Singapore: SP Group poised to transform into 'power sector's Uber'

Singapore: SP Group poised to transform into 'power sector's Uber'

AS WAVE after wave of disruption buffets the power sector, grid operator SP
Group is taking steps to turn itself into the industry's "Uber": In time to
come, it sees itself providing a platform that matches the supply and demand
of power, especially as power generation becomes a fragmented and
distributed business.

At the heart of this transformation is the desire to stay relevant to the
Singapore consumer, particularly as the progressive liberalisation of
Singapore's electricity market will lead to a fully open market by mid-2018.

SP Group - formerly known as Singapore Power Ltd - owns and operates
electricity and gas transmission networks in Singapore and Australia. The
group, fully-owned by Temasek Holdings, made S$923.5 million in net profit
last year, on revenue of S$3.9 billion.

In an interview with The Business Times, group chief executive Wong Kim Yin
said that while every industry is being disrupted, the power market is
undergoing multiple dimensions of such changes.

Besides digital transformations, the industry also has had to face rapid
technological advances in renewables and battery storage. "For the longest
time, you cannot store electricity, or rather you cannot store it cheaply or
efficiently. But increasingly that is changing," he said. "And the moment
you can store power, it changes how power will be delivered or consumed." On
top of these, consumers are now demanding sustainability. In order to stay
true to its mission of enhancing the quality of life for Singaporeans, the
group therefore has to start building capabilities that will allow for the
types of life Singaporeans may want to lead in 30 years, said Mr Wong. To do
so, the group has adopted a three-pronged strategy: to be exposed to the
latest technologies and ideas in the industry; to test promising ideas, and
to have the capability to handle proven technologies.

Under the first prong, the group in January this year partnered seven other
utilities around the world to launch a global accelerator programme. Called
Free Electrons, the programme supports startups developing solutions in
areas such as clean energy, energy efficiency and mobility, digitisation,
and on-demand customer services.

SP Group has also put money in funds, including the Europe-based
Environmental Technologies Fund which invests in clean technologies and
greentech sectors. "By getting involved in these, we get exposed to all the
ideas that people have come up with," Mr Wong explained. "We also have the
opportunity to work with the entrepreneurs and to invest into them if those
are things relevant to us."

A technology of interest to SP Group is blockchain, a decentralised and
distributed digital ledger used to record data across many computers. This
will be useful in the future energy world - one that is expected to be more
distributed in nature with consumers also having the means to generate power
using renewables or batteries, said Mr Wong.

"Blockchain could potentially be a solution that will enable that
distributed transaction to be done between someone who owns a battery and
someone who owns a solar panel or even demand management..."

"We don't know whether it works yet. But we want to stay on top of it, we
want to stay ahead."

SP Group is supporting Energy Web Foundation, a global non-profit
organisation that is working to accelerate blockchain technology in the
energy sector, said Mr Wong.

Under the second prong to testbed ideas with high potential, the group has
in 2015 started a S$30 million Centre of Excellence, supported by the
Economic Development Board. Here it will develop, test and integrate new
technologies by other companies in the Singapore grid - regarded as one of
the best in the world.

As it does so, the group will gain insights into the problems and also the
capability to resolve them. It might also have the option to invest in these
solutions, or earn the intellectual property rights which it can then bring
overseas, said Mr Wong.

The group is also working with US multinational General Electric to develop
a digital replica of the Singapore grid. This will capture real-time data
that can be used to enhance asset management, predict failures and optimise
maintenance schedules, among others.

Thirdly, to build capabilities in already-mature technologies, the group is
installing solar panels at its new Kallang headquarters so as to gain
in-house expertise on how solar panels work and interact with batteries.

It has also converted its fleet of service vehicles into electric vehicles.
"By doing that we ourselves learn how it charges, what is the variability of
the range between one car and another, what the maintenance cycle is like
and how often it breaks down," said Mr Wong.

A key plank of its efforts in the third prong is a new app that the group
launched in March to allow customers to view and pay bills, and to compare
their consumption with those in the neighbourhood.

This app is just a starting point for future plans, said Mr Wong. One
possibility is to use it as a platform for consumers to compare various
electricity retailers when the market is fully liberalised mid-next year. Or
it could be used to aggregate users who are willing to reduce their
electricity usage in exchange for payment, a practice known as demand side
management.

"Uber is about the matching, and so is Airbnb. So this is about matching
also. Demand side management is about matching someone who is willing to
back off (from electricity usage) with someone who wants to use it
notwithstanding that it is expensive."

Further down the road, it could also be used for consumers to transact with
one another, especially if paired together with blockchain technology.

"Think about the possibilities," he said. "We're not there yet, but without
this (app) we can't even go there. You need to have something associated
with you and the account. And once they are ready this account can be used
as a platform, subject to regulatory frameworks."

Reflecting the group's desire to move quickly, the app was built in only
three months - compared to the one to two years it would otherwise have
taken - by a newly-formed digital team in the group, said Mr Wong.

Besides developing the app, this team - whose current headcount of 60-70
will eventually be expanded to 100 - is also responsible for deploying
digital solutions within the group as it embraces technology to improve its
work processes. Every employee, for example, was given an iPad in 2015. The
group has also experimented with Google Glass.

Even while embracing digital solutions, SP Group is also conscious that it
is exposed to cybersecurity risks, and is working with the Cyber Security
Agency of Singapore and Ministry of Home Affairs, among others, to ensure it
has the latest safeguards.

"As we build new digital capabilities we are always putting in the defences
along the way," said Mr Wong. "Having said that, no amount of defence is
foolproof. We always plan on the case that they will come in eventually, and
when they do that, we need to first identify and contain, slow them and
block them, and then recover."

In time to come, SP Group envisions that the digital platform it is
developing can also be used by other retailers, especially since the
residential electricity market, despite having 1.3 million customers,
consume only 15 per cent of Singapore's electricity. As it may not make
sense for retailers to set up a call centre to serve these customers, SP
Group could provide this service for them.

"We can white-label our products and services to enable the retailers to
have their own signature and to engage their customers," said Mr Wong.

"I don't see ourselves competing with the retailers. I see ourselves
enabling the retailers, but at the end of the day enabling the consumer. The
consumer must win."

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Link to Original Article:
http://www.businesstimes.com.sg/companies-markets/sp-group-poised-to-transfo
rm-into-power-sectors-uber?xtor=EREC-16-1[BT_Newsletter_1]-20170627-[SP+Grou
p+poised+to+transform+into+%27power+sector%27s+Uber%27]&xts=538380

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com