Digital transformation unlocking value for the electricity sector

November 25, 2016

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.

To thrive amid these challenges, the utility of the future will be a fully digital system. This means that today’s utilities face a digital transformation of their organisation and business. This can begin with quick moves to improve efficiency and expand the customer base. As the transformation builds momentum, it should open deeper digital opportunities across a wide field.

Integrating digitisation in the electricity sector

By leveraging the building blocks of digitisation, such as service platforms, smart devices, the ‘cloud’ and advanced analytics, companies in the industry have the opportunity to increase the asset life cycle of infrastructure, optimise electricity network flows and innovate with customer-centric products. New pools of value could also be tapped ‘beyond the electron’ by harnessing big data across sectors.

Yet the maturity of digital initiatives in the industry is varied – from projects using advanced analytics to optimise assets and the widespread implementation of smart meters, to early moves by some utilities to manage and integrate distributed generation resources. Industry players agree on the need to make deeper customer engagement a priority and the pivotal role of digital technologies in making this a reality.

Energy technology providers are playing a key role in digitising the industry, releasing a suite of smart turbines and panels, and sensors for commercial infrastructure. They are also developing connectivity platforms for industrial, commercial and retail customers. Established players and startups alike are experimenting on the fringes of the industry. The burgeoning home energy market is a case in point, with more than 100 (non-utility) actors capturing value.

Digital technologies have tremendous potential to contribute to growth in the sector and help deliver exceptional shareholder, customer and environmental value.

Technology trends influencing the utilities industry.

Smart electronics and home products are more than just a convenience for consumers. These technological advancements have a big impact on the utility market. At their simplest, smart products make an impact on utilities because they create smart consumers. Consumers can now measure their utility usage. Consumers realise where their energy is coming from. Additionally, they have a better understanding of their utility bills, and they can make better choices regarding energy usage.

On a deeper level, the smart home and smart device industries provide Big Data for utility companies. This data may not have been available before, and it allows companies to adjust their offerings.

Digital Utilities Roadmap, the four following business models will likely emerge:

  • Renewable energy generation at near-zero (marginal) cost
  • Distribution that is both smart and efficient—appealing to savvy customers
  • Services that balance both supply and demand concerns
  • Omni-channel distribution, to digital “prosumers” (smart consumers who want the best for their homes and businesses)

Improving productivity and efficiency

Utilities can realise 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 analyse existing information ranges from local diagnostic tools to highly complex planning instruments. With such tools, utilities can optimise 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 digitise 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 digitisation 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 standardisation 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 digitised 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.

Digital technologies therefore offer the chance for individualized, tailored, accelerated and more effective strategy for businesses. If you want to know about the power of digital transformation, Anglo African team can help you,  do contact Naazreen on 2331636 or via e-mail at


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