3FOOD

Third Industrial Revolution Consulting Group
The rise of local energy cooperatives has forced electricity companies to rethink their business
practices. A decade ago, four giant vertically integrated electricity generating companies—
E.ON, RWE, EnBW, and Vattenfall—were producing much of the electricity powering Germany.
Today, they are losing market share, since fossil fuel and nuclear generated electricity has been
reduced to 68 percent. At the same time, the big four power companies are producing less than
7 percent of the new green electricity that’s taking Germany into a Third Industrial Revolution.
Peter Terium, CEO of RWE, the German-based energy company, acknowledges the massive shift
taking place in Germany from centralized to distributed power, and says that the bigger power
and utility companies “have to adjust to the fact that, in the longer term, earning capacity in
conventional electricity generation will be markedly below what we’ve seen in recent years.” 19
Companies like E.ON and RWE are spinning off their fossil-based activities into separate
businesses in anticipation of the changing role of traditional power plants in the energy system.
In the future, in the fully liberalized European energy market, traditional energy suppliers will
increasingly generate income by erecting and operating the Energy Internet and managing their
customers’ energy use by taking on additional roles as both Energy Service Company Providers
(ESCO) and aggregators of energy services. Suppliers and grid operators alike will mine Big Data
across each of their clients’ value chains and use analytics to increase their aggregate energy
efficiency and productivity, and reduce their marginal cost. Their clients, in turn, will share the
efficiency and productivity gains back with the utilities in what are called “Performance
Contracts.” In short, energy companies will profit more from managing energy use more
efficiently, and selling less rather than more electricity.
Luxembourg Vision “Energy System 2050”
The participants of the Luxembourg Energy Working Group have set forth a bold vision of a
smarter energy future in Luxembourg described in eight transformational initiatives:
1. Significant reduction of energy consumption through increased energy efficiency.
2. The energy production in 2050 will be based almost exclusively on renewables.
3. Energy production and consumption will increasingly be distributed.
4. Local and/or regional energy clusters will become increasingly more important.
5. Centralized production and distribution of energy (in particular electricity) will remain
at least a back-up component of the energy system.
6. Innovative ICT solutions will be the basis of a flexible demand side management and
thus contribute to an increased flexibility of the energy market(s).
7. The mobility sector will essentially rely on electricity.
8. As a prosumer, the client will play a crucial role in the future energy system.
19 See: http://www.reuters.com/article/us-utilities-threat-idUSBRE92709E20130308
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