To gauge the complexity of the juggling act utility firms must perform to stay in business, consider two statistics. In the four years to 2018, the number of Britons who switched their energy supplier almost doubled to 5.9 million; at the same time, the contribution of renewables to energy firms’ output mix grew from about 13% to just shy of 20%.
One represents a fundamental change in consumer expectations of the service they receive while the other highlights the political and environmental pressures being brought to bear on suppliers’ operations.
To the list of challenges that are adding to the pressures under which utilities operate, add the tightening – and disparate – the grip of regulators, the fracturing of transmission networks and the increasing influence of activist investors.
The purpose of technology in a competitive landscape
Managing these changing times can be incredibly challenging for established utilities, especially at a time when technology is enabling venture-backed start-ups to move into niche segments of their operations.
Yet the very same technology that’s giving competitors an edge can be harnessed by incumbents to benefit not only their customers but also their bottom lines and the environment.
Sophisticated digital technologies and innovations including AI, blockchain, cloud, analytics, and IoT are providing utilities with the opportunities to disrupt business models. The purpose of technology is to enable companies to become as agile as their newly minted rivals and, more importantly, empower them to leverage the key advantage they possess over the new upstarts – expertise and market data accumulated over decades of successful operations.
Here we examine how companies are harnessing the power of five digital technologies to meet the challenges of the modern utility industry.
1. Optimizing operations with IoT
With embedded sensors, smart devices and connected supply chains, the IoT is enabling utility companies to identify sources of inefficiencies, predict asset performance and initiative predictive maintenance, avoid supply disruptions and monitor consumption for demand prediction. The Industrial Internet and IoT are transforming the transmission and distribution of electricity, in addition to improving the efficiency and performance outcomes of power plants and optimizing hybrid microgrid systems.
Florida-based Duke Energy has created a self-healing grid system to automatically reconfigure itself when you lose power in the home. The electrical system has the capacity to automatically detect, isolate, and reroute power when a problem occurs.
2. Enhancing worker and environmental safety with drones
Ensuring uninterrupted supplies, lower equipment failure, routine maintenance can all translate into complex and even dangerous working conditions in the utility sector. For many companies, drones are offering a powerful, accurate and safer alternative for asset inspection, monitoring and performance management.
California based Pacific Gas and Electric (PG&E) company is using drones to conduct accelerated safety inspections of electric infrastructure. Not only do these inspections enhance worker safety, but they also serve as a critical component of PG&E’s Community Wildfire Safety Program as additional precautionary measures intended to further reduce wildfire risks. The use of drones and other imaging technologies is a critical component of PG&E’s commitment to protecting their customers and communities safe if the face of growing wildfire threats across the state.
3. Balancing demand and supply through blockchain and AI
Renewable energy supplies can often be unpredictable as the technology to tap these sources evolves. The key to balancing demand and supply will be the use of energy storage technology and infrastructure that enables real-time transactions between power generators and storage providers.
With energy storage technology yet to fully meet that demand, some companies have adopted other innovations to smooth out the peaks and troughs. An Italian company, Enel has launched a vehicle-to-grid (V2G) test network in Denmark that’s designed to draw power from the batteries of parked electric vehicles (EVs) and feed it into local grids at times of unusually high demand. Automated and managed by AI software, such a system rewards drivers for the release of their EV’s energy, recharging those vehicles when grid supplies are more plentiful.
AGL is moving forward with Australia’s largest solar energy trading platform, AGL Solar Exchange that uses enterprise blockchain to allow customers to trade solar tokens within the community and save on their electricity bills. Customers with solar panels can buy their way into energy savings and maximize the returns on their rooftop investments. Firms like M-PAYG are democratizing access to energy, backed by the power of blockchain to provide pay-as-you-go solar energy services in developing countries.
4. Redefining customer service with automation and analytics
Australian giant AGL Energy realized some time ago that it was sitting on a potential goldmine of data that could help it navigate the energy industry’s digital revolution. It just needed help in harvesting and putting that data to good use.
The company established a cloud-based platform built with AI-driven analytical tools that could get to work on intel gathered from customers’ smart meters, solar panels, and IoT devices. The intention was to personalize services to individual customers by understanding consumer behavior and energy needs, managing distributed resources more effectively, improving asset performance and optimize their portfolio by anticipating and efficiently managing energy trading. AGL is also planning to build out its predictive analytics capabilities so that it can continue to deliver on its promise of customer centricity and transform into the energy company of the future.
EDF Energy is taking customer experience to a new level. By offering customers the option to sync, operate and manage their EDF Energy account with Amazon’s Echo and Alexa, the company has simplified routine tasks like submitting meter readings, tracking payment dates and energy consumption to the click of a button, or a voice command issued on the go.
5. Improving agility in the cloud
In the utility sector, digital innovations are often associated with start-ups, which have no legacy setups to replace with new technology. But it’s not impossible for incumbents to restructure themselves around a new technological proposition.
Public utility Scottish Water operates on tight margins and had been struggling to keep up with the technological advances that enabled private competitors to flourish. Scottish Water fundamentally rebuilt its business from the ground up – only this time in the cloud. Using cloud applications, the public body was able to personalize its customer products, establish new supply chains and put in place a strategy of agile adaptation that has all helped cut customer complaints by 85%, lift satisfaction levels by 31% and reduce the cost of ownership by 15%.
Purpose of tech: a more responsive industry
Companies that are harnessing the combinatorial power of digital technologies have been quick to realize cost and efficiency benefits. Intelligent automation, blockchain, connectivity with the IoT and analytics can bring companies closer to their customers, enabling the efficient personalization of supplies that can eliminate the resource wastage inherent in one-size-fits-all provision models.
What makes this use of digital technologies a more powerful story though, is that utilities have the opportunity to play a more active and responsible role in ensuring the sustainability of their business and operations while powering positive impact in the communities in which they operate.
About the author(s)
Business & Technology Services
TCS’ Business and Technology Services organization combines the power of business excellence with digital innovations to help enterprises and leaders be purpose-driven and performance-oriented, making the shift from shareholder value to stakeholder value. By harnessing the abundance of data, talent, connectivity and capital, B&TS helps leading companies around the world build ecosystems that fuel growth and innovation, foster collaboration and engagement across ecosystems, improve health, safety, and well-being, enabling empowerment and inclusivity, and driving sustainability and positive environmental impact.