Utilities must adapt to a changing environment

EU utilities are worth half a trillion less due to the economic turndown and the introduction of renewables and micro-generation.
Published: Wed 11 Dec 2013

Engerati caught up with Martin Wells, Vice President & Utilities Head, Capgemini Consulting, at the recent European Utility Week to discuss his view on utilities’ transformation to digital.
With energy resources such as gas, coal and oil on the decline it is up to utilities to curb consumer consumption where possible.
Martin Wells believes that the game plan has changed for utilities and that they need to change their traditional strategies in order to adapt to the changing environment.  It is for this reason that many utilities are forced into a “digital transformation.” Utilities are looking to digital technology to improve their overall performance, explains Mr Wells. By applying these technologies to the customer, utilities will see an improvement in the management of their assets, performance levels and knowledge. Analytics will also help the utility to improve decision-making.
The time to transform is now
According to Mr Wells, the time has never been better than it is now for utilities to make the transformation to digital technology. He says 10 years ago, the transformation would not have been possible as the technology hadn’t come far enough.  Now that the right technology has been developed, the time is right for utilities to take the leap.
In addition to this, the attitude towards technology has changed. Consumer uptake is different and employees are changing their perception of how they want to use technology.
Mr Wells points out that, according to a new study from consulting firm Capgemini and the Massachusetts Institute of Technology (MIT), companies which adopt clearly defined digital strategies and invest in technologies such as mobile applications, social media and analytics, are more profitable than their competitors.
Utilities definitely see the potential that digitization promises and many are already making the transformation across the globe. Proof of this is the adoption of “digital director” and “head of digital” roles which never existed before. British Gas, for instance, has committed to digital transformation by introducing on-line applications to help customers manage their consumption and accounts.
Mr Wells says that utilities have been conservative in the uptake of digitization and that there are now excellent opportunities for the utility and its customers.
Opportunities of convergence of smart meter and digital
With the convergence of the smart meter and digital technology, new insights of customer behavior can be gathered and made available to third parties for analysis. Utilities have yet to explore this method of data collection even though it could be of great value to companies.
Mr Wells acknowledges that behavior change in the energy consumer is complex. He points out that customers and utility staff must be educated and given the knowledge and tools to save energy. In addition, policy-making obviously has a great effect on customer behavior. For instance, it’s difficult to reduce energy consumption with retail market reform which restricts tariffs.
Mr Wells suggests that companies use methods that will help to understand the customer better and customer communication must be clear.
Why the move to digitization
Retail sector and network operators are experiencing a major squeeze on their margins. Companies are struggling to improve their profitability and are also under pressure to improve customer service and trust in the utility. According to Mr Wells, manual transactions are costing the utility dearly, while digital is guaranteed to cost less. Consumers also expect a more modern and efficient on-line approach. “Operational and communication efficiencies alone justify the return on investment “, states Mr Wells.
In order for management in large utility networks to make informed, cost-effective short and long term management decisions, they must have access to the relevant data. It is for this reason that analytics is essential for the industry to run effectively.
Capgemini will be discussing how utilities can use technology to their benefit in our webinar Exploit the Power of New Technologies with Capgemini on 23 April 2015.