Bits, bytes, and watts - Digital transformation in Utilities

The power and utilities sector has been synonymous with stability and reliability throughout the last century. With the advent of the information age, this age-old industry is set for a radical transformation in the way it thinks and operates. Though the focus is still on reliability and affordability, the industry is increasingly opening to high-technology, new-age business models, with sustainability and profitability at the forefront of the change. The traditional utility companies are under stress as many new players, including large conglomerates in technology, oil and gas, retail, and other businesses to new-age tech startups and asset managers seek to enter this space. With the advent of Distributed Energy Resources, free trade of energy, and the demand for carbon-neutral technologies, the traditional utilities are paving the way for the virtual utility of the future. What should a utility do to alleviate these pressures and stay relevant in the face of these disruptions? The answer lies in what we are about to discuss shortly.

Energy 4.0! A technological revolution is unto us, a storm that was brewing silently for quite some time now. Over the past few decades, the power and utilities sector is witnessing some fundamental disruptions, quietly reshaping and evolving the industry, driving it to a new future. From a growing push for decarbonization driving regulatory changes and the adoption of new sustainable technologies to rising costs and changing load patterns worldwide, these disruptive forces are shaping the future utility. The future is here already, and the price for ignoring will be exorbitantly high and paid in losing relevance and the competitive edge in this dynamic and uncertain business environment. There have been countless success stories where big data, artificial intelligence, and new-age technologies under the umbrella of industry 4.0 have already transformed the way businesses function across the globe. Apply these to the power and utilities sector in conjunction with the growing trends of Decarbonization, Decentralization, and Digitalization, and we get the perfect toolkit to the digital transformation in Utilities, Energy 4.0.

From generation to customer retail, Energy 4.0 offers numerous exciting new opportunities all along the power and utilities value chain. Though still presenting many opportunities to scale, the impact of the digital transformation in the industry is already evident across the stakeholders, be it various processes, assets owned and managed by utilities, the end customer, or the employees. From mobile applications for the end-user to manage energy consumption, bills, and outages to always connected assets and workers, the digital revolution is improving the customer experience, worker productivity and safety, power company efficiencies, and profitability quite significantly.

Riding on the success industry 4.0 had with other industries, utilities can now plan for such Energy 4.0 driven improvements in efficiencies, reliability, safety, customer experience, regulatory compliance, and revenue management more confidently than ever.

The scope of the opportunities presented can be understood in terms of various productivity and efficiency, customer experience improvements, the need for sustainability, and the new frontiers that technological innovations herald.

Improving productivity and efficiency

Digital opportunities for process optimization and improving resilience are available throughout the value chain. Some industry estimates show that such interventions can boost profitability in an organization by around 20-30 percent. Smart meters and grids, connected worker solutions to enhance employee productivity and safety, advanced data analytics, and automation of the core processes are some means by which a utility can realize most of this potential.

Lots of structured and unstructured data flow in any utility from the customer's data (consumption, payment, and billing patterns) to operational data arising from various processes across the value chain from generation to customer retail. Clubbed with the right data analytics tools, this enables unique data-based analyses, planning, and course corrections. Here smart meters and IoT help utilities double down on the data gathering, which can then be the basis of intelligent data-based decisions and credit and collection algorithms, giving insights into a customer's consumption and payment patterns. On the other hand, smart grids are more robust, efficient, and less capital intense, the data generated by these connected assets help with predictive maintenance, thus increasing the grid reliability while cutting the costs.

Productivity tools for employees

Always connected inexpensive PDAs and smart handheld devices have increasingly made it possible for utilities to employ various digital solutions at scale, improving worker productivity and safety. This translates to improvements in core work processes, asset management, engineering, planning, and dispatch.

Automation of core processes and end to end digitalization

The Energy and Utilities business is a process-intensive business right from the generation, transmission, and dispatch of electricity to customer management, billing, and dues recovery. The task gets even more so daunting with the imminent rise of distributed energy resources and electric vehicles, resulting in two-way electricity flow. Digital solutions can be employed to standardize and automate such processes across the value chain, thus unlocking savings and improving customer satisfaction at the same time.

Big data and advanced analytics for improvements in the customer experience

With so much data flowing in each day, utilities practically sit on a data gold mine. But the million $ question is what and how to make the most out of that data when most of it is unstructured. Throw in big data and advanced analytics utilities can make tangible gains in customer experience, operations, and asset management. Some of the interesting use cases can be predictive maintenance, intelligent demand forecasting, omnichannel customer touchpoints, and collection analytics; cutting down on costs, improving efficiencies, and doubling down on the customer experience. Many utilities have successfully used social media analytics and chatbots to create customer heat maps, create multi-channel customer journeys and touchpoints, effectively target and segment the end-user.

Heralding a sustainable future

There is a renewed focus on sustainable production and consumption these days with utilities focusing on helping their customers reduce their carbon footprint and optimize their energy usage. Digital tools are increasingly helping with the twin goals of sustainable production in form of distributed solar and wind generation and sustainable consumption through various energy efficiency programs to reduce energy consumption. Efforts are to come up with a sustainable yet economic ecosystem starting right from greener sources of generation, to resilient smart grids to microgrids and DERs enabling local communities, helping them with their sustainability goals, and bringing down unit economics. Some of the interesting use cases enabling these developments are demand-side management to optimize the end consumer demand to smart meters enabling quintessential data gathering that forms the data backbone behind this sustainable smart ecosystem.

The new frontiers and innovations

The future is already here with smart cities, connected buildings, smart homes, and automation picking up; technology is changing the way one consumes energy and interacts with one’s surroundings. Corporate and government commitments towards further reducing the carbon footprint of their operations and the increasing importance of Environmental, Social, and Government (ESG) factors in new investments in the sector are paving way for cleaner, greener, and more sustainable data-driven smart technologies. The rise of Distributed Energy Resources as renewables take to the center stage will give rise to massive virtual utilities of the future, consolidating supply and aggregating demand. The utilities of the future will be increasingly data-driven. Some interesting use cases may be virtual energy exchanges for real-time energy trading, virtual power purchase agreements, blockchain-enabled smart contracts, and much more. On the user end technology will be enabling two way (grid-user) and peer to peer transactions, smart grids, and net metering. Another revolution will come in the way we move; electric vehicles (EV) will define the mobility sector of the future, which will be again highly technology-driven. The stakes will be higher for utilities in the Electric Vehicle business with EVs accounting 28 percent of the total US energy consumption in 2018 while it was less than 3 percent electrified. The 1.1 million electric vehicles on US roads today are expected to rise to 20 million by 2030, which will lead to massive investments in last-mile distribution, charging station infrastructure, and technology by utilities. Coming closer to home, if we speak of the smart homes and the home automation segment, according to a study by MarketsandMarkets, the smart home market alone will be worth USD 138 Billion by 2023.

Looking at these trends and the direction the power and utilities industry is moving in, the coming times seem quite interesting for technology in this grand old industry. Digital transformation, new age business models driven by smart technologies, and the ever-increasing demand for new innovative, intelligent products by the end-user focussing on convenience and sustainability opens up a bouquet of opportunities for the Utilities, and Energy 4.0 will prove to be the most potent tool in their arsenal in this pursuit.