In today’s connected world, seemingly every successful company has technology at its core and utilities companies, who power our connectivity, need to lead by example. Digital innovation enables greater efficiency and increased speed, both of which improve customer satisfaction. In order for the electric industry to evolve to a more digital model, it’s crucial for the current legacy systems already in place to align with new technologies.
How to Align with New Technologies
What’s different today? Like many industries, the electric utilities industry has access to real-time data and advanced analytics systems. Yet, despite this access, the industry isn’t necessarily taking advantage of these innovations. There’s often a disconnect between wanting digital transformation and making it happen. 84 percent of companies agree that digital transformation is important, but only 3 percent feel as if their digital transformation efforts have come to fruition.
To ensure future success and manage the changes that are taking place in the electric industry, on both an operational and a consumer level, digitization must play a critical role in the electric utility industry. As we see a shift of electric-based products becoming smarter, the utilities industry will need to refocus on digitization to evolve and keep up with these innovative products.
Why Keeping Up with Innovation is Key
There are more than 7.5 billion people around the world and with the population set to reach 10 billion by 2050, the need for electricity will increase significantly. The way we consume energy is also changing. In fact, there will be a 151 percent increase in worldwide electricity demand between 2007 and 2050. Take a look at how we travel by car — more ride-sharing services are gaining popularity in place of buying cars. With this increase, electric cars are becoming a more viable option, as they’re more sustainable and efficient. 2016 was a record year for electric vehicle sales; there were more than 750,000 sold worldwide, compared to 547,220 sold in 2015. As consumers evolve and shift their utilization habits, the industry must follow suit to meet these changing demands.
The good news is the electric industry has already taken advantage of some digital projects with the hope of increasing these initiatives in coming years. One example is a scenario that most of us know all too well: the power going out. It’s a frustrating feeling since often there’s little warning. It creates a system of reactiveness — the power goes out, consumers are forced to throw out perishable items from their refrigerator, and people call their power companies to alert them of the problem. It becomes very time consuming for both the consumers and the power companies. Workers then have to physically identify the problem and search along a particular grid to create a solution. However, with the introduction of sensors and connected technologies, there’s an opportunity to eliminate this process altogether.
For example, in August, the Outer Banks in North Carolina was victim to a prolonged power outage during peak tourism season. The cause of the outage was due to a bridge construction crew interfering with a transmission line. The outage left its residents, visitors and business owners without power for days and forced them to depart. This was not only invasive to their daily lives but it was also costly. If a connected sensor system was in place, this situation could have entirely been avoided, as sensors can observe the flow of electricity and quickly identify failures. Just look at The Tokyo Electricity Company — one of the biggest utilities companies in the world. They have already planned to deploy more than 27 million residential smart meters to their territory by 2020 to avoid issues such as these.
Last year during the Fourth of July holiday in Pennsylvania, Orange & Rockland Utilities looked to Tollgrade Communication for an advanced sensors system. The sensor system that was in place detected an issue along the electric grid in real-time and immediately alerted utility company workers exactly where the issue was located. Implementing a sensor system like this allows for problems to be detected before a consumer realizes there is an issue. This is one instance of how digital technology and in this case, sensors, allows for utilities companies be proactive versus reactive and uncover a problem before it turns into a bigger issue.
Similarly, innovation within the utilities industry has led some communities to explore distributed energy resources (DER) on a wider scale. These are smaller sources of power, yet they provide the right amount of electricity to meet consumer demand on a case-by-case basis. When the industry looks to explore options beyond the traditional electric grid, DER – like renewable energy and sophisticated storage – can transform a traditional power grid into a smarter, connected system. However, for DER to become more widely adopted, these technologies must be integrated with the current grid installed. Options like wind and solar are both solid alternatives, but often times these sources of energy aren’t consistent. By adopting a digitally-advanced storage system, utilities can still produce power during low-generation periods. In order to make this happen, connected electric devices including thermostats and lights need to be integrated with distributed energy. By integrating current systems with digital technology, opportunity is created for the electric industry.
The Power of Connectivity
There’s tremendous opportunity for utilities — an industry that will reach $50 billion by 2020. If the electric utilities industry continues to adopt a willingness and desire to integrate with digital technologies, we have the chance to put more efficient systems in place for the future. In order to make this a reality, we must align with current systems in place. Digital transformation has created new potential and possibility for the future of power consumption to make systems run more sustainably and simply. As consumers evolve and have an ever growing need for connectivity, the electric utilities industry is in a unique position to harness the power of connectivity.
About the author: Peter Maier is general manager of Energy and Natural Resources Industries at SAP. Maier is globally responsible for the SAP business with the Chemicals, Oil & Gas, Mill Products & Mining, and Utilities industries. In the role of the General Manager he oversees the development, solution management, sales and marketing, value engineering, partner management, services and support of these industries.