Corporate themes

The Digital Utility: Staying Relevant in the Age of Disruption

 
January 2, 2018

Despite the disruption caused by rapid digitization, evolving customer demands and intensifying competition, most North American utilities continue to remain upbeat. So much so that capital investment in the industry in 2017 is forecasted to be considerable, only moderately lower than the $117 billion in 2016. But with continuing focus on climate reform, proliferating energy storage options, and the emergence of transactive energy, the question is how can the asset intensive utilities industry retain its relevance in a digital-first world?

At a time when digital and physical boundaries are blurring, utilities recognize that digitization is fundamental to competitive advantage, given its ability to simplify processes, enhance customer experiences, and re-imagine business models. At the core of this transformation lies a shift from a physical world to an interactive digital world. This requires reimagining traditional processes, products, assets, investments and business models to focus on quality of customer experience and return on investment.

Currently, utilities target rate case filing and integrated resource plans to improve resiliency, reliability, and efficiency of the aging grid. While such investments are important to sustain operations in the near-term, it is equally important to prepare for the evolving IoT paradigm to future proof operations. For instance, a large number of utilities today have either already invested or are planning to deploy smart meters – a significant capital investment supported through rate increases. However, in this hyper-connected world, with each home likely to have as many as 400 connected devices by 2020, utilities will need to look beyond such investments to stay relevant. Now is the time to consider alternate digital utility solutions which not only make better economic sense but also provide superior customer experience.

 

Going from ‘smart meter’ to ‘no meter’

With rapidly advancing technologies, the question to consider is whether the smart meter of early 2000’s is really worthy of the ‘smart’ tag anymore. It is expensive to make, deploy and maintain, and is still a physical device in an increasingly virtual world. Instead of deploying physical smart meters, utilities could consider deploying an Amazon Echo like digital conduit in every home – which is physically disconnected from the grid but digitally connected to the customer. The digital conduit can help aggregate energy usage data from built-in sensors in each smart device in a customer’s home and provide billing details to the utility company.

Such aggregation capabilities can lead to new opportunities such as real-time consumption dashboards, and billing and payment, eliminating the need for human intensive processes in back and front office operations. Based on the aggregated information, the conduit can also potentially predict a smart device failure. For instance, heater or air conditioner failure can be preempted by sending an alert to utility staff in the vicinity or sending do-it-yourself (DIY) repair instructions to the customer. Using APIs exposed by mobile device manufacturers, the digital conduit can also offer Uber-like, real time experiences for consumers. This could include enabling voice alerts in case of high usage, offering in-depth insights into appliance usage, and generating energy efficiency rebates for buying a new smart device. The net effect: reduced operational costs, enhanced efficiencies, and superior customer experience.

 

Creating a digital footprint: The gateway to futuristic services

As businesses increasingly leverage open platform solutions, utilities must not only offer next-gen services but also make it simple for users to consume the services. Innovating and researching alternatives to existing services sets the stage for utilities to have a digital presence in every customer’s home. Such a presence offers two-fold benefits: it helps create a connected digital experience for consumers and becomes a conduit for new service offerings for utilities. As utilities move up the digital maturity curve in a hyper transactive world, it is but a matter of time before they evolve into energy services providers or energy insurance providers.

Ajeya is a Client​ Partner with Tata Consultancy Services helping Utility Clients stay relevant to their customers and re-imagine in this Digital first world. Ajeya is key member of the Tata Consulting Services North American Utilities leadership team and is focused for strategic and tactical initiatives to drive growth in Utilities Business Unit. Ajeya is regularly consulted for Customer Services and Digital Transformation initiatives by major North America Utilities with focus on Digital led business and technology transformation.