Makroekonomia Archive

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Gary Miles, CEO of Gentrack, tells delegates at Future of Utilities that the world needs to learn lessons from Australia’s “energy as a service” model

Utilities can’t afford to wait to transform, the benefits significantly outweigh the risks

IT transformation will be critical to deliver the energy transition. Gary Miles, CEO of Gentrack, tells delegates at Future of Utilities that the world needs to learn lessons from Australia’s “energy as a service” model.

Transitioning to a low carbon world involves huge upstream and midstream investment in solar, wind turbines and grid infrastructure to cleanly and reliably deliver electrons to people and businesses. But, as Gary Miles, CEO of Gentrack, made clear in his keynote presentation at the recent Future of Utilities Energy Transition conference, the IT systems which underpin the workings of the modern retailers and gen-tailers must transform to adapt to the decentralisation and decarbonisation challenges ahead.

Get this right and there’s huge upside, both for the utility provider and the customer. “Amazing customer experience, digital first engagement, lower debt, more than 99.5% accurate billing and reduced cost to serve, with automation helping to deliver 30-40% lower cost-to-serve,” said Miles

Miles is a newcomer to the energy industry, having spent most of his career in the telecoms industry. “Telecoms had the largest impact on GDP in the world over the last 30 years, delivering information and education to billions of people,” said Miles. “It’s been an amazing vehicle of progress for the world.”

“The energy industry today is more dynamic than the telecoms space. The pace of change is accelerating and the existential need to modernize is more profound.”

By comparison, few people would consider utility providers to be hubs of innovation. Yet this would, said Miles, be a misconception. “From time-of-use tariffing to virtual power plants there is an innovation highway ahead of energy suppliers and the industry today is more dynamic than the telecoms space was,” he said. “The pace of change is accelerating, and the complexity is enormous, but so are the opportunities.”

To illustrate his point, Miles highlighted the success stories from Australia, which, having been hard hit by blackouts, is now powering ahead with renewable and decentralised energy. The Australian Energy Market Operator and Energy Networks predict that generation from decentralised sources will be up to around 45% by 2040 – indeed, the country is already the number one in the world for solar PV per capita. This isn’t just about being blessed with good weather – after all, the country is also rich in oil, gas and coal – but about policy and investment.

Energy decentralisation graph

Government policy has accelerated the uptake of solar and battery systems, which in turn is leading to innovations in customer propositions.

Energy as a service

“One of the more recent innovations we’re seeing, powered by technology, is leveraging flexible behind-the-meter load from Solar and EVs,” Miles says, highlighting the work of Gentrack client Energy Australia. They offer householders installations of solar PV and battery systems with zero up-front cost, and at the end of seven years they own the system. The solar option is highly popular, and the battery roll out is also growing fast; around 140,000 homes already have batteries, with the number installed expected to rise to 800,000 by 2025.

Most importantly, for the consumer this is a super simple and very affordable proposition.”

“Consumers pay a flat energy rate for seven years on an ‘energy as a service’ model,” Miles explained. “Energy Australia leverages their ability to aggregate this flexible load and bid it into the grid as a virtual power plant, so they can take advantage of wholesale revenue streams. Most importantly, for the consumer this is a super simple and very affordable proposition.”

“Your systems need to deliver a simple customer experience in the face of extreme complexity”

This is key, and it’s why the IT side is just as important as the panels and batteries. To work, the hugely complex, multi-faceted and vastly expensive energy transition must be presented to the end-user as simple, reliable and good value for money. “Your systems need to deliver a simple customer experience in the face of extreme complexity,” said Miles.

While telcos responded to the cyclical waves of innovation that would routinely hit every eight years or so by renewing and reinventing their IT infrastructure, Miles believes that the systems powering much of the energy industry are stagnant and act as a brake, rather than an accelerant, on progress.

“The IT systems of many retailers are old and broken,” he told delegates. “The systems are 20-30 years old and they’re leaking and creaking. The shift to upgrade and transform has happened in leading markets with huge success as retailers move off of these antiquated systems. The rest of the world is due to follow as it sees that such transformations are both achievable and able to deliver significant results.”

Existing legacy systems are, quite simply, not fit for purpose if the energy transition is to be achievable to any meaningful timescale.

“Today, leading utilities are telling us that their legacy systems are like cement in their businesses,” he said. “Those platforms are literally weighing their organisations down and stopping them from moving forwards.”

“Leading utilities are telling us that their legacy systems are like cement in their business.”

Investing for a smarter, greener future

The good news is that this overdue investment is now being made. Miles cited statistics from a leading industry analyst that suggest that all of the utilities companies will upgrade their systems in this decade and the first 20% will choose a replacement system by 2026.

And this comes with a kicker in the tail. “If you don’t do it, you will fall further and further behind,” he said, stressing this wasn’t just an energy company issue; water companies need to make this investment too.

These investments in IT are part of the enabling technologies for the energy transition. Because clean energy isn’t just about turbines and solar; as demonstrated by Energy Australia, it’s about building a grid that can deal with intermittency and distributed generation, flexing and adapting and hedging to changing inputs and outputs, offering dynamic pricing and giving more power to consumers – who are becoming generators in their own right.

Get this right and there’s huge upside, both for the utility provider and the customer. “Amazing customer experience, digital first engagement, lower debt, more than 99.5% accurate billing and reduced cost to serve, with automation helping to deliver 30-40% lower cost-to-serve,” said Miles.

What’s more, this kind of digital transformation can be done relatively quickly, using low-code, no-code technologies. “It means you can be launching innovative propositions and new services in days rather than months,” he said.

The energy transition is going to require constant innovation and systems will need to be able to flex, whether it’s in response to new technologies, customer behaviours or market conditions. Future optionality can come from being part of an open ecosystem, enabling companies to partner with specialists and leverage existing capabilities. This is a new way of thinking and working for many in the utilities sector but it’s going to be essential to deliver perhaps one of the biggest challenges facing humanity: the transition to a low/no carbon future.

“The world needs to look at places like Victoria in Australia, and make that leap,” stressed Miles. “The time to do this was yesterday.”

As delegates at the conference would no doubt agree, the next best time is now.

More: MarketForceLive

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Ståle Hansen, CEO, Skuld: Stability in an unstable world

An interview with Ståle Hansen, CEO, Skuld – a Nor-Shipping Thought Leader

With 126 years of industry experience behind it, Skuld, a world leading marine insurer, should have “seen it all”. However, global health crises, geopolitical unrest and the need for industry transformation are ushering in a new age, with new challenges. Here Ståle Hansen, Skuld CEO, discusses the need for calm heads, and ever closer collaboration, to ensure the industry stays on course.

“It was a case of out of the frying pan, into the fire,” admits Ståle Hansen, CEO at Skuld for eight of his twenty years at the Oslo-headquartered insurance giant.

“The pandemic, and all the claims associated with it, was starting to ease, shipping patterns were returning to near normal, and then the war in Ukraine started. As we all know, that ushered in human tragedy of inconceivable proportions, and a wave of necessary sanctions that quickly dispelled any sense of ‘business as usual’.

“It’s been a busy, and challenging, few years.”

Almost overnight, Hansen states, Skuld, which had a leading position with Russian shipowners, had to terminate long-standing relationships, while the impact on Skuld’s existing members was, in some cases, even more drastic.

A matter of trust

“Suddenly we had members with vessels locked into Ukraine ports,” he explains. “The assets and cargoes are one thing, but the crews, and ensuring their safety, is another – that quickly becomes top priority.”

As such, the past year has seen specialist Skuld teams leveraging their industry expertise, networks and close relationships with other insurers to repatriate crews and release vessels, continually working to deliver on their company purpose statement (“Protecting Ocean Industries”) in the most challenging circumstances imaginable.

“There have been numerous, very complex situations,” Hansen notes. “Each vessel has multiple insurers, covering, for example, P&I, hull and machinery, war insurance, and the cargo, so that demands reliable, open and committed collaboration. And of course, if vessels are trapped for too long then the owners can claim a total constructive loss, which can lead to the insurers becoming shipowners.”

He smiles: “So, there’s a lot at stake. But we’re not exactly new to this. We know what we’re doing and make sure that all our stakeholders, from customers to the other insurance partners we work with, can rely on us.

“That trust is fundamentally important, and not just to our success, but to our values as a business. “That is who we are, we are Skuld.”

Collective strength

And this is the essence of Hansen’s philosophy during today’s conversation.

He’s here to discuss Skuld’s decision to renew its role of ‘Leading Partner’ at Nor-Shipping 2023 (taking place 6-9 June in Oslo and Lillestrøm), but quickly segues to the event’s main theme this year, which is #PartnerShip.

“That is a very interesting choice,” he comments, “and it couldn’t be more timely. It’s one thing that it chimes with the way we work as a business, but, from a wider perspective, it’s how we NEED to work as an industry. You can see that in the issues we’ve just mentioned – global pandemics and conflicts – but it’s also intrinsically important to the challenges, and opportunities, we face in terms of sustainable development.

“No one can tackle such a changing, unpredictable landscape alone. We all need partners.”

As Hansen implies, Skuld already has them.

Deep ties

Partnership is at the core of Skuld’s business model.

The marine insurer, which employs around 300 people in 11 locations worldwide (including Japan, after a new office opening last year), operates as a mutual insurance association providing risk pooling, claims services, loss prevention and overall representation for its members. Those same members, which essentially own the business, elect a board and committee, which then appoint the executive management team, including Hansen.

“So, we’re not just a service provider,” the CEO explains, “we’re their business, or rather we are them. We work closely to understand one another and tailor our products for their evolving business needs. In fact, I think you could say we work even closer now, given the challenges we’ve faced. Some relationships get forced apart by difficulty, but I’m pleased to report the opposite in our case. Loyalty has never been higher.”

Interestingly, this way of working extends to interaction with other insurers. Skuld is a member of the International Group of P&I Clubs, an organisation of 13 ‘competitors’ that, together, provide liability cover for around 90% of global ocean-going tonnage.

“We share, that’s the cornerstone of the group,” Hansen says, adding: “And that means everything from knowledge to large loss exposures. Our aim is keeping this essential industry thriving, and we realise that is more important than individual competition. There’s a ‘greater good’ here – the future of shipping.”

More: Ståle Hansen, CEO, Skuld

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Oil and Product Logistics in 2022 – Radical Changes in Routes, Ports and Freight

By Marek Grzybowski

The year 2022 brought radical changes to the transport routes of crude oil and products. After Russia’s invasion of Ukraine, importers experienced a record increase in freight rates for operators of oil tankers and its products. The local war changed the macroeconomic picture of the world economy.

 

Last year marked a new era in the global logistics of crude oil and petroleum products. December 5 last year With the extension of the European Union’s sanctions package and the entry into force of the EU ban on trade in Russian oil, a new era of oil at sea and on land has begun.

– The year ends with critical macroeconomic challenges regarding the future of VLCC and crude oil freight rates. There is uncertainty about the evolution of the oil supply given the current increase in oil demand and the impact on trade flows, as Europe continued to rely on Russian oil imports until the end of the third quarter, says Sue Terpilowski of SeaNews, using data compiled by Signal Ocean.

In 11 months of 2022 [excluding December], the global supply of crude oil in sea transport increased by 8.6% y/y to 1,866.8 million tonnes, excluding cabotage transport, Refinitiv experts calculated. This means higher demand than in the period January-November 2021 (1,718.3 million tonnes), but it was slightly lower than in the same period of 2019, when it amounted to 1,926.9 million tonnes.

As the geography of crude oil and petroleum product imports changes, fuel terminals in Polish ports play a greater role. We still imported 51% of crude oil from Russia to Poland (January-October 2022). Crude oil from outside this market also reached Poland by sea. The main suppliers were: Saudi Arabia (28%), Norway (8%), Great Great Britain (5%), USA (4%), Kazakhstan (3%), Guyana (1%), Nigeria (1%) – Forum Energii experts calculated.

More: Oil and Product Logistics in 2022

 

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Sea coal logistics in 2022. A radical change in supply routes

 

By Marek Grzybowski

Russia’s attack on Ukraine and the sanctions introduced by EU countries resulted in radical changes in coal transport chains in 2022 on a global scale. Polish ports also joined the new system of sea connections under the influence of decisive changes in the sources of coal acquisition on the international market. The bulk terminals of Gdańsk, Gdynia, Szczecin and Świnoujście quickly adapted their technical and organizational potential. Polish ports joined the transshipment of coal in import relations.

Periodic shortages of gas and oil on the international market resulted in increased demand for coal. Global coal consumption increased by 1.2% and reached a record level of demand in 2022, according to a report by the International Energy Agency (EIA).

A new record for coal consumption reached 8,025 million tonnes in 2022. This was slightly above the level of 2013, when 7,997 million tonnes were used for energy, industrial and consumption purposes. The lower demand growth in 2022 is largely a reaction to the economic slowdown in leading industrial regions, including China.

The World Economic Forum highlights that only “about a third of the world’s electricity generation capacity now comes from low-carbon sources, with 26% coming from renewables and about 10% from nuclear power. The other two-thirds come from fossil fuels that emit greenhouse gases, such as coal, gas and oil.”

Coal ships will sail for many more miles and ports will handle millions of tons of coal before economies switch to renewable or nuclear power.

More: Sea coal logistics in 2022

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Sea transport in economic storms. UNCTAD 2022 Report

 

Higher grain prices and dry bulk freight rates in early 2022 will contribute to a 1.2 percent increase in consumer food prices. Container ships berthed 13.7% longer in 2021 compared to 2020, exacerbating delays and shortages of goods. Over the past year, the total greenhouse gas emissions from the global fleet have increased by 4.7% – these are the findings of UNCTAD exports included in the latest report “Maritime Transport Review 2022”.

“In short, we need to tackle the many sources of inefficiencies at ports and in land transport networks. This review also calls for better implementation of transport and trade facilitation solutions at ports and borders. At UNCTAD, we work very closely on facilitation through different programs on ports and customs like ASYCUDA and the ports management program. These are our largest technical assistance projects going to really dozens of countries around the world. This report also calls for a faster transition to smart and green logistics systems and to the widespread use of electronic documents in international trade. All of these are solutions to reduce logistic costs, which in turn translate into lower prices for the world” – said Rebeca Grynspan, Secretary-General of UNCTAD in the Statement during the Presentation of the “Review of Maritime Transport 2022” in Geneva.

More: Grzybowski: Transport morski. Raport UCTAD 2022

Presentation of the Review of Maritime Transport 2022