2018, the year of electrifying trends in the utility sector

• 6 years ago (2018-02-04)
• Junior Isles

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By Saul Zambrano, Global Industry Director for Energy and Utilities at Software AG.

Last year’s disruption in the utility sector, from regulation to renewable sources of energy, will accelerate in 2018 as leading utilities aggressively pursue digital transformation.

In 2018, utilities will ramp up this transformation to embrace new technologies that have the potential to redefine not only the technical landscape of enabling technologies, but, more importantly, prioritise the user experience as a concrete and measurable goal.

Here are four predictions for utilities in 2018 and beyond:

1. The Grid Revolution

Digital grid architectures will be critical in integrating and managing disruptive power technologies such as renewables.

As more and more devices become connected, we anticipate more lines of communication. This means that the infrastructure will begin to move away from a traditional archaic grid, to a more digital architecture. Within this transformation, we will utilise two-way communication technologies to connect the supplier and the consumer, as well as the machine and the operator.

Enhanced connectivity between the machine and the operator will enable continuous monitoring and reporting of energy systems, enabling operators to check that everything is running efficiently.

In addition, increased connectivity between the supplier and the consumer will be critical in balancing grid-tied supply and demand resources across the value chain.

For example, digital platforms will be critical in managing generation spikes. Say a supply spike is caused by strong gusts of wind at a wind turbine farm; a utility can activate battery storage assets, or trigger spot power market trading instructions. It can even alert customers involved in loyalty programmes to take advantage of the excess generation, increasing trust between the supplier and the consumer.

The key to this capability is digital architectures that operate in real-time and can manage and orchestrate optimisation decisions in milliseconds.

1. Perform or Pay

Digital platforms will serve as the innovation engines for utilities to thrive in a Performance Based Regulatory (PBR) structure.

Disruptive technologies are altering the way electricity is monitored, connected and distributed from the grid. In fact, consumers today have the ability to monitor their own energy usage as a result of this increased connectivity.

In this digital age, the introduction of the PBR structure helps to bridge the gap between older regulations and the benefits that this disruptive technology brings with it. The goal of a PBR structure is to provide incentives for the utilities to accelerate operational and technical innovations, while delivering on measurable goals such as safety, environment, customer satisfaction, value for money, connections, social obligations, reliability and availability.

In order for utilities to thrive in this structure, utilities must be able to innovate. The adoption of digital transformation initiatives is critical for utilities to integrate data sets across legacy applications, stream the data within analytical frameworks, and initiate automated event processes to drive greater safety, operational, customer and reliability outcomes.

1. IIoT Gets Smart

Smart and connected utilities will drive operational efficiencies to new heights.

The Industrial Internet of Things (IIoT) has made it possible for manufacturing and process-oriented industries to develop and deploy smart management concepts at asset, process and plant environments. For example, currently more than four in five people with a smart meter would recommend them and the UK government plan to offer them to all homes and small businesses in the UK by 2020 .

Realistically, utilities will initially focus on predictive maintenance. This focus mirrors the adoption path experienced in both the manufacturing and process-oriented industries.

Once utilities deploy and harness the efficiencies associated with these initiatives, they will transition to more complicated initiatives, such as system wide supply and demand visibility that leverages distributed energy resources for nodal balancing dispatch orders, an initiative that requires real-time complex algorithms and event processing to generate even greater benefits.

1. From Ratepayer to Customer

Digital platforms will become a key enabler in driving utility customer experience and satisfaction.

In the old-fashioned regulatory construct, where competition was severely limited and customers were referred to as “ratepayers,” there was little concept of delightful customer experiences.

Fast forward to today and you will see that the customer experience is becoming increasingly valuable. The customer experience is just one of many benefits businesses will recognise as a result of embracing digital transformation.  It is clear that there is a sense of urgency from utility executives to re-imagine and deliver an outstanding user experience across all of their targeted customer segments and this is why many projects within utilities will have a large digital focus.

The ability to improve the customer experience through the mapping of customer journeys by personas and channels of engagement will be critical to this capability. Digital platforms are not only key to the initial mapping and change management strategy, but will be critical as a core capability over time that allows utilities to continuously challenge and evolve their strategies.

Digitalisation has the power to transform the customer experience, but it also presents an opportunity for utilities to lower costs and improve efficiencies. Access to customer data analytics offers useful insights that facilitate better informed decisions for improved business outcome and customer relationship. This can involve anything from a customer’s loyalty to the business to a change in the customer’s behaviour in energy usage, right down to the customers’ willingness to pay for additional services.

There is no doubt that the transition from the more traditional systems to a fully functional digital system will not be easy. However, the utilities who choose to embrace these disruptive technologies over the next year, will no doubt reap the benefits. Whether it’s an improved customer relationship, greater efficiencies or the ability to balance between supply and demand, it will surely help in becoming a leading utility provider.