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Digital Transformation: the Electricity Sector in France and Germany

Research: Digital Transformation of the Electricity Sector in France and Germany
Published on
18 October 2016

The digitalization of the energy sector translates to the use of ICT technology throughout the value chain. Everything from smart networks to cloud computing, mobile applications or management services is finding its way into the energy sector.

To understand the challenges of this evolution, Grenoble Ecole de Management collaborates with ZEW, a European center for research in Germany. The two organizations carry out a study of French and German energy market experts who work in industry, science and government. Here we provide you with selected excerpts from the 2016 second semester study carried out from May to June.

The digital transformation of the electricity sector

In France, 58 percent of experts believe that the country’s digital transition in the electricity sector is similar to other Western countries. In Germany, the level of digitalization is considered to be adequate or high. Both French and German experts agree that the digital transformation is happening too slowly.

An unfavorable cost-benefit ratio

The study highlights several factors that are slowing the digital transformation in the electricity sector. The primary obstacle cited was an unfavorable cost-benefit ratio. For example, smart grids have been deployed in Issy, Nice, Lyon and Grenoble. Whereas the technology behind these grids is seen favorably, they are generally tested on a small scale and therefore their value is not guaranteed when deployed on a large scale.

Strict regulations

In France, regulatory measures are considered to be the second most important obstacle to the digitalization of the electricity sector. Feedback from technology demonstrators highlights that regulatory measures prevent them from easily turning such technologies into profitable operations.

Cybersecurity: a fundamental issue

Cybersecurity is considered a crucial issue. German experts believe that cyber-threats are a greater obstacle than regulatory measures in terms of the digitalization of the German electricity sector. Cybersecurity and the protection of personal data is a challenge faced by all sectors undergoing a digital transformation. For example, 97% of Fortune 500 companies have been victims of a successful cyber attack.

Embracing change

French experts underlined two more factors that slow down the digital transformation in the electricity sector. First, the semi-competitive nature of the network lessens each company's desire for change. Second, there are issues to overcome surrounding the social acceptation of digital changes such as smart meters. As in other countries, French consumers are worried about the protection of their personal data and the danger of electromagnetic emissions.  

Improving efficiency

While the digital transformation is full of challenges, it also has the potential to optimize our electrical networks. French and German experts agree that gains can be made in several areas, such as: predictions to manage network load, sharing of electricity production and  customer billing.

A positive impact for consumers

French and German experts agree that the digital transformation should benefit consumers. They believe that digitalization will allow the industry to be more flexible (18% of French experts, 19% of German experts). However, less than 11% of French and German experts believe that households will benefit from greater flexibility. This is one of the interesting paradoxes of the digital transformation in the electricity sector.

On one hand, consumer expectations are cited as a motivating factor for the digital transformation. They are asking for more information and control over their energy consumption in order to lower costs and reduce their impact on the environment. On the other hand, there are doubts as to the fact consumers will be able to fully benefit from this digital transformation.

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  • Published on 31 March 2016

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    Economic and political uncertainty and currency risk are among major concerns, indicating that a potential Brexit is damaging confidence. UK Financial Executives have the highest understanding among Europeans of recent innovations such as the...

  • websites such as TripAdvisor have given consumers the power to impact a company's image.
    Published on 22 March 2016

    TripAdvisor: How Companies React to Negative Ratings

    The world wide web has revolutionized the hotel, restaurant and other travel-related industries. From online bookings to customer ratings, companies have to learn how to operate in this new environment. While an organization's market identity used...

  • websites such as TripAdvisor have given consumers the power to impact a company's image.
    Published on 22 March 2016

    Recherche : TripAdvisor ou l’irrépressible montée du pouvoir des consommateurs

    A travers TripAdvisor, les clients ont une influence croissante sur la réputation des hôtels et ces derniers répondent de plus en plus aux avis défavorables. C'est ce que montre une étude menée entre 2002 et 2012 sur les avis des clients de 600...

  • Published on 04 February 2016

    Low oil prices cause investment in renewables, biofuels and energy efficiency technologies to decrease

    The current weak price of crude oil is having an adverse impact on the amount of investment in renewables for heat generation, biofuels, and energy efficiency technologies, according to Grenoble École de Management’s Energy Market Barometer Reading.

  •  Thibault Daudigeos is a researcher in Sustainability, Corporate Social Reponsibility, Alternative forms of Organization, Sharing economy, and new models of management at Grenoble Ecole de Management.
    Published on 26 January 2016

    Recherche : Responsabilité sociale des entreprises globalisées, plus facile à dire qu’à faire

    Les démarches de Responsabilité sociale des entreprises (RSE) sont censées créer de la valeur. Pourtant, elles peinent à se mettre en place dans les secteurs où les chaînes de valeur sont éclatées : elles coûtent cher et ne profitent pas forcément à...

  • Published on 07 January 2016

    Baromètre du climat des affaires : l’optimisme se stabilise

    Nous rapportons dans ce document la perception du climat des affaires par les responsables financiers français et la comparons aux résultats obtenus en Europe et dans le reste du monde. Nous évaluons également les sources de risque pour l'entreprise...

  • Published on 04 January 2016

    Recherche : Produit d’origine locale, une mention qui parle au consommateur

    La mention « origine locale » apposée sur un produit alimentaire déclenche chez le consommateur des perceptions plus positives et une intention d'achat plus forte qu'un produit d'une autre région française. Trois études portant sur 632 consommateurs...

  • Published on 28 October 2015

    The influence of humor on the attitudes and behaviors of interns

    Internships have become both an important part of undergraduate education and a critical tool for management education and organizational recruitment

  • Rüling Charles-Clemens, Professor GEM
    Published on 08 September 2015

    AMJ Best Article 2014 : Congratulations to Clemens Rüling

    This summer at Vancouver, during last conference « Academy of Management Annual Meeting » Clemens Rüling and his co-authors received the prize of the“AMJ Best Article 2014” for their article on the evolution of United Nations conferences on climate...

  • Published on 07 September 2015

    Energy market barometer report: the development of energy prices

    The next Conference of Parties to the United Nations Framework Convention on Climate Change (COP21) will take place in Paris from 30 November to 11 December. The Paris Climate Summit, announced as one of the biggest climate negotiations in history,...

  • Published on 23 June 2015

    Baromètre de la finance : Climat mondial des affaires juin 2015

    La perception du climat des affaires par les responsables financiers français et la comparons aux résultats obtenus en Europe et dans le reste du monde. L'évaluation des sources de risque pour l'entreprise ainsi que les prévisions de croissance des...

  • Published on 22 June 2015

    Research: Microeconomic Degrowth, Community Supported Agriculture

    Economic growth is the cornerstone of mainstream macroeconomics. In the face of economic crises and unemployment, growth has long been the only acceptable solution. Yet many issues have started to challenge this dominant economic model. As a result...

  • Recherche : nutrition des sportifs et plaisir
    Published on 16 June 2015

    Is It Fun or Exercise ? The Framing of Physical Activity Biases Subsequent Snacking

    While the benefits of exercising are widely accepted by consumers and healthcare providers, people who begin an exercise program don't necessarily lose weight. A fact that can be frustrating not only for practitioners, but their coaches and...

  • Mark Olsthoorn, professor and researcher at Grenoble Ecole de Mangement
    Published on 07 April 2015

    Recherche : Effacement de consommation électrique, pourquoi les industriels hésitent

    En acceptant de réduire leur consommation électrique lors de pics de demande, les industriels faciliteraient l'équilibrage des réseaux de distribution. Or, ils ont de solides arguments pour ne pas jouer la carte de la flexibilité. Une étude les...

  • Vincent Mangematin, Associate Dean for Corporate Relations and Research at Grenoble Ecole de Management
    Published on 17 March 2015

    Orchestrating Innovation with User Communities in the Creative Industries

    In search of continuous innovation, the digital creative industries have expanded their interactions with user communities to develop their products. This study highlights the evolution of these company-user relationships that allow for fluid...

  • Joachim Schleich, professor and energy markets experts at Grenoble Ecole de Management
    Published on 01 December 2014

    Research: Switching to energy efficient lighting : a bright idea!

    Energy efficiency policies such as the EU ban on incandescent light bulbs (and on halogen ones in the near future) have been the subject of much discussion in the last few years. The majority of the academic community predicted that new emerging...

  • Published on 07 November 2014

    Research : Digitization, Changing How We Work and Coordinate Projects

    All of us use digital tools and objects that can now be shared and combined in a variety of ways. This change has profoundly influenced the organization of work with projects being divided according to specialization and geographical location.

  • Published on 07 November 2014

    Recherche : Effets spéciaux pour le cinéma, l’art de faire collaborer 60 métiers

    Comment les spécialistes des effets spéciaux collaborent-ils sur un même film alors qu’ils appartiennent à 60 métiers différents et sont répartis dans le monde entier ? Deux chercheurs de GEM ont étudié les mécanismes de coordination qui structurent...

  • Erno TORNIKOSKI is a Professor in Entrepreneurship at Grenoble Ecole de Management.
    Published on 16 September 2014

    Research: How can the start-up process be accelerated?

    Success or failure of new businesses is what most studies related to the start-up process focus on. However, in today's dynamic market, time is a highly critical issue for nascent entrepreneurs.