Global Megatrends and Industry Division D
This set of utility services has been with us for a very long time. The Romans developed water reticulation and sewage systems. Gas has been used commercially for hundreds of years, and electricity for more than a century. But change is afoot in this industry division. Pressure is building (sic) from various sources This article reflects on these changes – what could happen in the utilities industry over the next 10 or more years? What could happen to career or business prospects? What follows are some insights from a futurist on electricity, gas, water and waste services – a perspective on what could be.
As with other articles exploring the future for different Industry divisions, the focus is just on the impact of two global megatrends – computerisation and climate change. Societal and demographic global megatrends are other ones (eg. across the OECD, the number of single parent and childless couple households is expected to continue to rise), but they may not be as significant as the two in focus.
About the global megatrend of climate change
We are witnessing shifts in weather patterns, increases in ocean temperatures, and rising rates of abnormally high seasonal temperatures. Shifts that impact agricultural returns and interrupt the annual rhythms of nature (eg. French vineyards are replacing old varieties with more suitable vines for a warming climate. Mangoes, avocados and bananas are now commercially viable in Sicily).
Unless there is a globally significant and sustained effort at combating climate change, we will witness a continuing increase in land and ocean temperatures over the coming years. Likewise with the frequency and duration of land and marine heatwaves. And not forgetting the increasing intensity and frequency of heavy precipitation (eg. in the 60 years to 2011, the northern hemisphere summer grew in length from 78 to 95 days. In Australia summer is twice as long now as it used to be in the 1950s).
About the global megatrend of computerisation
Another thing we have witnessed in recent decades is the increasing ubiquity of computers. From the first commercial computer in the years after WW2 to the introduction of the personal computer in the late 70s, to the current day smartphone in every pocket, computers are everywhere. The uses to which they are put have spread as well. From early uses in Census Bureaus, spreading to finance departments in major corporations, to the electronic gaming industry in current times. There are very few of the 96 standard industry subdivisions in which a computer is not used.
The global personal computer market is expected to grow from its current size $160 Billion to over $220 Billion in the next 4 years. Further, over 200 million desktops notebook and laptops will be sold this year alone. Compared to the 10 million units sold in the year 2000, is it any wonder that computers are used in every facet of industry.
The growth in smartphones also has a similar trajectory, from about 120 million for the year 2007 to over 1.5 billion this year.
The depth, resilience and growth of this market is testament to the usefulness of the product. There is no slowing it down.
The impact of these two influences
So, what will these two global megatrends do to the utilities industries?
First, a definition. What are these utilities? Electricity has to do with its generation, transmission and distribution. Gas services have to do with the distribution of natural gas or LPG. Water services include the storage, treatment and distribution of water as well drainage services. Finally, waste services. These services centre on sewerage systems that collect waste and dispose of it through treatment facilities.
Turning to one of these two global megatrends - climate change. Regarding electricity, the obvious impact is upon sources of generation. Globally, the expectation is that by 2030 40% of electricity generation will come from renewables (up from 20% in 2010). To support this generation trend, the transmission and distribution networks are moving from a radial, or centralised model, to one that is more distributed. Where instead of power flowing from a central generator to the grid, electricity flows across the grid from multiple sources.
Like electricity, gas will be supplanted by cleaner forms of energy. One such form is green hydrogen. Investment in this energy source is growing, particularly due to its usefulness in decarbonising the steel, cement and surface and maritime transport sectors. It is also likely that technical barriers to using existing gas distribution systems for hydrogen will be overcome.
The utilities that supply water will be affected two different ways. Changing rainfall patterns will affect the availability of water, and in drying conditions desalination plants and stormwater recycling will be needed. The other impact will be on the physical infrastructure itself. Wetter, or dryer, soil will impact maintenance costs.
Finally, waste services. As with water distribution networks, the maintenance costs of wastewater infrastructure will change as a locale’s soil becomes either wetter or dryer (depending upon localised climate change trends). Added to this are potential changes in waste treatment costs due to changes in the concentrations of pathogens, nutrients and toxins in the wastewater.
Across the board, the influence of climate change will be found in the shifts in temperature and precipitation averages and their respective extremes. This will affect each of these four services.
Turning, secondly, to the global megatrend of computerisation.
Terms associated with computerisation are digitisation and digitalisation. Digitisation is about making the physical digital. Its about sensors and actuators, about converting a physical measurement to a digital number and about computer signals controlling the real world. Digitalisation, on the other hand, is associated with the business processes associated with computer technology.
The electricity distribution sector is an example of both of these associated terms.
Digitisation has led to data flows from energy use sensors in commercial and domestic settings. Digitalisation, which takes these data flows from these of physical-to-digital conversion devices, opens up new ways of operating. For example, imagine a city with both house-mounted solar cells and a centralised gas-fired generator – digitalisation enables greater efficiency and lower consumer costs through combining all of these sources of energy into a city-wide virtual power plant.
In a similar fashion, digitisation and digitalisation is affecting, and will continue to have an impact upon, gas, water and waste services. For example: better monitoring of physical infrastructure, the use of robotics for dangerous and/or repetitive manual tasks, and improvements in the speed and accuracy of reporting.
Not forgetting the direction that increased processing power and algorithmic smarts have on the construction of the physical infrastructure that these utility services use. Computers are fundamentally important in the investigation of say nano materials that can improve the treatment of wastewater, improve the properties of cement, and improve the mechanical performance of pipelines.
And then there are the other promises of digital technology: 1.of wireless electricity transmission that could be hastened through breakthrough wrought by quantum computing; and 2. the use of blockchain in say the trading of water rights.
Thus, both climate change and computerisation will continue to shape the utilities industry in the years ahead.
What are your prospects
From the preceding, and from a career perspective, there are several observations that can be made:
If you are more the “get it done” type: you’ll be using increasingly complex machines and software to get your work done. Non-routine maintenance tasks will require experience
If you are more the “thinking” type: there’ll be more data and a greater need to analyse data from a systems perspective in order to manage operations, customers and regulations
If you are more the “creative” type: there’ll be opportunities in virtual technology to plan new infrastructure and with software tools to design new distribution systems
If you are more the “helper” type: you’ll be needed to maintain the skills of those within the industry and develop pathways for those entering it
If you are more the “leader” type: you’ll be needing to improve your skills of persuasion and collaboration as your industry fundamentally changes. You’ll also need to be very comfortable with leading in a highly digitised industry
If you are more the “structure” type: you’ll be faced with using RegTech to help you navigate your GHG and you place in complex value chains
Overall, in the years ahead you’ll need to comfortable with both using more computing and not doing some of the things that previous generation of employees did.
Like with other industry sectors - from a business perspective, when it comes to responding to climate change it is all about mitigation (ie. shifting focus to reduce risk) and resilience (ie. fortification to handle risk). And, when it comes to computerisation its all about automation and using data. So, for those operating within the utilities industry, likely impacts are:
Mitigation: changes in production, distribution and consumption patterns
Resilience: strengthening physical infrastructure, understanding a locale’s climatic trends
Automation: increasing digital integration of all aspects of operations
Data analysis: improving the digital skills of the workforce and finding new value in the data
Overall, and quite obviously, for businesses there are both risks to be aware of and opportunities to exploit in the change that is happening.
The global megatrends of climate change and computerisation are impacting life and economies in many ways. The electricity, gas, water and waste services industries are no exception. While climate-aware operations are being built using digital technologies, the difference between these industries and say the manufacturing and extractive industries, is that the physical entity that these services manage is directly affected by climate change.
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