Digital transformation is reshaping the energy industry

December 14, 2017

The digital revolution is coming to the power industry. Renewables, distributed generation, and smart grids demand new capabilities and are triggering new business models and regulatory frameworks. Data collection and exchange are growing exponentially, creating digital threats but also valuable opportunities. The competition for customers is shifting to the online channel; the Internet of Things promises new product and management options. Entrants from the digital economy are disrupting the industrial landscape, while governments and regulatory bodies seek to encourage smarter measuring systems and greener standards for generation and consumption.

Improving productivity and efficiency

Digital opportunities to improve operations and increase flexibility are available throughout the value chain (Exhibit 2). Conservative estimates supported by analysis of real-life cases suggest that digital optimization can boost profitability by 20 to 30 percent. Utilities can realize most of this potential by three means: smart meters and the smart grid, digital productivity tools for employees, and automation of back-office processes.

Smart meters and the smart grid. These innovations form the foundation of the digital utility, supplying the massive volumes of data that are its lifeblood. For utilities invested in the right analytics capabilities, they enable data-based analyses, planning, and diagnostics. Smart grids are more efficient and less capital intense, allowing for predictive maintenance and better asset health. Smart meters are a requirement for the advanced credit and collections algorithms that can identify which customers will need help to avoid default. The array of means used to better analyze existing information ranges from local diagnostic tools to highly complex planning instruments. With such tools, utilities can optimize staffing levels at power plants and manage the intricate energy terrain of renewable and conventional sources, trading options, and patterns in demand.

Productivity tools for employees. Mobile enablement for employees is quickly becoming a powerful productivity-boosting capability. Since smartphones provide the platform, grid companies can now digitize the core process of work management to greater effect. This means better asset management, engineering, planning, scheduling and dispatch, as well as execution and job closeout. Since the 1990s, this process has been managed through enterprise-resource-planning systems, which have generally been unwieldy—easy neither to use nor to extend to scale. With the latest digital and mobile technology, utilities can more easily incorporate all work into a single view with universal access. In Germany, one energy supplier has already successfully completed a digitization program and now applies a full tool kit to improve the productivity of its maintenance personnel. GPS and traffic information have been added to conventional route planning and management tools, which increased productive hours by 15 percent. All employees carry a diagnostic tool giving access to reference samples, root-cause analysis, and the range of available replacement parts. They can use the tool to make direct contact with experts if more complex error patterns are detected. Engineers will eventually be provided with information about potential maintenance contracts for customers.

Automation of back-office processes. Administrative processes in customer management and billing (including changes in provider, address, or product) are proliferating. Distributed generation and multiple channels are resulting in more convoluted and error-prone processes. The rewards of process standardization and automation are therefore growing. Process-efficiency opportunities are also evident in the significant variation among retail providers in cost per customer, the cost of resolving errors, and billing inquiries. In one case, a company digitized a single core process and cut process costs by 20 percent in the first year while also improving customer satisfaction. The key drivers were higher-quality data and effective process automation.


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