For a long time now, utilities have been asked by regulators to match increasing demand and maintain reliability. In return for this, they are rewarded with guaranteed returns and minimal regulatory changes.
This has led to utility organizations being driven by a technical and engineering-oriented approach.Because of this approach, utilities have spent less time focusing on business outcomes and consumer needs.
In addition to this, utilities have been operating in silos around technical communities, such as operational technology (OT) and information technology (IT) departments. This has made it difficult for utilities to evolve into an interconnected energy ecosystem where data sharing and collaboration are pivotal to success.
End to end business approach
At CGI, we believe that this focus on technology has contributed to a narrow view of the value OT/IT technologies can deliver.
This was the case, for example, during several massive smart meter rollouts across the globe that initially were aimed only at decreasing the cost of meter readings or reducing fraud. While these objectives are understandable in the short term, getting the most value from the rollouts requires an end-to-end business approach that maximizes the exploitation of the underlying technologies long term—something that was never pursued in a number of cases.
The focus cannot be on the deployment of “smart” technologies such as smart meters, smart devices, smart appliances and smart grids alone. In fact, these technologies are only enablers of business outcomes that an individual utility may need to achieve. More must be done to maximize the value of these technologies, starting with an understanding of the value of data, as well as the tighter integration across people, systems and processes. This will require considerable business, cultural and organizational change.
Focus on business outcomes
If, in the past, utilities were struggling with a lack of data, now the challenge is to extract value from huge amounts of available data.
This requires a holistic approach to all smart grid related investments—an approach that involves looking at the immediate value drivers, as well as the long-term benefits and opportunities these technologies can deliver, especially when they are integrated.
Certainly, shifting to a focus on business outcomes is more easily said than done. And, what exactly does it involve?
It is now common knowledge in our industry that the energy system is undergoing a major transformation as we move to a low carbon-based economy. This is especially true for network utilities that transmit and distribute energy and must find new ways of matching increasing peaks of demand with an intermittent supply of renewable energy. Most utilities have already woken up to the need for a better understanding of what the new paradigm shift will mean for them, how they can prepare for the future, and how they can take advantage of short-term opportunities.
The move to a new energy system - a multidimensional challenge
The change to a new energy system is certainly not a simple challenge, with many market uncertainties and the need to adopt new and unproven technologies. CGI receives many questions from utilities around the technologies they should select, in which sequence they should be deployed, the key benefits that can be expected, how to maximize and demonstrate a return on investment, and what organizational changes in people and processes are required.
We receive these requests from utilities that have already deployed different smart technologies or are just starting to do so, and that operate in very different market structures, regulatory regimes and societies, with different adoption rates for digital technologies. It is a multidimensional challenge, and there is no single answer to all these questions.
Ultimately, a network utility does not seek to implement a smart grid as its end objective. Moreover, a smart grid means many different things nowadays. At CGI, we prefer to talk of optimized network utilities (ONUs) that optimize their grid operations, asset maintenance strategies, asset and new technology investments and resources. They seek to balance the sometimes opposing interests of their key stakeholders—balancing investments and business opportunities with risks and responsibilities.
This can take many different forms—from exploiting siloed data generated from enterprise systems or smart meters, to increasing the level of integration of existing applications with the addition of some add-on solutions that facilitate IT/OT convergence, to investing in the deployment of new technologies and communications infrastructures.
Common approaches for a successful transition
Drawing on our vast experience with a diversified smart grid client base, which ranges from large to small utilities and extends across the value chain, we have identified fundamental common approaches that lead to a successful transition. We have wrapped these approaches around three fundamental mindsets and call organizations that embrace these mindsets ONUs.
An ONU understands the need to take a holistic approach in the deployment and exploitation of all smart technologies—more specifically, an end-to-end business process approach that leads to relevant business outcomes. To succeed, it is essential to understand the value of integrating applications and relevant data from multiple sources, both across the enterprise and the utilities ecosystem, in an increasingly collaborative way.
So, why is our ONU vision important for transmission and distribution utility companies?
Network utilities that embrace and act on these holistic approaches are already becoming leaders that are able to exploit multiple opportunities, while having the required flexibility to alter tactics as circumstances change.
These utilities will be at the forefront of the multiple paradigm shifts that lie ahead.
For more information on this topic, listen to CGI’s recent webinar Briefing: Facing the paradigm shift – examples of how CGI can help you transition to a smart network utility