Ten predictions for 2020 for the global utility industry

Photo by Drew Beamer on Unsplash

The utilities industry — made up of electricity, gas, or water — is only halfway through its profound transformation journey. While navigating along the journey, utilities must maintain the right balance between reinventing and growing their core business and expanding into new business models and revenue streams.  To be successful, we recommend utilities focus on three main elements: relevance, risk, and resilience.

Relevance. Utilities must remain relevant in a world where energy use and digital consumers’ expectations are changing. This has to do with how utilities should evolve their core business as an industry (i.e., supporting distributed generation and storage, offering energy and flexibility as a service) and, individually, what role each company wants to carve out for itself (e.g., the carbon neutral mobility enabler, smart city enabler, all-virtual energy retailer). Utilities should ask themselves: How can I make my mission and strategy relevant for my customers, my employees, my shareholder, and the society as a whole?

Risk. Utilities must not only continue to excel in what they know best — that is, providing safe and reliable services to customers — but also minimize operational risk by ensuring physical security, cybersecurity, and data protection for customers. Information technology (IT) and operational technology (OT) integration is vital to achieve this. They must also embrace risk, which is all the more important. This means two things:

When it comes to innovation, they must learn to think big, scale fast, and fail fast (which is outside their comfort zone).

They must build as-a-service offerings in which they take the burden and risk of energy management off the shoulders of customers — not only large commercial and industrial (C&I) consumers but also residential customers — taking some risk associated with load defection in exchange for the role of trusted energy advisor.

Resilience. Utilities must go beyond technical resilience, which must be granted from a commodity delivery perspective, to also cover business resiliency. With all the changes happening and the transformations the industry itself is introducing, it is critical for companies be able to quickly readapt, become more agile, and espouse an easier way of working. It’s imperative to not get stuck in execution. Once again, IT-OT integration is fundamental to achieve resilience.

In this context, we have developed our top 10 predictions that make up the framework for IT and line-of-business (LOB) decision makers and influencers’ technology-related initiatives in the year ahead.

Prediction 1: While developing new business models, in 2020, utilities will put 80% of their execution efforts into modernizing the core, with emphasis on applying AI to customer, asset, or enterprise operations.

Prediction 2: By 2021, only 20% of electric utilities will have developed an end-to-end e-mobility ecosystem — from equipment to customer applications — unlocking business worth of up to 10% of their gross margins.

Prediction 3: By 2024, 70% of utilities operating in countries not yet at 100% electrification rate will invest in microgrids to achieve their clean energy goals and grant energy access to the entire population.

Prediction 4: By 2022, 70% of water companies will have deployed advanced analytics and AI on telemetry and operational systems data, reducing leakages, power and chemical usage by 10%, 15%, and 30%, respectively.

Prediction 5: By 2022, half of utilities and energy retailers will have reorganized their operations along the customer journey, leveraging agile to speed up processes and outcomes while increasing CSAT by 30%.

Prediction 6: By 2020, over 30% of utilities will still have segregated IT-OT governance models with less efficient operations and maintenance processes compared with utilities with highly integrated IT-OT models.

Prediction 7: By 2023, over 50% of utilities will use digital twins for T&D assets, reducing simulation model creation times for T&D systems by nearly 90% and providing significant savings in maintenance costs.

Prediction 8: By 2025, 70% of utility-owned solar and wind capacity will be managed through APM platforms, improving capacity factors by 5% in solar and 10% in wind.

Prediction 9: By 2023, 50% of electricity, gas, and water companies will have deployed AR, wearables, AI, or robots to augment field technicians’ capabilities, improving safety and reducing maintenance costs by 25%.

Prediction 10: In 2021, one out of five electric, gas, or water utilities will appoint a new CISO capable of holistically managing digital trust and reducing corporate risk.

In the years to come, it will be imperative for utilities to maintain the right balance between reinventing and growing their core business while expanding into new business models to get new revenue streams. This requires top management to balance investments accordingly, to have the courage to challenge the status quo, and to disrupt the old ways of working — opening companies to the ecosystem to ignite innovation and recruit scarce talent. It also requires a new company culture — less bureaucratic and more agile — with the goal of making companies relevant, resilient, and more flexible toward risk.

DISTRIBUTECH International offers education for utilities in all of these areas. The event takes place in San Antonio, Texas from January 28-30. Register today!

Lead Photo by Drew Beamer on Unsplash

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