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Utility Week 8 July issue

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6 | 8TH - 14TH JULY 2016 | UTILITY WEEK People & Opinion Today, customers have sovereignty Technology gives customers more control over their energy use, shifting power away from suppliers. Chief executive's view Iain Conn, Centrica B usiness as usual is very hard in the midst of such turmoil. The decision by the people of Britain to instruct the government to leave the European Union changes every thing in politics, and until the uncertainty lis it will have a major effect on business too. Much of the impact will not be clear for some time. The task for everyone is to make the best of the decision and to press on. In the middle of shortterm volatility it is probably a good idea to reiterate the longterm trends that, in energy, include a significant shi of power among market participants. Britain has just had a major discussion about where sovereignty should lie. In energy, the same argument is happening as sovereignty shis quickly to the customer. There are some inescapable trends. For the foreseeable future we will rely on hydrocarbons. By 2035 they are expected to represent about 80 per cent of primary energy supply. In that 80 per cent figure, fossil fuels – coal, oil and gas – will have a roughly equal share of about 26 to 30 per cent. In all sectors we must ensure energy efficiency is as good as it can be. In heat and power we must move away from unabated coal. For the foresee able future this means we must develop natural gas. When combined with data and insight, and costcompetitive technology at the point of use, these macrotrends lead to a surge in power to the customer. It is clear what the customer wants: affordable energy, meaningful choice, the control that allows them to use less energy and shrink their carbon footprints. The main way in which power is shiing is through choice in the market. In the UK, there are more than 40 energy suppliers and pricecomparison websites are an everyday tool for millions. Customers are now taking active control of their energy. Centrica, for example, has the largest installed base of con nected thermostats in the UK. They are also taking control of their own power generation. In 2015, it was estimated that four million households globally were equipped with domestic solar systems. By 2020 this is expected to grow to 25 million homes. Technology is transferring power to customers, too. The via bility and use of distributed gen eration and storage technologies by households and businesses is going to grow. Powerbythe hour energy pricing is making a big difference. Big data is offering new insights that help customers make decisions. By 2020, there will be 200 million smart electric ity meters and 45 million smart gas meters in the EU alone. Information is power. With the right data customers have more control over their energy use. This shi in power has a set of consequences that we as busi nesses must respond to. It means there will be a fundamental shi in where energy is generated and managed. It means access to energy will be accelerated for millions of people in develop ing countries without the cost of building a central grid. It means a new competitive landscape will emerge in energy markets, with plenty of new entrants. It means customers will be pricesetters rather than pricetakers. And it means costs will fall and there will continue be a divergence between energy use and GDP growth, and CO2 and energy. At Centrica, we are close to the action. We have 12,000 engineers and technicians and we operate at the point where physical meets digital. Centrica is a company that dates back to 1812. At the very moment of the formation of the company, the Luddites were breaking machin ery in defiance of technological change. That is never the right response. The better course is to know that the customer is sover eign and welcome the fact. "We endorsed the principle of countries working together to tackle global issues like climate change, energy security and the fight against terrorism. Scotland spoke clearly for Remain. I am determined that Scotland's voice will be heard." Scottish first minister Nicola Sturgeon speaking in Holyrood after the referendum result

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