by Sharelynn Moore, Itron
Utilities always have been integral to the prosperity of nations, serving as an engine of commerce and powering people’s lives by delivering energy and water to their homes and businesses. The traditional way of doing business and interacting with customers, however, is changing for utilities.
Disruptive technologies have given utilities more information about where and how resources are used, helping them map usage, balance loads, restore outages and engage with customers. More than before, customers and other stakeholders are looking to utilities to ensure energy and water are being used and managed more effectively and efficiently.
Resourcefulness-defined here as the ability of utilities to effectively manage the delivery and use of energy and water-is not just about using less. It means finding a new approach to energy management that includes integrating renewable sources, using technology to reduce energy and water delivery waste caused by inefficiency. Ensuring that utilities maintain a role as economic engines involves investment in modernization of utility infrastructure. Nations that realize this and act upon it will be the success stories of the 21st century; evidence suggests that countries benefit economically when utilities achieve a higher level of resourcefulness.
To bring attention to how utilities can contribute to national resourcefulness and economic competitiveness, Itron launched its second annual “Itron Resourcefulness Index.” The index included a perception survey to benchmark the state of resourcefulness across energy and water, as well as the “Energy and Water Resourcefulness Indices,” which used macroeconomic data from third parties to evaluate and rank countries based on their national resourcefulness.
Utility Industry Outlook
The “2015 Itron Resourcefulness Index” includes results from a global survey of 900 utility executives and 900 informed consumers in 16 countries-reaching 28 percent more respondents than the previous year’s report. The perception survey measured the opinions of global utility executives along with informed consumers to gauge how resourceful they think the industry is today, to identify perceived barriers to progress and to help envision solutions for a more resourceful future.
Figure 1: Technology and Software Tools are Key to Transformation
The index shows consistency overall with utility executives’ and informed consumers’ continuing to recognize the need for transformation. There is a larger disconnect between utilities and consumers, with consumers’ feeling even less satisfied with the information they receive from their utilities.
Key findings from the report include:
Disconnect between utilities and customers. Survey findings showed a growing disconnect between utilities and consumers about consumer education and the information consumers want to receive. This year, informed consumers ranked education about consumption and conservation of higher importance than in the previous year’s survey.
‘Energy Resourcefulness Index’
This year, to reflect a broader assessment of the relationship among resourcefulness and social and economic health and competitiveness, Itron introduced the “Energy and Water Resourcefulness Indices.” The indices were built from 20 third-party sources with macroeconomic data, such as a country’s ranking in the World Bank’s Ease of Doing Business report, World Economic Forum, Global Water Intelligence and the International Energy Agency’s consumption statistics.
The resulting indices are organized into three pillars-fundamentals, efficiency and innovation-that influence overall resourcefulness. Fundamentals reflect the ability of utilities to serve customers and the broader enabling environment; efficiency measures the extent to which water and energy is wasted by utilities and consumers; and innovation captures the extent to which utilities are embracing new and emerging technologies.
The research revealed that the top five countries for energy-Germany, United Arab Emirates (UAE), Australia, Spain and the U.S.-were sufficient in resourcefulness by excelling in different ways:
“- Germany leads Europe in sustainable energy. During the past 12 years, Germany has replaced 31 percent of its nuclear- and fossil fuel-generated electricity with clean power.
“- The UAE excels in energy fundamentals and is ranked first in innovation. The country is particularly strong in digital demand response investment, quality of electricity supply and its ability to accommodate new energy resources.
“- Australia performed well in the efficiency and innovation pillars because of its low electricity transmission and distribution losses, as well as high levels of energy research and development investment.
“- Spain’s strengths lie in demonstrated efficiency and adapting to the pace of technology innovation.
“- The U.S. performed especially well in energy fundamentals because of the country’s strong quality of electricity supply and efficiency.
Among consumers, 54 percent said there is a lack of consumer information about consumption and conservation, despite that 66 percent of utility executives said they have been successful in engaging with customers.
Despite consumers’ wanting more information from their utilities, utility executives said that cutting consumer/educational programs would be the first to go if they had to reduce their budgets by 10 percent.
In addition, highlighting the communication disconnect, informed consumers said they prefer to receive information with inserts in their utility bills and by email, yet utilities intend to start sending customer information via social channels. Consumer education is vital to encouraging and inspiring efficiency and conservation among end users to achieve greater resourcefulness. As utilities gather more information about where and how resources are being used, they should use that information to engage consumers. The key to finding and capitalizing on the opportunities created by new technology is establishing a dialog among utilities and their customers, where utilities educate and engage customers and make them active participants in energy management.
Figure 2: Educate the Public About Conservation, Consumption
Government still seen as barrier. As with the previous year, the top barrier for utility transformation was seen as government regulation, with 70 percent of utility executives’ and 80 percent of informed consumers’ reporting new (or potentially new) government regulations as a concern. The greater concern among informed consumers vs. utility executives indicates an opportunity for improved industry communication around achievements and innovations, as well as a need for education surrounding advanced capabilities and long-term investments.
Results showed a significant increase in barriers to transformation that are less frequently cited, including lack of private funding and need for more time. Utility executives’ citing a lack of private funding as a barrier to infrastructure investment rose 17 percent from the previous year, and the need for more time rose 14 percent.
Modernize infrastructure. Utility executives recognize the need to modernize and invest in utility infrastructure to improve operational efficiency, with 83 percent of utility executives’ reporting that transformation is needed. Furthermore, 55 percent of utility executives said the industry is not running efficiently, and 21 percent said the state of infrastructure will be worse in five years.
In addition, one-third of utility executives said keeping up with the needed rate of investment in infrastructure is an urgent concern for the industry.
Technology, software tools key to transformation. In addition to modernizing infrastructure, investing in technology and software tools such as business analytics is key to transformation. This year, the survey specifically asked utility executives what technology investments they would prioritize. Nearly one-third said business intelligence/analytics would be at the top of their investment wish lists. For example, there are about 150 million electricity meters in the U.S., of which more than 40 percent are smart meters with more advanced functionalities that generate large amounts of data. For many utilities, fully analyzing the data to extract more value is a top priority.
Analytics deliver value by turning data into information utilities can use to improve smart grid distribution operations. To capitalize on the opportunities created by new technology, utilities must establish a dialog with customers to educate and engage consumers and make them active participants in energy management.
Develop a future-proof business model. Utilities face a changing landscape that includes renewable energy integration, an aging work force, Internet of Things adoption and dealing with massive amounts of data. These issues are top-of-mind for utilities, but consumers also think about their utilities in different ways; 64 percent of surveyed consumers said they would like the utility industry to focus on renewable integration.
From Consumption to Resourcefulness
As energy and water consumption continue to increase, resourcefulness will be one of the defining trends of this century. The utility industry is becoming more resourceful with the energy and water resources by applying technology and empowering consumers to manage energy and water use. But there remains more work to be done.
The “Itron Resourcefulness Index” aims to help utilities, consumers and government officials prioritize investment in technology, infrastructure and education. To address the top concerns identified in the index, utilities must take a leading role in a new era of resourcefulness.
Utilities have the tools for transformation. With disruptive technologies, utilities can better manage where and how resources are used and empower customers to conserve resources. These tools and education will be the key to helping move from an age of consumption to an age of resourcefulness.
Sharelynn Moore is vice president of corporate marketing and public affairs at Itron, where she is responsible for all global marketing and public affairs, including development of strategic marketing objectives, oversight of internal and external communications and management of external affairs including community investment and government relations.