“Further than many believe – or than they want to believe.”

The future is also digital in the energy sector. On this basis, new business models are emerging. Markus Brokhof, a Member of the Alpiq Executive Board, explains how a leading energy group is tackling these challenges. The interview was conducted by Ralph Möll, Editor-in-Chief VSE of Bulletin SEV/VSE.

Bulletin: Markus Brokhof, you have been in charge of the Digital & Commerce division at Alpiq for four years. What has happened in terms of digitalisation during this period?

Markus Brokhof: In 2016, we set up a think tank to focus on the question “What will tomorrow’s energy world look like?”. We started with a small team, which has since developed into the “Digital Technologies and Innovation” business unit that now employs 130 people.

What exactly are the tasks of this department?

DTI is primarily an internal service provider that develops solutions for the digitalisation of our own processes and tools. In future, this business unit will also develop solutions that will enable customers to digitalise their specific business activities, assets and workflows.

What IS digitalisation?

First of all, digitalisation is undisputedly a huge trend in society. In business, it makes it possible to launch new products and services on the market. But digitalisation is also a toolbox. Basically, digitalisation is everything.

Where do you see concrete fields of application?

On the one hand, we apply digitalisation to offer our customers added value; on the other, it is also opening up new business opportunities for Alpiq. Take, for example, the Werdhölzli sewage treatment plant in Zurich. Here Alpiq implemented a digital project that, for the very first time, made it possible to simulate all input parameters and to operate energy-intensive plant components, such as pumps, in an energy-optimised manner. All data is retrieved every four seconds and combined with an electricity price curve. On this basis, either the plant manager or the program itself decides when the pumps should be turned on.

How can Alpiq’s know-how and experience in the energy sector be transferred to the digital business?

The management and control of highly complex and highly flexible generation systems are our core competencies. This experience now benefits us in the digital management of ever smaller units, because this also requires a very high degree of flexibility. There is no doubt: Without digitalisation, the processing of such vast amounts of data would no longer be possible. At the Werdhölzli wastewater treatment plant, both people and software can decide when the optimum time to operate the pumps is.

How far have we already advanced on the path towards artificial intelligence?

We are further than many believe – or than they want to believe. For example, Alpiq is testing automated (algorithmic) trading, i.e. methods of application in which robotic systems purchase and sell energy on the screen.

You apply artificial intelligence to your energy trading?

Yes, on a trial basis. Accordingly, our “Digital Technologies & Innovation” and our trading business units work closely together. In order to not be left behind, we are forced to support our core business with digital innovations. This is absolutely essential.

Why?

Because to a certain extent, this allows us to consolidate our market position in an extremely competitive, disruptive world.

What are the most formidable players in this respect?

Large, innovative corporations such as Google, Amazon, Baidoo and Alibaba are pushing their way onto the market – and they are doing so forcefully. Google, for example, is developing autonomous vehicles or the solar calculator Sunroof, Amazon has the intelligent assistant Alexa. These companies are using intelligent technologies and machine learning to penetrate many spheres of our lives. There is a risk that such corporations will also penetrate the energy market and undermine the business models of energy companies. Thanks to their data centres, these corporations not only have massive computing capacities, but also a great deal of manpower.

How are you dealing with this situation?

Our challenge is to offer an attractive working environment. Today we are competing for the most talented employees not only with other energy suppliers, but with corporations such as IBM, Google or Amazon, all of which also operate research centres here in Switzerland. At Alpiq, we focused on digitalisation at an early stage – more than 130 mathematicians, analysts and IT experts are already working in tomorrow’s fields of work.

Large companies can be sluggish at times. It takes a long time for new structures to be implemented effectively and for new corporate cultures to be embraced. Is Alpiq’s size a disadvantage in the process of digitalisation?

Small companies can start up quickly, enter the market quickly and reach wide audiences quickly. This can indeed threaten our conventional value chain. But thanks to its size, Alpiq can tap into other opportunities. Alpiq is lean and agile. For example, we have the resources to operate the Oyster Lab, a think tank in Zurich, which is somewhat isolated from Alpiq. There we have fifteen creative minds who, detached from Alpiq’s sphere of activity, can develop new projects that do not necessarily have anything to do with energy.

Have these ideas already given rise to concrete projects?

Yes. We have developed a model – Juicar – which covers the short-term leasing of an electric car, the electricity, a charging station and billing; Netflix for e-mobility, so to speak. In this context, we launched a pilot project together with BMW (Schweiz) AG in Switzerland, while in Germany, we are working together with Nissan. If the pilot phase delivers satisfactory results, the project could be rolled out throughout Europe.

So far we have talked a lot about the benefits of digitalisation – at least for companies. But among employees, the topic can also trigger fear. How do you respond to this?

Automating workflows naturally leads to discussions among employees who work in the affected fields. It is clear that the working world will change. We will require more highly qualified staff, but their jobs will also be correspondingly more challenging.

Which alternatives to digitalisation are there?

In my opinion, there are none. We must face the challenges of this new world of working. Digitalisation in itself does not lead to job losses, but rather to the expansion of existing functions with additional specifications. People will have to continue to educate themselves and to adapt to progress in order to stay abreast. That being said: Many have a desire to grow, and we promote this in a targeted manner.

So it comes down to survival of the fittest?

The disruptive nature of digitalisation is an indisputable fact. This not only has an impact on business models, but also on job profiles. Companies have to adapt to new circumstances. This is only possible if employees continue to develop their skills. We have a number of in-house specialists, for example, our own department for Energy Artificial Intelligence, and we work together with the external experts of our partners, research institutions and within the framework industrial partnerships.

Not all companies accomplish this transformation. Former market leaders in their sectors, such as Nokia or Blackberry, have disappeared or are have simply become insignificant. How can such a scenario be prevented?

Large companies need to rethink and become more flexible. Companies that fail to understand this will disappear from the market, because then small three or four-man start-ups will gain a competitive edge. Look, for example, at how the online electronics retailer Digitec developed. Nowadays, all that is required is an idea, a computer and the will to implement.

What will be the next big thing?

I am convinced that e-mobility is going to be a big one. In addition, the topic of “beyond the meter or behind the meter” will gain importance.

How will the Internet of Things affect our lives?

The IoT, the networking of devices that communicate with the cloud and thus create new products and services, will be the biggest revolution of all. Naturally, Alpiq intends to play a role in this.

Do you already have any concrete plans?

We are working on a platform that will allow us to add additional decentralised consumers at any time. Every additional car and every additional charging station that is integrated into the system using a simple plug-and-play solution creates added value for the consumer and, in sufficient quantities, it also develops a portfolio effect for Alpiq. This is my vision for our digital environment.

Interview: Ralph Möll

Markus Brokhof