that the water industry – where most business have been monopolies – was also experiencing a shift towards its customers. 

“Increasingly what we are seeing is actually you just can’t get away with not being responsive anymore and not being customer-led,” Chenery said during the panel. 

“We are very much focusing on service at our customers’ convenience, not at our convenience, and it is quite a different way of thinking for a business that hasn’t thought that way historically.”

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