Digital Transformation Critical for the Utility of The Future

The move to a low carbon economy is forcing utilities to migrate to a business model which involves digital transformation on all levels.
Published: Wed 18 Nov 2015

The move to a low carbon economy is forcing utilities to migrate to a business model which involves digital transformation on all levels.

The introduction of renewables and the growth in prosumer numbers is having a major impact on the entire energy value chain. The current electricity system has to be structured and monitored differently, calling for a greater need for innovation and investment.  

To accommodate these new market needs, the utility business is forced to go digital when it comes to creating its new energy system and  when engaging with its consumers.

The importance of digital transformation was made abundantly clear by the industry experts we interviewed at our studios at European Utility Week (see the attached playlist).

Creating a flexible system

Ana Domingues, Global Lead for Utilities and Communications, CGI Global, says that their annual global survey shows that only a small portion of the industry’s IT budget is being allocated to the transformation of the business and she points out that this leaves a lot of room for attaining greater system efficiency which could be used to finance the transformation. She adds that technologies should be deployed in a holistic way and that these should be interconnected so that data can be better exploited, resulting in more efficient responses. Her advice is that there is no single solution but the idea is to create a flexible system so that it can be adapted in the future.

This kind of flexibility and adaptation is talked about by Sudheer Warrier, VP and global head utilities, Tata Consultancy Services, who says that digitalisation will see the introduction of new technologies which will enable utilities to create new revenue streams . The offering of new services and new capabilities will be the market differentiator, he states. “The idea is to leverage the new technology to take advantage of the many opportunities now available to new and existing market players.”

Extracting value from the digital world

Marco Li Vigni, Utilities Industry Expert, Ericsson, stresses that the utility of the future needs to extract value from the digital world. The new connected utility should drive greater operational energy efficiency and improve customer engagements.  He says of utilities: “The old business models are collapsing  and they must learn to be active players or they will lose value in society. They have to reinvent themselves and they can do this by becoming digital.”

Mr Li Vigni explains that with digitilisation, data can be used to optimise investments, driving value for shareholders and society. He adds that a lot can be learnt from the transformation of the telecommunications sector. “The telcos had to start offering new services to engage their customers. They had to adopt new business models and utilities can learn from these experiences. The market is moving fast and utilities have to do something different.”

Transformation needs proactiveness and resiliency

Luís Vale Cunha, Advisor to the board, EDP Distribution, says that DSOs should play an active role in facilitating process changes. “DSOs must pave the way for retailers and suppliers, helping them to deliver new and innovative services to customers so that they can benefit from transformation.”

He adds that the utility space needs to be more innovative when it comes to new market approaches and that they should be spearheading the digital revolution, ensuring a resilient network and enabling a reliable service to customers. We should be proactive, resilient and pragmatic in the face of transformation and at the same time, taking care of our customers.”

Chris King, Global Chief Regulatory Officer, Smart Grid Solutions, Siemens, talks about the importance of changing utility business models.  He says that utilities should prepare for the future by adopting new and flexible technology so that changes can be made in accordance with changing market needs. He talks about telcos and how they change their products and services frequently to respond to customer needs.

He says that utilities should use their existing expertise to innovate services and create flexibility. “Utilities are best placed to provide services around these solutions and trends.” He adds that utilities should work alongside regulatory bodies  in order to make the transition easier. Success will come from creating a collaborative future between utilities and regulatory bodies, he explains.

Do more with less

Haresh Patel, CEO and co-founder of Mercatus, a leading provider of Energy Investment Management (EIM) software, reminds that the adoption of new technology should be looked at through the eyes of a financier in order to highlight possible risks that may have been overlooked.

Mercatus software has been developed to help the energy industry digitize every phase of the investment process when it comes to projects. Processes are automated which saves time and money, resulting in a 10% structural cost advantage, he says.

Critical pieces of domain knowledge forms part of the software solution, giving  businesses an advantage and helping them diversify. “It’s about operational efficiency and how to help them improve it. We give them ability to do more with less.”