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Blog |  5 min read

How Digital Disruption Is Transforming The Utilities Sector

The utility sector has had to learn to cope with disruptive influences. Over the past ten years this has included industry deregulation, rapid demand growth and environmental challenges.

The digital revolution happening currently is primarily driven by consumer expectations and emerging technologies, with significant potential to reduce the utilisation of traditional networks and generation capacity. Today’s time limited, totally digital and mobile consumers demand better, cheaper, more portable services with the ability to personalise the service they get from their selected service provider.

For energy companies, this digital transformation means greater customer contestability and the need to differentiate service levels through a range of value added deliverables in addition to competitive energy rates. Success in such a challenging environment requires a combination of efficient, customer-focused business models supported by agile technology platforms.

However, many utilities firms have found it difficult to adapt and improve their customer offerings as quickly as many consumers want. Conventional (business as usual) thinking and legacy business solutions have contributed to the inertia. The more innovative ones, generally those with a growing millennial workforce, are winning the hearts and minds of consumers and are becoming more competitive and efficient by embracing both new business concepts and adaptive technology solutions to enable rapid change.

The following is a list of the five key elements of digital transformation that have brought about positive changes for utilities companies and their customers.

1. Internet of Things

  • Everyone is talking about the Internet of Things (IoT), but for the utilities sector in particular, it represents a new reality.

  • IoT offers powerful tools for the utilities sector, enabling granular visibility into energy usage hour by hour, remote management of network equipment and distribution automation.

  • The vast amount of data that can be collected from Internet-connected devices such as sensors for monitoring the reliability of poles, cables and pipelines can be used to enhance productivity and to improve efficiency.

2. Smart meters

  • Smart meters are helping to improve real-time decision making, solving critical problems and helping utilities firms to develop new services and innovative experiences for customers.

  • There has been a significant increase in the number of smart meters installed in Australia/New Zealand, enabling real-time communication of energy data between customers and their service providers. Nearly 1.1 billion smart meters will be installed by 2023 worldwide (according to a report by Navigant Research). In NZ over 55% of installations currently have smart metering and the majority of Victoria’s 2.8 million meters have been installed.

  • While smart meters are becoming more widespread, the use of dynamic pricing, which matches energy supply and demand through real-time price changes, is not as prevalent. However, some utilities are emerging as leaders in applying dynamic pricing to better engage their customers and ensure system reliability.

  • The reduced cost of automated meter reading has effectively lowered the remaining barrier to customer switching and hence, the contestable market.

3. Smart grids

  • Due to increasing global power consumption, coupled with challenges in the production of electricity, utility providers are expected to increasingly shift toward smart grid systems and their associated analytics driven optimisation solutions in the coming years.

  • Smarter utilities will look to network efficiencies and automation across the production and delivery spectrum and beyond into the customer demand side.

  • Smart grid technology, coupled with deep dive analytics will continue to open up new product options that provide customer value as well as optimising utility performance.

4. Big data analytics

  • There is a proliferation of data, but being smart with their data analytics and ensuring the data itself is of a sufficiently high enough quality is the challenge for utilities companies.

  • Managing large streams of energy or water consumption data is fundamental to the future of the grid, as well as for helping consumers reduce their energy and water consumption.

  • All of this data goes from the devices to the data centre, but by introducing sophisticated analytics, the more innovative utilities companies are able to use the valuable insights garnered to develop new processes that will improve their services and competitiveness and make them more efficient.

5. Managing Demand Response for Renewable Energy Supplies

  • Fundamental changes in the power grid’s supply and demand profile are requiring utilities to think creatively about how to manage this transition.

  • On the supply side, significant investment in utility-scale renewable energy sources like wind and solar are bringing into question the intermittency of these sources.

  • While on the demand side, the increased demand for electric cars, the most energy-sapping machines of all time, could put substantial pressure on the grid at certain times of the day. 

Summary

In isolation none of these disruptive elements or the associated technologies are new to the utilities sector. The powerful message for the sector is the need to invest in the portfolio of solutions aimed at delivering outcomes in terms of business efficiency, asset productivity and demonstrable customer value that will ensure uptake. Process optimisation without analytics, analytics without quality data, incomplete or obsolete data will all compromise progress.

Increasingly we are seeing technology vendors innovating around families of solutions and technologies that provide a contextual framework for industry solutions rather than technology components. We envisage that these new enterprise optimisation applications will grow into the business operations and performance space between the existing financial, client care and asset management solutions for utilities.

It is now becoming clear that company directors and boards are increasingly controlling ICT purchasing, particularly in the area of customer engagement and operational management, which are the more dynamic aspects of business change to cope with disruption. While this focuses the role of technology in enabling better business, there is a risk that the architectural and lifecycle management guidance from ICT will be under-represented in these decisions. Decisions around technologies such as mobility, cloud-based solutions and insight-driven decision optimisation will require strong business and ICT direction to avoid the costly and time-consuming mistakes of the last generation of ERP and IT investments. 

Will digital disruption continue to transform the utilities industry?

How will your organisation adapt to meet increasing customer demands?

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