11 MINS READ
INDUSTRY
Energy, Resources & Utilities
Rebalance the energy equation
Highlights
- Changing consumer preferences and the shift to more sustainable energy sources is compelling utilities to rethink their business models, products and services. In addition, decentralization, decarbonization and digitization require a more well-planned and innovative customer inclusion approach.
- As digital-savvy prosumers (acting as both consumers and producers of energy) transition to renewable energy technologies they will seek better collaboration, convenience, and choice from utilities.
- From remote predictive maintenance to peer-to-peer trading and smart home automation, utilities must leverage intuitive digital solutions to enhance customer experience.
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Abstract
The energy industry today has pivoted to a consumer-centric approach with businesses and end-consumers’ changing preference to invest in sustainable energy sources, combat climate change, and contribute to the greater good of the environment.
With increased digitalization, consumers today are seeking personalized experiences and faster access to services across industries. Customers expect similar levels of engagement in utilities as well and want to be more actively involved as prosumers (acting as both producers and consumers of energy).
Utility players need to place the customers at the core and center of all their initiatives to build innovative business models, products, and services that are convenient, collaborative, and sustainable. The path towards achieving net-zero and beyond zero is a collective effort with cross-industry collaborations and sector convergence, and by using technology as a critical lever.
This paper explores how a well-planned customer inclusion journey of the utility industry can shape the future by empowering individuals and businesses in contributing to a sustainable and green economy.
Factors driving change in the utilities industry
The Utilities industry is in the midst of rapid change.
According to Globe Newswire, the global market size for clean energy technologies is expected to grow at 6.9% annual CAGR from 2021 and reaching USD 423.7 billion by 2026. The surge in demand for advanced technology, smart cities, and electric mobility is converging with the growing demand for renewable energy sources and sustainability.
The Utilities industry shoulders much of the responsibility of this immense transition, and the actions they take now will have a profound impact on society for generations to come. Leading utilities companies are exploring new ways of engagement to support customers, communities, society, the environment, and their stakeholders. This requires utilities to rethink their operations and develop intelligent solutions with the following considerations.
Customer demand and community expectations
Customer interaction with utility players was minimal and highly transactional and supply led. Now, however, customers are expecting an engaging interaction with improved access and ability to store, monitor, and manage their energy.
Both individual and commercial users are looking to switch to renewable energy sources to cut down their electricity consumption, carbon footprint and hedge against fuel price volatility. Utility industry needs to meet customer demand for renewable energy within the boundaries of regulatory frameworks through innovative approaches such as green tariffs, energy efficiency incentives, and other subsidies.
New energy technologies and new business models
The imperative to transition to clean energy consumption and production has led to newer energy infrastructure and business models with decentralization as a central theme. Decentralization in the energy sector has brought forth many prosumers who want to manage and sell their surplus renewable power digitally. The transition towards decentralized utility is not an easy path to traverse as it requires balancing the ecosystem of customers, businesses and partners under a central system. Therefore, the seamless co-existence of centralized and decentralized models can only be ensured with advanced technologies that can integrate the newer operations with their legacy systems effectively.
Need for digital technology enablers
Technological integrations can enhance customer experience rapidly for the utilities sector with data-driven insights. With technological solutions such as smart meters on the grid, smart home automations providing real-time information, customers experience more convenience and cost-savings. For instance, technology can transform the consumer interaction with ready accessibility at their fingertips by digitizing bill payments, subscription services providing home charging capabilities. As a part of UK government’s national grid upgrade initiative, consumers are being encouraged to switch to smart meters that can help them track their energy consumption in real-time and make an informed usage choice.
Opportunities ahead
Today’s increasingly digitally savvy customer base presents a unique opportunity for the utilities industry to establish relationships through digital communications to drive increased efficiencies and greater customer connect.
By interacting with consumers digitally, they can go beyond just providing information to educating and motivating consumers by leveraging data analytics. A recent study by J D Power indicated that utilities are currently only providing customers with basic digital solutions such as servicing digital payments. In order to drive true value to customers and businesses, utility companies need to harness the intelligence from customer data residing with them. Analysis of their consumption history, understanding their expectations and needs and passing on suitable personalized recommendations for energy-saving opportunities can help entice the customer to contribute to the green future. As the industry powers ahead, the utility companies need to utilize the emerging technology and scale it and stay relevant to the customers.
How technology can power the energy sector
The utility industry’s agenda for a cleaner future has gained strength by promoting new business models for sustainability and fostering an environment for building a sustainable ecosystem among utility, prosumers, and partners.
Furthermore, by embracing decentralization, digitization, and decarbonization; utilities can adapt, innovate and ensure long term sustainability.
Both individual and business consumers have unequivocally shown that convenience, collaboration and choice are what matter the most. These three crucial levers are driving the impetus for utility industry acceleration underpinned by technology solutions. Here we elucidate how each of three levers can add value to the utility industry.
- Collaboration: Collaboration among the workforce and stakeholders is an important dimension that improves the productivity. With the pandemic, virtual collaboration and remote assistance has increased in all aspects of business. Remote predictive maintenance requires cross-functional interaction to apply data analysis in asset management and maintenance.
- Convenience: The utility industry needs to come up with newer business models and provide a conducive environment for individual and business customers to participate actively. Adopting innovative systems such as peer-to-peer trading, microgrids, energy marketplace encourages both the supply and demand side users to have more control and experience better serviceability.
- Choice: The emergence of prosumer has led to tech-based green energy products and solutions such as solar panels, smart home automation, electric vehicles. The customer now has a myriad of options to choose from across payment models, self-service options, etc with insights and recommendations on usage and preferences.
Additionally, the growing demand for renewable energy, electrification of transportation and industrial sectors and collaboration across the electricity value chain will further facilitate energy industry convergence. Industry convergence, coupled with technology solutions such as smart grids, IoT and emergency voice solutions, will help advance the energy transition for the next decade.
Here are some of the technological solutions that will play a key role in utilities industry:
IoT enabled solutions such as smart grid, energy efficiency management, smart meters etc. are playing a key role in enticing consumers to take part in the energy value chain. IoT innovations will help in addressing challenges and opportunities such as market regulations, fluctuating energy and power demand etc. For instance, Duke Energy’s self-healing grid technology automatically reconfigures itself for real-time troubleshooting. The smart network works with the extensive deployment of IoT sensors at sub stations and powerlines. The sensors monitor the condition of the network in real-time and identify problems to restore power on the line. The continual availability of grid network information from smart devices also helps in intelligent energy management and planning, reducing the frequency and duration of power outages.
With the expected influx of massive data from connected and digitized devices, utilities need to channel and integrate data to form predictive and prescriptive analytics models to anticipate outages, leakages etc and thus avoid financial and environmental damages. For instance, Vestas Wind Systems, world’s largest wind energy company, makes use of a big data modelling solution that reduces the data processing time drastically and helps in accurate wind turbine placement decisions. Vestas was able to help its customers maximize power out at low costs with precise location assistance.
IoT networks face certain challenges due to heterogeneous data making it difficult to handle and store time-sensitive data. Edge computing has proven to address these challenges and provide better data management and reduce the latency. Edge computing architecture will play a major role in acquiring and processing huge volumes of data closer to the source by applying edge computing logic and algorithms, enabling utilities to manage and monitor a broader array of operations at higher level of granularity, paving a path for data-driven use cases. Energy industry leaders like Schlumberger and Shell are using edge computing to address challenges such as equipment failures and downtimes and thereby improving productivity and safety of their workforce.
The future ahead for the energy market
The energy ecosystem is at a tipping point transforming rapidly to a decentralized, decarbonized, and digitized future.
New business models, policy and regulatory models transitions, and consumer focus on the renewable energy and cleaner future are driving the increase in renewable energy. According to IRENA’s Remap 2030 report, the total share of modern renewable energy is expected to reach 44% in power, 38% in buildings, 26% in industry, and 17% in transport by 2030. With the consumers, policymakers, and regulators joining hands together, and adopting technological solutions, the renewable energy market is likely to radically change in the near future presenting exciting possibilities.
