Digital technologies and the transformation of the utility industry.
Read what Franck Chevalley, Chief Executive Officer at Atos Worldgrid, has to say about digital technologies and the transformation of the utility industry.
The pace of change right across the utilities sector is truly remarkable. Looking back over the last twenty years or so, we see an industry that has already undergone radical change. As a young engineer, when I started my career in training simulators for the utility sector, business and operational models were relatively simple: gas, water and electricity were provided to a more or less captive market using centralized production and linear distribution processes.
Today, a young engineer or management professional starting out in the utility sector, encounters a landscape that has already been transformed, and which, most importantly, faces even greater transformation in the years ahead.Three forces for transformation
Our industry today has been transformed by three distinct, yet inter-related forces for transformation: the viable growth of renewables; the emergence of dynamic demand-side models; and the continuing shift to deregulation.
Let’s consider each of these briefly.
The balance between renewables and fossil fuels has changed. Renewables used to be seen very much as the junior cousin to oil and gas, but now they are poised to take the lead. Not only have wind, solar and ground-source energy assumed a position as viable alternatives to fossil. They are almost universally accepted as being essential in the pursuit of sustainable energy and the need to combat climate change.
Hand-in-hand with the growth of renewables is the emergence of dynamic demand-side models. From an industry-perspective, locally and even domestically produced power must be managed and balanced in both operational and commercial operations. This not only demands increasingly agile utility models. It also implies increasingly active and collaborative relationships with both domestic and commercial customers.
And, of course, deregulation is continual and complex. Just as in other industries that were once state-run monopolies, we now live in a world in which operation itself is ever more fluid and dynamic: retailers can be telcos, telcos can be media companies, post offices can be financial service providers, and utility companies can be almost anything they choose – with one proviso. Power and water are the most indispensable of all social resources and must be protected and managed responsibly.Practical implications
The turbulence of these changes is reflected in many of the ways utility companies must now behave.
Customers cease to be captive accounts. Both domestic and commercial customers are actively encouraged to switch in pursuit of the best deal. As this awareness of choice matures, the best deal will not just be about cost. Utilities need to know how to build and sustain relationships, and success will increasingly depend on responsiveness and personalization. Today, few utilities have achieved the levels of personalization, for example, which telcos are starting to achieve.
Operationally this transformation has a significant impact in grid management. This goes far beyond the need to balance generation and loading across high and low voltage grids. It needs, for example, to become far smarter in terms of analysis and intelligence in order to predict local patterns of production and usage and to adjust the mix accordingly.
Utilities also need to look beyond the traditional boundaries of their industry in order to identify and take advantage of new and emerging business opportunities. Rather than being simple power providers, for example, the ways in which utility companies build relationships with civic authorities, with automotive and transport industries will all benefit from innovation and imagination.The digital landscape
Both the forces for transformation and the practical actions associated with them are inextricable from developments in digital technology. Data analytics, the Internet-of-Things and new distributed and virtual computing models all make a key contribution to the transformation of the utility industry.
Over the last couple of years, in every strategic conversation with clients, we find ourselves examining the close relationship between transformation in the utility sector and innovation across the digital landscape.
Whether looking at new approaches to distributed energy generation and trading or ways to empower the commercial and engineering workforce, digital innovation is always an essential part of the discussion.
This is not just about ensuring that utility companies can continue as successful businesses long into the future. It is also about helping redefine their relationships with domestic and commercial customers so that together we can maintain the provision of these essential resources, while paying full attention to our wider social and environmental responsibilities.
You can join Atos in our event where they are showcasing solutions central to the new digital landscape for forward-thinking utilities.
This blog is part of the Atos Look Out 2020+ Utilities “From commodities to high-value service providers” where we explore the business opportunities and key technologies which will shape the future of Utilities.