2018 Digital Transformation Trends in the Power Sector

2018 Digital Transformation Trends in the Power Sector

By John Villali, Research Director, IDC Energy Insights

John Villali, Research Director, IDC Energy Insights

The power sector is currently undergoing a digital transformation (DX) that will continue to play out for the next several years. This transformation is enhancing the way energy is produced, delivered, and consumed. Utilities are creating new business models, products, and services seamlessly in an effort to blend both digital and physical experiences related to their business and customers while improving operational efficiencies and organizational performance. This article will highlight some of the core areas where DX initiatives are happening in the power and utility space.

Although slower than many industries, the power and utility sector are making digital advancements in many segments of their business. In the power sector the traditional commodity has always been the physical delivery of power (i.e. Megawatts). As the utility sector digitally transforms the commodity that is becoming most valuable to the industry is data. The collection, analytics and use of operational and customer data is being harnessed to make better informed and quicker business decisions, which is driving many of the DX trends in the utility industry. Below are some of the core areas within the power and utility sector which are creating positive changes in the way utilities operate as the industry takes on digital transformation.

Distributed Energy Resource Management: The continued global growth of distributed energy resources (DERs) such as solar power, energy storage, microgrids, and wind generation is changing the power supply make up for many utilities, globally. Solar in particular, being the fasting growing source of renewable energy being installed is changing the ways utilities approach balancing their generating supply and electric demand on the power grid. The intermittent nature of distributed energy resources and renewable energy has increased the need for greater visibility, predictability and control of these assets. The high penetration of DERs and renewables has increased the collection of data and analytics on items such as electric demand, temperatures, sunlight, wind speed and generation output. These types of real-time data sets can impact various groups within an organization which include but are not limited to, operations, finance, trading, and risk management. DERs and renewables have created the requisite to share time sensitive data in order to make strategic decisions on how to manage the sporadic output DERs in a reliable manner in order to efficiently balance electric supply and demand on the power grid.

"Although slower than many industries, the power and utility sector are making digital advancements in many segments of their business"

Asset Performance Management: In a time where energy commodity prices continue to stay low and generating profit margins are tight, investment in asset performance management (APM) will be a key area for power companies and utilities to invest. Traditional fossil fuel generators are struggling to compete in this new competitive world with plenty of clean, low cost, distributed and renewable generation coming on line in combination with decreased electric demand and less price volatility in wholesale power markets. Generation owners and operators investing in APM are striving for greater reliability, operational efficiencies and increased output and revenues from their generating units. APM investments in generation will be necessary for many mid-merit fossil fuel units in order for them to remain relevant in many regional power markets giving such generation the ability to compete. Operating older large fossil fuel generation units at the highest efficiencies possible is a must in many competitive wholesale power market environments. Asset performance management not only improves a generator’s performance, it is also a strategy to minimize an asset’s down time which can create sizable savings on maintenance, labor and equipment cost.

A strategic digital approach to APM can optimize a generator or a fleet of generators performance by applying in-depth analytics on real-time and historical operational data which can provide actionable intelligence to organizations on new and improved ways to profitably operate their generation.

Mobile Workforce Management: The ability to react to real-time operations data remotely is becoming more critical to workers in the field as it relates to asset management. For the assets themselves, machine learning from dispersed sets operational data being collected and analyzed allow for effective predictive, preventative and prescriptive maintenance of utility assets such as generators, substations and transmission lines. This in turn will lead to minimizing down time of a utility’s assets. The use of edge computing and cloud capabilities enable access to data in the field via mobile devices which can help maintenance crews and linemen perform their jobs in a more efficient manner leading to quicker restoration times on outages. In the wake of the several devastating hurricane events in the Atlantic last fall, efficient field work management is under the microscope for many utilities. Effective Mobile Work Force Management provides utility workers tools that can improve safety, reliability, create cost savings and improve efficiencies while working out in the field. Investing to improve and advance Mobile Workforce Management is on the list of high priorities for utilities.

Customer Engagement: Utilities traditionally have not been on the bleeding edge when it comes to customer engagement. Most utilities historically have considered their customers as “rate payers” and had little or no significant interaction with their customers. The DX taking place in the utilities space is changing that. Utilities are finding that their customers are demanding that they need to keep up with other industries in regards to digital capabilities as it relates to customer satisfaction. The utility industry’s new approach to customer engagement has put an emphasis and importance on customer centric data such as energy use, billing data, outage information, and rate options which is changing the way that customers and utilities interact with one another. Digital capabilities can help utilities gain insights through customer data leading to a better customer experiences and satisfaction. Utilities are investing replacing or upgrading their Customer Information Systems (CISs) which is resulting in improved call center operations. Leveraging real-time customer data can improve ticket volume, customer interaction, service order management, and overall customer satisfaction. Quality CISs can provide utility call centers with predictable customer issues; decreased call volumes, proactive customer outreach, and a streamlined process that can help achieve customer resolutions more effectively.

Power and Utility Sector Digital Transformation Trends in 2018 and Beyond

The power and utility sector is digitally transforming albeit slower than many industries. That said, utilities are looking closer at other verticals as they evaluate best practices and lessons learned as they digitally transform. The examples above are in core areas where digital transformation is taking place and making a positive impact on the way the power industry and utilities are improving their business by analyzing and acting on operational and customer data in order to become more reliable, efficient and profitable while improving customer experiences. DX in utilities has the opportunity to improve and integrate operational technologies and informational technologies across the entire electricity value chain. From generation, energy trading, transmission and distribution systems down to energy management and customer engagement, utilities are expected to continue to change and enhance their digital capabilities across all functional areas of their business. As DX continues its momentum in the power and utility sector expectations are that utilities will continue to adapt to—or drive—positive disruptive changes among their customers and within their markets by leveraging digital competencies to innovate new business models, products, and services which will improve operational and organizational performance while increasing customer satisfaction.

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