The utilities industry touches every person, household, and business. It provides generation, transmission, distribution, and metering of all forms of energy and water, as well as waste disposal and recycling. It is considered the foundation for modern life.
It also also considered by many as an industry at risk, as the way consumers perceive and consume resources is changing. It is also an industry that stands much to gain from current and emerging digital technologies.
There are three macro forces shaping the industry today: decentralization, deregulation, and decarbonization. Decentralization involves a shift in how and where energy is consumed. No longer the exclusive domain of power companies, energy is now being produced at an increasing rate by both businesses and households leveraging solar, wind, and battery technologies. Most customers that produce their own energy are still connected to the power grid. In fact, many of them sell surplus energy back to the local power utility. This has resulted in a market dynamic where customers have now become suppliers. As a benefit, this allows utility companies to better manage supply and demand, particularly during peak periods. But it also adds significantly to the complexity of the supply chain.
Deregulation is another force shaping the industry. As regulatory bodies have opened the door to new competition, energy resellers (using utility company transmission systems) have become an alternative to the traditional electric or gas company. Deregulation is also allowing non-utility companies into the home, as seen in the rapid rise of on-premises monitoring and control products and companies. These firms, such as Amazon (Nest), offer new ways for consumers to manage their energy usage. In the process, they also have the ability to take control of the customer relationship, often positioning the utility company as a commodity item, while they provide the value-add today’s consumer seeks.
Decarbonization is also changing the utility landscape, as the strong customer-driven push for carbon energy alternatives (e.g., solar, wind, hydro) has resulted in demand for energy saving and the use of renewable resources.
The challenges of being a utility
Combined, these three forces are placing a number of challenges on utilities providers, who are increasingly asking:
- How can they support and even encourage consumers to smartly generate power, all while retaining control of the relationship (or partnership)?
- How can they drive the use of smart in-home control and metering devices that add value to both the consumer (lower energy utilization) and the utility (improved load management)?
- How can they offer clean energy and cost-savings programs through the use of smart sensors and intelligent assets?
- How can they evolve their businesses, services, and operational processes to survive in a world where the consumer is asking for improved energy consumption at a lower price point than before?
Utility providers are also asking how they can attract and retain the talent necessary to address these problems.
Enter the digital solution
The answers to these questions can be found through the right application of digital technologies, a willingness to rethink business operations and revenue models, and the appropriate tools necessary to capture, analyze, and act on the massive amount of data that is available to utilities firms today.
With the right digital core, the cloud can become a secure and ubiquitous platform for the storing of data and a common system of record for the company, its partners, and its customers. Internet of Things (IoT) sensors can be used to gather data from operational infrastructure, supply chain partners, employees, and customers to better understand and manage the generation, distribution, and consumer of its offerings. Predictive analytics and machine learning can offer insights into improved operations and maintenance. Even emerging technologies such as blockchain can play a role, helping record and track supply chain and customer equipment transactions.
The bottom line is digital offers the ability to foster innovation, develop new revenue opportunities, and address the challenges faced by today’s utilities industry.
Download our “Digital Transformation in the Utilities Industry” white paper now to get an even greater look at the importance of innovating and digitizing in this high paced industry. And learn how SAP Leonardo can help your company make the move to digital.
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