Energy in the “Emergent” Era
Whether we look at the political landscape, the state of regional and global business, climatic conditions, or technology and its impact on, well, everything, we can safely say the world is in flux.
This recognition, and what to do about it, is at the heart of remarks Beth Comstock, GE’s Vice Chair, has been making recently as GE assesses and addresses the milieu of disruption we find ourselves in today, where “the old ways” are under relentless pressure, but “the new ways” positioned to replace them have not yet fully formed.
This isn’t a state of limbo, rather it’s a state of emergence, a living at the intersection of the old and new — with responsibilities to both.
The idea of “emergence” as a managing principle isn’t new, but its application couldn’t be more current. From a business strategy perspective, emergence is “the view that strategy emerges over time as intentions collide with, and accommodate, a changing reality… (while also implying) that an organization is learning what works in practice.”
This changing reality is one GE Energy Connections and our utility and oil & gas customers feel keenly on a daily basis as we work together to find the best ways to move power from the point of generation to the point of consumption. In fact, the energy industry could be the poster child for doing business in the Emergent Era. Here’s why:
1. The transition from fossil fuels to renewables. In order to meet the demands of climate change — and impending regulatory regimes — producers and consumers of energy must embrace renewables, at scale, to dramatically curb greenhouse gas emissions. Utilities around the world are doing their part to green their portfolios, bringing more renewables into their energy mix. Yet fossil fuels, including lower-emission natural gas, are abundant and will remain an essential source of power well into the mid-century. Consider, too, that the regulatory climate is also in flux as new administrations, with new ideas, come into power.
What does this all mean? In part that the energy industry hasn’t landed on a single set of solutions yet — the answers are still emerging. As a consequence, during this long transition, we will continue to serve the existing and the emerging. As I mentioned in an earlier post, energy creates opportunity and prosperity for the world’s population; with energy access comes the fulfillment of individual potential and gains in GDP.
We need to remain nimble to serve the needs of all. And we are: whether that means preparing Wales for renewable tidal energy or delivering gas turbines, transmission technology and heat-recovery steam generators from across the GE Store to power Latin America’s largest gas power plant.
2. The transformation of consumers to prosumers. Talk about change and disruption! Today, through rooftop solar, net metering and demand response, end customers of electricity can be both consumers and producers of electricity and are looking for a meaningful, two-way interaction with their utility. This means utilities must consider investing more in understanding their customers to both serve them better and manage electricity. And this is just the beginning. No one knows where this shift will take the industry, only that the future is coming fast and it’s our choice whether we actively shape it or get blindsided by it. We choose the former.
This future-ready mindset requires investment in software and infrastructure, from distributed energy management systems and data analytics to digital substations. Yet even as utilities invest more in the software side of energy, they are facing a difficult economic reality: when residential and business customers produce more energy on their own, they are paying less into the system. In addition, aging power infrastructure requires fresh investment. Who then will pay for these major upgrades and how? Welcome on all fronts to the uncertainty, and opportunity, of emergence.
GE Energy Connections: Ready to Emerge
We’ve been preparing for these changes across GE and specifically at GE Energy Connections. GE’s Alstom deal in 2015, the changing of our name and leadership team in the process, have helped our team become a leading global player in electricity transmission and distribution. And we, along with all of GE, have fully embraced digital, understanding that managing data will deliver the next revolution in efficiency, productivity and customer service.
Today digital is transforming how we manufacture our products as we put our facilities on the path to being designated as brilliant factories, while enhancing the benefits our clients gain from them. For example, we are supplying the substation digital control system to Scottish Power so they can deliver smart grid solutions critical to helping Britain transition to a low carbon future and meet its goal of reducing CO2 emissions by 80% in 2050. In our oil & gas business, we’re collaborating with Maersk on a data analytic-driven pilot project with the aim of increasing Maersk’s drilling vessels’ productivity and significantly reducing maintenance costs by up to 20 percent.
Which brings me back to Beth. As she continues to articulate the new rules of the Emergent Era, we know we have to move fast, which at times includes failing fast, so we can learn, grow and stay in front of customer needs. We know, too, that we must collaborate with customers to help them meet their emergent challenges. Their wins are our wins — we are truly in this together. And, finally, we know we must lead the digital charge, embracing our digital industrial leadership mantle while continuing to innovate. In fact, our digital evolution seems particularly well suited to the demands of emergence, effectively creating value for both the old guard and the vanguard, while building the bridge that moves us from one to the other.