E.ON uses quantum computing to help tackle complexity

E.ON’s job is to keep the lights on. As one of Europe’s largest energy companies, it operates a 1.6-million-kilometer energy network to serve 47 million customers with electricity and gas across 17 European countries. E.ON  powers homes, hospitals, factories, transit and other critical infrastructure essential to 21st-century life. And that job is only getting more complicated.

As E.ON supports Europe’s transition to renewable energy, the demands on the grid become increasingly complex. The old ways of distributing energy were predictable. Given a big power plant and a steady supply of fuel, it was not too difficult to know how much it would cost to generate a megawatt of electricity tomorrow or a year from now. As demand changed during a heat wave or a cold snap, it was relatively straightforward to ramp production up and down.

Now power comes from smaller, more dynamic sources, including solar and wind. At the same time, electric vehicles and intelligent systems in homes are dramatically changing consumption patterns, and more sectors are becoming electrified, such as mobility and heating. E.ON, responsible for providing power 24x7 year round, has to prepare well in advance to account for complex dynamic changes in both supply and demand. The company is now exploring quantum computing, a tool for conquering complexity, as a solution to this problem.

“We are becoming a digital company,” said Dr. Giorgio Cortiana, Head of Data & AI, Energy Intelligence at E.ON. “Data technology will be essential to help us master the complexity of these systems.”

One large piece of this effort boils down to a pricing problem.

“We need to procure power before customers ask for it,” said Dr. Piergiacomo Sabino, Quantitative Risk Expert at E.ON Energy Markets.

E.ON’s contracts require the company to provide energy to customers at a fixed price, even though consumption rates and delivery costs go up and down. Often there will be some mismatch between the amount of energy bought in advance and the actual demand. So different players in the market insure each other against those risks—buying and selling energy derivatives and keeping the lights on.

On E.ON’s trading floor, experts like Dr. Sabino work to efficiently price those derivatives. They use Monte Carlo simulations for this task—a way of predicting outcomes to uncertain events using today’s computing technology. These methods account for volatility from weather, usage patterns and other factors. But even the world’s largest supercomputers struggle with these kinds of problems.

“This requires us to be smart and forward-looking, years in advance,” said Dr. Cortiana. “Climate change and black swan events must be part of our model. The ultimate goal is to provide energy affordability to our customers.”

During a recent energy crisis that led to dramatic spikes in prices across Europe, E.ON was able to protect customers and keep price increases under control due to this planning. If E.ON hadn't handled this crisis correctly, customers could have been left in the dark.

The more complex a problem is, specifically, the more interacting variables it involves, the harder it is for a computer that deals in binary 1s and 0s to handle. Weather risks, supply changes and dynamic consumption patterns are all interacting variables. So even the best classical approaches on the best supercomputing machines run up against hard limits.

That’s why E.ON is exploring quantum computing with IBM.

Quantum computers offer an entirely new approach to solving complex problems. Certain problems that might take millennia to solve on classical supercomputers could have much more straightforward solutions using quantum computing algorithms.

“The reason we decided to partner with IBM Quantum was we wanted to be exposed to the experts in the field,” Dr. Cortiana said. “We not only gained access to this hardware, but we gained access to experts and were able to skill up our team.”

Today, quantum computers are still a work in progress. However, that progress is moving quickly. In 2023, IBM showed that its quantum hardware and software together could perform reliable computations at a scale beyond “brute force” classical methods for running quantum algorithms. This advancement means we have entered the era of “quantum utility,” where quantum computers are the best tools for getting exact answers from quantum circuits.

The next step is finding “quantum advantages,” which are instances where quantum computers are better than any classical methods. For an organization such as E.ON, finding a quantum advantage could potentially deliver new efficiencies and competitive advantages—and ultimately better energy prices for its customers.

Working together, E.ON and IBM Quantum® teams developed a path toward quantum advantage for energy pricing. Dr. Sabino, on the business side, drove the requirements for the project. The goal was not just an experimental project, but one that could eventually yield a practical business advantage on a future error-corrected quantum computer. IBM projects it will unveil an error-corrected quantum computer in 2029.

Working together, IBM and E.ON developed an algorithm for managing weather risk that would be able to outperform classical methods using a sufficiently advanced quantum computer.

Each run of this algorithm asks the question, “If we offer energy at a certain price, what will that cost us given a certain set of weather conditions over the course of a contract?”

Run this algorithm many times and you get information you can use to make hedging decisions.

Having proved this algorithm could work in principle, the team then prepared to run the algorithm on real IBM Quantum hardware. The original version of the algorithm involved circuits—individual quantum executions—that were too long to run on the quantum computers available in 2023.

So, the team took advantage of an advanced IBM® Qiskit® capability known as dynamic circuits to break the problem down into pieces that even a previous-generation, 27-qubit IBM Quantum computer was able to handle.

Using Qiskit for this project was a “no-brainer,” said Dr. Corey O’Meara, Chief Quantum Scientist at E.ON. “Qiskit is the number one SDK in the world for coding quantum software. It’s fantastic and improving more and more.”

Today, IBM makes quantum computers of 127 qubits and up available to its users. These quantum computers can  run much longer circuits than were possible on earlier machines. Combined with the power of Qiskit, these rapidly improving computers have brought about the era of utility. Quantum advantage is on the horizon.

“I think working at utility scale is the next thing that has to happen for the entire quantum computing field,” said Dr. O’Meara. “People have been doing toy models and small-scale proofs of concept with a couple qubits. That’s going to change.”

E.ON’s quantum target for the next 3 years, Dr. O’Meara said, is utility-scale work, hunting utility for their business.

The field of quantum computing is complex, Dr. Cortiana said. Organizations looking to pursue quantum computing should partner with similarly minded people—university, research and providers such as IBM—and try to find synergies, because there are core problems that will be common across industries.

“Project yourself a few years into the future and envision the situations where computational capabilities will run short,” Dr. Cortiana said. “Ask where can quantum help? Find low-hanging fruit that can get you to business utility without waiting for a fault-tolerant machine.”

Now is the time to capture that low-hanging fruit and grow quantum talent pools.

“Once quantum advantages are here, everyone will want to take advantage,” Dr. Cortiana said. “It’s better to have the skills already. Otherwise, it will be difficult to catch up.”

E.ON is one of Europe’s largest energy companies in the business areas of energy distribution grid, energy infrastructure solutions and energy sales. With their 1.6-million-kilometre-long energy distribution grid and around 47 million customers, E.ON is playing a leading role in shaping a green, digital and decentralized energy world. It’s on E.ON to make new energy work.