Platform based digital energy ecosystems have evolved to address the strategic transition challenges facing the energy sector.

Platform based Digital Energy Ecosystem

Digital technologies, such as AI and Blockchain, are shaping the response to transition challenges by enabling the creation of platform-based energy ecosystems. Digitalisation is a key enabler of the change from traditional centralised model to a more decentralised model along with the advancement of renewable energy technologies (RETs). Digitalisation aims to connect every segment of the energy ecosystem such as households, prosumers, distribution, transmission, generation and retail, and is frequently stated as likely to lead to a transformation of the energy system. Digitalisation creates a large amount of data in real time (e.g. instantaneous electricity supply and demand at every node of the electricity network) and provides a potential to develop an information based digital energy system.

Platform ecosystems are an omnipresent phenomenon that challenges incumbents by changing the way we consume and provide digital products and services . Platform ecosystem presents an opportunity along the power-industry value chain, from generation to customer relationship management. The emergent energy platforms offer decentralised, digitally enabled exchanges of energy from distributed sources . They can record flows of energy to administer connections of exchange between household users, develop algorithms to steer the flow of energy from and to household batteries, and enable crowdsourced investments into (small-scale) renewable energy production

Ecosystems

The benefit of renewable energy technologies ( RET) would be limited if they are not integrated into a larger platform-based ecosystem. Digitalisation helps to encompass stakeholders beyond a single participant itself to unlock full potential. With every year, as power generation becomes more distributed, the expanding range of digital tools become more central to facilitating an ecosystem.

There are numerous well-known examples of platform-based ecosystems such as those engaged in social media, e-commerce, transportation, banking and even mining. These include tech leaders Google, Amazon, Facebook, and Apple, as well as longer-established companies, such as Maersk and Cisco (Gawer,2014). The concept of platform-based ecosystem, however, is a novel idea to the energy sector and is soon gaining popularity.

With the influx of diverse complementors and users, a platform based ecosystem provides the interoperability that eases the participation of the diverse stakeholders. Every component of the value chain needs to be integrated and orchestrated in a seamless manner. The diverse stakeholders include distribution system operators (DSOs) for both renewable and traditional energy sources, e-mobility providers, power providers, prosumers, energy service companies and consumers. Over time, as more stakeholders, complementors and users, participate the value of the ecosystem increases further.

Platform model 

Platforms are particularly well built to connect distributed resources, either when ownership of assets is decentralized (such as Airbnb) or when spatial dispersal is key to the platform’s service (such as ZipCar). Many digital platforms therefore do not provide or own physical infrastructures or assets, but act as a service on top of these. They facilitate decentralised, digitally enabled exchanges of distributed resources.

Energy platforms would share these characteristics. They would make use of a digital environment to connect users and their resources. The providers of energy platforms would also tend not to own generation capacity or produce energy themselves but facilitate transactions between energy prosumers and consumers that would otherwise struggle to find each other.

There are some differences expected in the design of the energy platforms such as how the platform technology relates to the grid and by what they allow consumers to do (Boekelo & Kloppenburg, 2019). The first difference is whether they enable exchanges by using smart meters to record energy flows in and out of customers’ households, or whether, with the help of algorithms, they intervene by steering those energy flows themselves. A second difference is whether the platforms enable connection to existing resources (generally the small-scale prosumers assets, such as PV panels) or whether they facilitate the construction of and access to new resources (which can be more substantial in scale). Thirdly, on the consumer-facing side, the primary point of differentiation is whether platforms enable individual choice or whether they entail submitting to the power of the crowd, at which point the platform (algorithmically) assumes certain responsibility for energy traffic.

Orchestration of the platform

Orchestrators are those who play the role of integrating the activities of the different stakeholders in the platform to bring it to a cohesive whole (Gawer and Cusumano, 2008). They play a pivotal role and significantly stand to gain as platform-based ecosystem increase market share and eat into the profits of traditional companies. However, orchestration comes with challenges of scaling the ecosystem, expanding it beyond its initial use case, or simply with monetization and value extraction. The orchestrators have to embrace the digital business model built upon the platform, while ensuring that ecosystem complementors and users benefit, thereby enhancing the scope and attractiveness of the platform .

In the energy sector, many small start-up companies have taken on the orchestrator role and is gaining market share especially in the expanding renewable market. A few utility companies and oil majors have started investing into these start-up companies, as ecosystem partners, in order to take advantage of the innovation and the services that they offer. This especially is useful in an environment where the energy system is undergoing a decentralisation requiring high level of coordination and collaboration for the efficient flow of data and energy. This is also a great opportunity for utility companies and others entering into the space to get closer to the customers and to become valuable ecosystem partners as they hold huge quantities of data.

There are various key factors which would determine the orchestration success of the platform.

Leveraging network effect

Growing the platform by bringing in a number of ecosystem partners, complementors and users is key for making the platform effective and successful. Network effects can help to increase the business as players can broaden the reach by moving into adjacent areas. Leveraging network effects is the most potent method for amplifying the range and influence of an existing ecosystem quickly. As new members are attracted to the ecosystem by growing user base, new complementors producing more and better content and by a larger variety of product offerings seek to reach these members. This creates an exponential growth and creates an entry barrier to new incumbents by those already in place. In the case of energy sector, ecosystems are a novel concept, giving the opportunity for aggressive and ambitious players to grab the market share. But this could also lead to the issue of monopolization of the market, which will be acted upon by regulators.

Ensuring quality and service

As the ecosystem evolves, it is important to maintain the platform at the highest quality by providing best-in-class functionality and services. Orchestrators have to decide between an open and a closed structure . As quality of service is paramount in an energy ecosystem, a closed structure provides the right control ensuring the quality. The orchestrators can control and vet the partners and complementors who provide services in the platform. The ecosystem can be designed to create tailored experiences for the partners, complementors and users, from advanced analytics on energy production and consumption patterns. Given the large amounts of data capable of being generated by the electricity system in real time (e.g. instantaneous electricity supply and demand at every node of the electricity network), it is a promising area for AI.

Managing Relationships

Orchestrators must be proactive about managing relationships between customers and complementors to ensure that the quality of service is held at highest standards. The phenomenon of multihoming, which entails complementors participating on several platforms simultaneously to provide the best profit potential and largest customer base, is one of the main challenges faced by orchestrators. As a result, complementors can jump between platforms that offer them the best service. In the same way, customers could also jump between platforms depending on their preferences and choices on the complementors participating in the ecosystem.

Increasing stickiness

One of the ways to increase the stickiness to the platform is to provide incentives to the ecosystem partners and complementors to offer highly competitive applications on the platform through modularity. Modularity describes the degree to which a system can be broken into modules and recombined in various ways . This modularity feature helps to create product variety (and would result in higher quality offerings, which in turn, would make it very attractive to consumers. Another way is to offer cross selling and upselling opportunities, depending on the needs of the users. Orchestrators could use the data available on the platform to study the customer and complementor behaviours. This could further be used to recommend services and products that could benefit the customers and complementors.