5. The coming Convergence of Sectors

Main takeaways:

• The energy, mobility, water, buildings and telecoms sectors can no longer be operated as silos. They are fundamentally converging
• Convergence doesn’t simply mean that two sectors are connected or overlapping. It occurs when the business value propositions for the sectors are fundamentally interlinked
• A joint customer proposition should yield significant competitive advantage and/or create barriers to entry

“Convergence: The merging of distinct technologies, industries, or devices into a unified whole.” (Merriam-Webster dictionary)

My last few articles have talked about examples of a coming Convergence of sectors – specifically, the linkage of energy with water, mobility and buildings. But sectors are often linked! The fact that there’s a top-end sound system in my car doesn’t mean that the automotive and electronics industries are “converging”. It only means that a car is a convenient sales channel for a sound device. So what do we mean by Convergence?

Let’s take the example of the energy-water nexus. Here both sectors depend on each other. Energy costs are a big part of water purification and supply, and the energy sector is one of the biggest industrial consumers of water. The business value propositions for the two sectors are interlinked. Water availability and costs are important for power plants and vice-versa.

In the same way, fuel costs have historically influenced car usage, and electricity costs will do so in future. Electric vehicles are expected to become a big part of power supply and grid stabilisation. This also holds true for buildings. Energy costs have historically been one of the lower priorities of property owners and managers. But avoiding emissions is cheaper than having to deal with them later. Energy efficiency is thus one of the cheapest means of addressing environmental concerns. The term “energy positive” buildings is gradually entering the real estate lexicon. And arguably the easiest way for buildings to become energy positive is when power generation is embedded in the fabric of buildings, such as with BIPV.

Thus Convergence between sectors occurs when:

• The business value proposition for the sectors is fundamentally interlinked
• The notion of expertise in one sector in incomplete without expertise in the other
• A joint customer proposition creates competitive advantage and in certain cases also raises barriers to entry

There is one domain that brings together all the others. The layer of Connectivity comprises the digital ring that binds together the customer propositions for energy, mobility, building management, security, water & waste management and public administration. I have referred to it briefly in a previous article as one of the trends shaping mobility and district planning. I’ll expound on this subject in my next article.