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Digitalization — the cornerstone of the future energy system

With electricity set to play a primary role in the decarbonization of Europe’s energy supply, the digitization of our assets, processes and operations is a key priority for the EU.

But this is not a new concept. Smart meters were initially developed mainly to increase efficiency in network operations, but their role has broadened. They now represent the cornerstone of the future energy system, accelerating decarbonization and enabling a more active role for consumers.

Enel started to digitize its distribution network in the early 2000s by deploying smart meters, automating the electricity network and introducing modern workforce and asset management systems. Enel completed the rollout of smart meters in Italy in 2006, anticipating by 15 years the European regulatory mandate. It is about to complete roll-out in Spain and to introduce smart meters to Romania, in compliance with the EU’s target to replace at least 80 percent of Europe’s traditional meters with new smart models by 2020. In Europe alone, Enel has already installed more than 40 million smart meters.

In Italy, as first-generation meters come to the end of their expected service life, Enel is now launching the second generation of smart meters. The new “open meter” is characterized by higher performances and advanced functionalities.

“Second-generation smart meters open a new frontier of energy efficiency and new ways to consume, as well as innovative new services that will enhance customers’ participation in the energy system,” says Simone Mori, executive vice president and head of European affairs at Enel.

Smart meters are the first pillar of smart grids. Smart grids will allow consumers to make better use of energy from renewable sources generated locally, as well as making it easier for them to sell power they generate themselves, through solar or wind power, back to energy companies.

“New challenges like decarbonization and an ongoing emphasis on energy efficiency, backed by new technology, digitization and platforms, pave the way to a better integration of renewables and demand-side participation, creating new business models and allowing new actors to contribute,” says Mori.

Over the next three years, Enel will invest €4.7 billion to digitize its asset base, operations and processes and to enhance connectivity. “The energy system itself cannot be modernized and adapted to the low-carbon energy transition if the grids and processes are not digitized,” he says.

As a further step in the group’s digitalization strategy, Enel recently launched a new global business line, named E-solutions, to address the changing landscape of smart homes, smart cities, distributed generation and e-mobility. The new unit is aimed at understanding the needs of Enel’s global customer base by exploring opportunities in areas of new technologies to develop customer-centric, innovative products and both non-commodity and digital solutions.

The Internet of Things (IoT)

Last May, representatives from the European Commission, from academia, and from energy companies — including Ernesto Ciorra, Enel’s head of innovation and sustainability — met to discuss the new perspectives of innovation in the energy sector. As production becomes more decentralized, and buildings are increasingly equipped with new technology, smart homes, appliances and platforms, they focused on how to change the paradigm of the energy business and shift the boundaries of the energy, communications and transportation sectors.

Digitalization is also playing an important role in the rise of e-mobility.

Ciorra says: “For us, electric cars are batteries on wheels. We can pay car owners for connecting their batteries to the grid when they are sitting in their office or at home and not using their car, and that helps the system to better manage supply and demand.”

Central to this is the Internet of Things (IoT), which is the concept of connecting buildings and devices — such as phones, lamps and washing machines — to the internet, so that they can be remotely controlled.

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“Smart devices, coupled with the increasing penetration of electricity, will bring a more dynamic and efficient market, with increased consumer participation,” adds Mori.

The IoT transformation also means that every device is potentially going to become a smart sensor, allowing energy companies to monitor generation plants, power grids and appliances in an unprecedented way. This “big data collection” generated from IoT can be used via predictive maintenance analysis to optimize operation and maintenance processes, leading towards a new frontier for efficiency.

A fourth industrial revolution

Data has an increasingly important impact in many areas of daily life in the 21^st century, and is set to play a key role in the future of energy, too. Mori talks of the data economy as the fourth industrial revolution, creating great opportunities in terms of growth, jobs and welfare, as well as paving the way for the European Gigabit Society.

A prerequisite of this, he says, will be the availability of ultra high speed telecommunication networks and a future-proof approach to cybersecurity.

“The availability of huge amounts of data will support our transition towards the energy systems and to the customers of the future,” he says. “In the future we will have connected homes and demand side management, artificial intelligence and self-driving cars.”

There will be need and room for massive innovation and transformation by utilities, which will compete on a much more complex field.

Innovation and collaboration

Another key driver of the digitalization of energy is the idea of combining innovation with collaboration. It’s a concept that Enel has embraced wholeheartedly, by taking innovation out of the research and development lab and fostering new partnerships with start-ups, SMEs, universities and wider local communities. “Innovation needs to open up to networks of innovators, in order to identify the most efficient technological solutions. We need to create an ecosystem of partners,” Mori says.

In this spirit, Enel has recently launched Innovation Hubs in San Francisco and Tel Aviv in order to scout the most promising start-ups and create the best possible technological and business partnerships.

“The age of passive consumers and old-fashioned utilities is over.”

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