The power and utilities industry is asset-intensive. Operational assets include power stations, gas pipelines, electricity cables, and substations to mention a few. Data, buildings, people and other assets are also part of running an effective business today.
Significant transformations are currently taking place in the industry and utilities are forced to alter business models in order to remain relevant in the industry.
In addition to deregulation, new legislation, policy uncertainties and sharp increases in cyber security incidents, utilities must deal with revenue changes caused by a tougher economy and the volatility arising from the increased deployment of distributed renewable generation sources.
It’s all about connections
For an asset-heavy power and utilities sector, making connections between actions or events in one place and impacts in another is critical.
PWC recommends the following strategies:
Strategic Asset Management a must
Whether upstream, midstream or downstream, the utility must stay ahead of the massive and complex regulatory, business, and technology changes taking place in the industry, all the while keeping operations running smoothly, and costs under control.
Higher input costs, stretched supply lines and the need to invest in infrastructure are also putting significant additional cost into the value chain. But, there are limits to how far costs can be passed on to end-users. To this end, strategic, integrated asset management is non-negotiable.
Utilities should consider re-designing or standardizing existing processes, practices and technology solutions. By doing this, the utility can expect to create tangible, and sustained business results.
Multi-functional and multi-dimensional solutions
The demand for a customer-centric focus, end to end integrated operations and cost management has never been greater. Implementation should be collaborative, multi-dimensional and driven to reduce costs, capture lost revenue, and improve efficiency.
By implementing a multi-functional solution, practical and complete answers to the most complex business questions can be answered.
Supply chain management
The supply chain has traditionally been regarded as a necessary cost burden to power supply and delivery businesses. This is understandable since a regular flow of materials is necessary for keeping the lights on. This has now changed. In the current environment, a utility’s supply chain should be a strategic enabler.
Effective management is needed to enable correct assessments and strategies for the large-scale implementation of process and technology improvements which will result in cost-effectiveness, reliable services and scalability.
Energy and capital are symbiotically connected. The scale of capital project investment in the utilities sector is immense, the competition for resources is intense, and the regulatory landscape is complex and all-pervasive.
Utility management teams need to assess project viability from beginning to end-from project appraisal, structuring and technology, to governance, execution and follow-up.
In this challenging environment, utilities are expected to meet customers’ expectations for safe, affordable, and reliable power, as well as meet the stakeholders’ need for higher returns and optimal corporate performance. In order to do this effectively, focus has to be placed on the utility’s operations and the management thereof.