Once considered predictable and even stodgy, the power and utilities sector is rapidly transforming — and the future is digital. Ninety-five percent of executives responding to a recent Deloitte survey reported that digital transformation is a top strategic priority.
That’s no surprise as the industry puts a greater focus on reducing costs, protecting infrastructure and diversifying power sources. On top of that, providers must cater to an increasingly sophisticated customer base searching for more options and greater control.
The Deloitte report, “Digital Innovation: Creating the Utility of the Future,” outlines the challenges and opportunities of a changing landscape. Energy sector leaders identified forces that impact their business models — with changes in fuel prices and availability at the top of the list, at 48 percent.
The main takeaway: Energy providers must adapt and evolve, and many appear poised to change or are interested in doing so. With new tools and players set to shake up the market, the methods of delivery, hiring and payment are likely to shift too.
Here are some characteristics from the report that could define future utilities.
Greater Use of IoT and AI
Technological advances are driving rapid cost declines for building blocks such as computing power, data storage and internet bandwidth, the report notes. Utilities are looking to leverage sensors, robotics, cloud computing, artificial intelligence and Internet of Things sensors.
But they’re not the only ones doing so. These shifts have prompted outside players to explore and enter the market, causing competitive disruption. That, however, presents an opportunity for savvy utilities to take advantage of these developments and outperform status quo competitors.
Diverse, Interconnected Assets Help Prepare for Future Threats
Threats such as extreme weather and new market competitors — as well as a growing call to decarbonize — have led many utilities providers to focus on clean, cost-efficient energy sources such as solar and wind power.
Digitization is helping those options work together seamlessly. The report cites “a network of sensors, drones, cameras and other devices” that work together to monitor the status of facilities and equipment. The tools can analyze performance and also avert or identify a problem.
Utilities' Focus on the Customer Will Grow
It’s second nature for many people to manage their power use with a smartphone, tablet or virtual assistant — “a personal relationship with their utility,” as the report defines it. This user base is driven by real-time data and one-click energy management, and its members want greater control.
Which is why new products and applications must cater to them. Those offerings, the report says, may include virtual assistants to manage energy use and make personalized suggestions, at-home electric vehicle charging stations and the option to buy community solar shares.
Nimble, Tech-Savvy Employees
Digital know-how and innovation must continue to guide hiring practices, Deloitte argues. That’s a shift from utilities jobs of generations past that relied on routine and sometimes dangerous tasks that have since been replaced by automated processes.
No longer: Power companies’ success will hinge on “digital DNA traits of agility, innovation and higher collaboration levels” among staff, the report says. Such culture can reap benefits that include cost savings, increased productivity and opportunities for new revenue streams.
The power industry must move quickly on making digital transformation happen. One big reason: Electricity consumption in developed countries is no longer growing in tandem with GDP growth, so operation and maintenance costs don’t always have sufficient revenue to cover them, the report notes.
Making plans to evolve is important, but deep strategy is crucial. The report cites a risk for organizations of getting stuck in a loop of “doing” digital things but not making systemic changes to business, operating and customer models to help achieve current goals and long-term success.