Energy Sector: A Distributed Generation

Elizabeth Hackenson, CIO & SVP of Global Business Services, The AES Corporation

The ever-changing pace of technology influencing the Utilities landscape

The energy sector is poised for significant change as renewable (e.g. wind and solar) and energy storage (e.g. batteries) become more prevalent. Increased use of renewable resources, driven by policy standards coupled with price reductions and technology advances are changing the 125 year old industry. Similar to the computing disruption of mainframes to servers in the 1980s, this is now happening to the energy sector and we call it Distributed Generation. For example, rooftop solar produces energy at the source of consumption verses a large, centralized power plant many miles away from consumption. Although the computing and energy industries are very different, the notion of producing power, especially at the consumer point of use, has both benefits and challenges that the industry is starting to understand. Similar to the disruptive computing era, the energy sector will learn how to manage hybrid centralized-decentralized models, which I believe brings tremendous opportunities for the CIO and their teams.

"Every day is different, every day you learn and every day you get the chance to make a difference"

We have all witnessed the power of the consumer in their use of mobile smart phones. It was not long ago that the iPhone changed the way we communicated and became the platform for tens of thousands of applications that are downloaded at will by the consumer. Let’s think about the implications of consumers controlling their power consumption, especially if they are producing power via their rooftop solar or battery systems. What do they do with excess power generated? Do they have the option to sell it back to a utility? At what price and is there time of day pricing? What about demand management incentives? Regardless of the specific answers to these questions, I believe applications will be the underlying solution, and, begs the question, what is the implication to utility companies. Do they become a “virtual” utility, meaning they begin to broker in the “cloud” energy from consumers and deliver power where needed? Again, sounds like an application to me. So, as CIOs and their teams better understand the dynamics at play, they are well positioned to help their business partners build services for consumers. Another analogy I like to reference is the experience of telephone companies. Who would have thought in the early 2000s that phone companies would be streaming video and now vying for content? History routinely repeats itself, and I wish I knew the answer to what a utility can become, but it is certainly going to look different a decade from now.

I see both the disruptive nature of computing and telecommunications as good barometers for what is now happening to the energy sector. While both industries copied many of the early success elements of the energy industry (centralized models), they eventually realized that technology and consumer behavior would change their models and they learned how to adopt a centralized-decentralized system. That said, for computing, there are still mainframes (but not as prevalent) and there is still a large back-bone computing and  moving data around the world, but both needed to fundamentally think differently about their business models and how to make it all work seamlessly. For the energy sector, we too will figure this out and only doing so by thinking outside the box and investing in the right technologies at the right time.

Changing role of CIOs

Indeed the role of the CIO has gone through many transformations and I believe this trend will continue. Technology and new business challenges drive these changes and how fortunate we are as CIOs to never have a routine day. I recall decades ago when knowing all the intricacies of how a data center worked was the key to becoming a CIO. Nowadays, I rarely meet a CIO who has such intimate knowledge and I am not sure these are even questions asked anymore of a CIO. From my experience, the role has shifted to more than just knowing about technology – it is knowing the product and services of your company in detail and then determining how technology can be leveraged.

And, more importantly, it isn’t about reacting to technology needs but proactively sharing the art of the possible. My personal journey over the past few years has been rather exciting, as I was given responsibilities beyond those of a CIO. I am fortunate to work for a progressive CEO who allowed me the opportunity to take on additional global responsibility, including: cyber security, insurance of our physical assets, internal audit, corporate facilities and our new energy solutions group, which is focused on energy storage and solar. Each of these teams are critical to the company’s success and while you may see this as a diverse set of teams, we view each of these functions as service organizations focused on providing value-added services to our colleagues at corporate and at our businesses around the world. In addition to these functions, I also have the privilege of being a member of the Executive Leadership Team (ELT) and help to manage our innovation and technology efforts for the company, which include a Committee of our Board. As a member of the ELT, we develop the company’s strategy and are responsible for the investment decisions. This activity alone represents 20-30 percent of my time and the innovation efforts about 10-20 percent, so on average I have 50 percent to spend on the other functions.

Getting used to letting go of my traditional CIO role wasn’t easy, however I eventually realized by doing so that I would give others the opportunity to step-up. Fortunately, I have two leaders who could not be more perfect to step into the Deputy CIO role (Hugo Vasquez) and CISO role (Scott Goodhart). Both are mature, highly experienced leaders who make it easy for me to let go. What’s fun now, is that we focus more on strategy together vs. me being in the weeds. We discuss the bigger picture and the future more than when I was focused heavily in both their areas. I do believe this benefits us all and allows us to delegate more to future leaders.

I am often asked how do I manage this broad spectrum of responsibility and my answer is easy:when you have a great team and leaders who are really good at what they do, then you can focus on strategy, quality time with your peers, your CEO, your Board and engage in external interactions. In the big scheme, it is certainly a challenge, but a good one. Every day is different, every day you learn and every day you get the chance to make a difference. Honestly, I can’t imagine a better job to have.