Transforming utility companies

Written by
Laurence Cramp

Transforming utility companies

Written by
Laurence Cramp

Transforming utility companies

Written by
Laurence Cramp

Historically the utilities sector (including energy, power, gas, energy networks, water networks and so on) was seen as an industry that was slow to adapt. It was somewhere to invest knowing that whilst capital intensive the returns were ongoing and stable. The customers weren't going anywhere due to a general apathy towards switching, or a lack of ability to switch, and the regulator kept offering performance incentives and returns. It certainly wasn’t considered cutting-edge or innovative to many outside of the industries themselves.

But in many of the utilities companies we work with we can see that technology is helping to drive many new ways of working alongside a desire to transform business and operating models and deliver a superior customer service.

Drivers of change in utilities

There are several drivers of change that are still playing out including change in the energy mix such as the use of renewable energy sources; the continued focus on low carbon across the energy system and a desire to ensure sustainability and increasing interconnectedness of energy infrastructure and other types such as gas, water and communications.

Global power systems are becoming less centralised and markets are being opened to a range of new players. Distributed energy technologies go broader than you might initially expect. They include demand response technologies, distributed generation, energy and battery storage and even technologies such as electric vehicles, air conditioners, refrigerators. They can all be used to consume energy and then called upon to transfer excess back to the grid to act as short term response to help balance peaks in demand. Much remains to be done to integrate such energy sources into the grid including large scale on and offshore renewables.

The rollout of smart metering, smart grids and other technologies is allowing greater digitalisation in energy services. Energy demand can become increasingly responsive to changes in prices and participate actively in their provision. Consumer tariffs can be adjusted to accommodate these trends where once they were static. Advanced metering infrastructure and other network-sensing infrastructure continues to be rolled out at pace. Networks are upgraded to be faster, more resilient, self-healing and self diagnosing. Internet of Things devices can give real-time feedback on the condition of plant and assets and monitor its performance.

Making infrastructure change happen

Overcapacity and low wholesale prices remain a challenge for utilities generation and infrastructure, alongside the ongoing rise of renewables. Barriers to entry are lower than ever, as a result of greater digitisation and new market entrants. Infrastructure and generation plant investment remains costly and still full of political challenges over the medium to longer term. Utility companies are needing to launch new business models and consider partnering with financial institutions who can lower the cost of capital and help to shoulder the burden of risk.

It's not that long since decisions were taken by Hitachi and Toshiba to halt new nuclear power projects at Wylfa and Moorside, impacting the UK's desire for a new nuclear renaissance as part of a low carbon economy. The UK government has still to really set out how it will create the right investment and regulatory framework to encourage the investment needed in UK generation.

Investment in smart grid infrastructure also needs considering. The future smart grid will likely have ownership that includes electricity transmission, network operators, generators including wind farms or utility-owned generators and individual households who may be operating household-level battery systems, solar panels or releasing energy from electric vehicles.

Making change happen for customers

Many utility companies have launched digital transformation projects or are in the process of doing so. This includes making improvements to omnichannel customer experience; putting in place new scheduling and workforce managements systems; and adopting analytics and machine learning solutions to diagnose issues.

As we've written about in other blogs, the path to sustainable customer service improvement isn't always smooth. Many organisations embark on a programme but find it hard to keep it going and the old siloed mentality prevails. Utility organisations that try to put in new workforce management systems fail to realise their true benefits because their processes aren't sufficiently amended at the same time, so teams fall back to old ways of working.

What to do next

In truth, the path towards change is never easy. Many utilities have complex systems landscapes they they are now starting to unpick and upgrade. The move to cloud is challenging for many utilities due to a need to manage data ownership, but this is changing as cloud providers evolve. Many organisations are starting to make the investment they need in change management as part of a complex transformation programme. Customer experience is gaining real traction in many organisations and dedicated teams are being set up to keep it front of mind. Emerging technologies such as IoT, artificial intelligence and machine learning are being successfully piloted and scaled up as utilities look to gain efficiency and competitive advantage.

Leadent Digital helps organisations to achieve transformational change. We love developing apps that transform customer experience and help you deliver a more frictionless service experience across all of your contact points and channels. Why not get in touch to tell us more about your current  priorities?

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