Industry
Energy, Resources & Utilities
Rebalance the energy equation
Highlights
- The ever-increasing adoption of renewable energy sources, the emergence of the prosumers (both consumers and producers of energy), and the rising demand for cost-effective energy production are transforming the utilities sector.
- Additionally, the industry is experiencing a workforce crisis while struggling with a complex legacy IT landscape characterized by siloed information and applications, which negatively impacts operational efficiencies.
- We look at the key factors shaping the industry and the process capabilities utilities need to develop to remain relevant in this fast-changing world.
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The changing world of energy and utilities
Utility companies worldwide face the daunting challenge of reorganizing and realigning their process capabilities.
This restructuring is crucial for utilities to meet the evolving demands of the business. The shifting landscape of customer centricity and preferences is at the core of these changes, driving the adoption of new services, solutions, and business models. These developments, in turn, necessitate improving existing processes or building entirely new ones.
Key developments shaping the industry
Utility players have to constantly navigate the twin requirements of grid modernization and technology adoption.
The increasing popularity of electric vehicles, the legacy infrastructure and an aging workforce, the growing focus on customer experience, and the emergence of the prosumers have brought about this transformation. The daunting task of adopting sustainability practices and the increasing reliance on renewable energy sources have become central to the industry. Operators must adapt to these changes to effectively track and manage network assets and energy consumption patterns.
However, most industry players struggle with a complex legacy IT landscape with siloed information and applications, compromising operational workflow efficiencies. Adopting next-gen technologies, such as artificial intelligence, digital twin, and others, is critical to improving operational efficiency and transforming the physical grid assets. To address this issue, utilities must choose technologies that integrate all the information streams to give an accurate view of the physical grid that can be shared across the organization.
In addition, the industry is also experiencing a workforce crisis, with a large part of the workforce due to retire. Hiring skilled workers is becoming increasingly complex, making technology modernization and automation urgent needs.
Focusing on energy services
Digital disruptors are causing a shift in business models.
The conventional revenue model in the utility retail business, reliant on energy sales, is facing disruption due to the commercialization of storage and renewable energy technologies. Plus, regulations promoting energy efficiency and clean energy are paving the way for energy transition. There is a shift toward energy services to counter the decline in energy sales revenue. Traditionally, these services catered to ad-hoc B2C requests, but the trend is now catching up with annuity businesses and the B2B sector. The evolving norm emphasizes immediate, customized services in response to changing market dynamics.
From the process capability standpoint, this will require utilities to deliver an integrated, seamless experience across the web, customer service representatives (CSR), and field agents using a mobile-enabled solution for next-generation field services. Adopting a cloud-based infrastructure facilitates rapid scaling, providing a unified platform for all franchises and retail businesses ensuring transparent visibility of service offerings and plans. A well-defined and intuitive franchisee onboarding process minimizes both time and cost. In addition, a streamlined procurement process for materials enhances cost-effectiveness through better discounts, resulting in more competitive services.
- The shift from consumers to prosumers: Consumers are becoming more proactive in managing their interactions, seeking transparency in energy usage, billing, and contracts. They also anticipate receiving insights, recommendations, and guidance on optimizing their energy consumption. Utilities need to adapt to these changing dynamics, facilitating the integration of prosumer-generated energy into the grid, supporting energy storage, and exploring new business models that accommodate this shift.
- Decentralizing energy generation: Traditional centralized power plants are being complemented and, in some cases, replaced by distributed energy resources (DERs). Some examples include rooftop solar panels, wind turbines, and energy storage systems. Environmental concerns and advancements in renewable energy technology drive this trend. Utilities must embrace DERs and integrate them into their energy grids. This involves modernizing the grid infrastructure, enhancing grid management to accommodate intermittent power sources, and implementing effective demand-response programs to manage the variability in supply and demand.
- From production-centric to customer-centric: Utilities are no longer just providers of essential services; they are becoming customer-centric organizations. Customers expect transparency, choice, and personalized energy solutions. To meet these demands, utilities must provide real-time access to usage data, flexible billing options, and seamless communication channels for issue resolution. In addition, customers also expect value-added services outside the ambit of traditional services. Energy customers seek a competitively priced, low-touch, simple, and transparent experience. Yet, they find a multi-product offering appealing, especially in the essential services category, where data or broadband and telephony emerge as logical choices after light, gas, and water. A leading energy retailer in Australia offers renters and home builders smart insurance products clubbed as part of their services through a subsidiary company. In addition, they also provide product offerings like broadband and mobile—another company in the US partners with leading utilities to provide home repair and maintenance services to customers. The future demands a shift in the mindset where utilities prioritize customer experience, communication, and satisfaction. This means providing real-time access to usage data, offering flexible billing options, and ensuring seamless, omnichannel communication for issue resolution and account management. Furthermore, utilities must educate their customers on sustainable practices and help them make informed choices. By understanding the unique needs of their customer base, utilities can enhance customer relationships, reduce churn, and foster a more sustainable energy consumption culture.
- Proactive and predictive equipment maintenance: With increasing energy prices worldwide, utilities need to optimize operating costs. In addition, the rising cost of capital necessitates extending the asset life. Energy companies are vulnerable to asset failure, but the costs of replacement or repair are generally prohibitive. Both predictive and proactive maintenance are crucial to reducing costs and preventing supply disruptions. Utilities will therefore need to build the capability to ensure the safe, proactive, and predictive maintenance of company-owned assets and equipment deployed at customer sites. This involves implementing comprehensive systems and processes for enterprise asset management, customer service, and field service management. Leveraging advanced digital capabilities through augmented reality (AR), virtual reality (VR), digital twin, and IoT allows real-time data to enable remote support, collaboration, monitoring, and troubleshooting.
- A definitive push toward sustainability and renewable energy: As global efforts to combat climate change intensify, there is a heightened focus on reducing carbon emissions at utility companies. This trend is supported by government policies and incentives encouraging renewable energy adoption. Renewable energy initiatives are gaining growing importance within utility companies as they strive to diminish their environmental impact, satisfy customer demand for sustainable energy, and chart a course for long-term expansion.
- Grid modernization and smart technologies: Smart grid technologies are critical for building a resilient and adaptive grid. These include advanced sensors, communication networks, and data analytics, enabling utilities to enhance grid management, reduce energy losses, and respond swiftly to outages. To prioritize grid modernization, utilities can deploy advanced sensors and communication infrastructure, implement data analytics to monitor grid health and detect anomalies, and create advanced outage management systems for rapid response. The successful adoption of renewable energy sources hinges on the modernization of the power grid. To unlock the full potential of renewables like wind, solar, and geothermal, the power grid must be agile and versatile, capable of accommodating diverse energy sources.
A transformative period
The utility industry is experiencing a transformative period driven by several key trends.
To thrive in the next five to 10 years, utilities must embrace these trends and adapt their operations accordingly. This involves investing in modern grid infrastructure, integrating renewable energy sources, providing EV charging infrastructure, adopting smart technologies, and prioritizing a customer-centric approach. Moreover, utilities must remain vigilant about regulatory changes and cybersecurity while promoting sustainability and electrification efforts. By proactively addressing these trends, utilities can secure their place in a rapidly changing energy landscape and contribute to a sustainable and resilient future.
