Certain services may not be available to attest clients under the rules and regulations of public accounting. This is a significant departure from the slow-moving culture for which most utilities are known. Power and utility companies that seek to thrive as the future unfolds should start their digital journeys now or keep moving if they’ve already started. Develop innovation capabilities: It’s important to establish repeatable innovation capabilities to continuously supply the business with a robust pipeline of digital projects. Wastewater leaks are also problematic, as utilities can be fined for releasing contaminants into the environment, not to mention the safety hazards for people, property, and impact on the image of a … Conservative estimates supported by analysis of real-life cases suggest that digital optimization can boost profitability by 20 to 30 percent. Use minimal essential But at the same time, large enterprises such as today’s electric companies can take advantage of these opportunities to disrupt the industry status quo themselves and remain competitive and profitable. Fast forward to today and, while still laser-focused on reliability and affordability, the power and utilities sector appears to be morphing into an increasingly attractive, high-tech magnet for a multitude of new players. Digital Utility market size by 2025 45% of utilities' investment in analytics will be used in operations and maintenance of plant and network infrastructure The digital transformation is a centerpiece of many companies’ strategy. Many respondents also noted shifting customer behaviors, electric vehicles, and wind power in another nod to the new products and technologies that are helping to transform their sector. to receive more business insights, analysis, and perspectives from Deloitte Insights, Telecommunications, Media & Entertainment, US Energy Information Administration, Electricity Data Browser, Smarter together: Why artificial intelligence needs human-centered design, The Adaptable organization: Harnessing a networked enterprise of human resilience, /content/www/us/en/insights/focus/technology-and-the-future-of-work.html, Automated cognitive asset inspections—Drone-enabled, https://www.youtube.com/watch?v=-LOPGn7UFpk. She has more than 20 years of experience in research, analysis, marketing, communications, and program management in the power and utilities, oil and gas, and renewable energy sectors. Or they can be disruptors that open the door to new market entrants—such as technology platforms that aggregate output from distributed energy resource (DER) owners and bid it into wholesale electricity markets. Utilities are using advanced analytics to enhance service quality, lower costs, and preserve and deepen customer relationships. Eventually, the utilities could own the distributed facilities and sell optimized hours to facility operators and other customers. Its main goal was to keep the lights on without breaking the bank. Smart grids are more efficient and less capital intense, allowing for predictive maintenance and better asset health. Some are already available today but integrating them all on one platform, accessible through multiple channels, is a goal of many power companies. All power and utilities respondents were director level or higher, including CEOs (6 percent), CFOs (9 percent), COOs (10 percent), CDOs (7 percent), CIOs (5 percent), CTOs (7 percent), CSCOs (3 percent), business unit presidents (6 percent), executive VPs (9 percent), VPs (12 percent), executive directors (7 percent), and directors (19 percent). Of course, these opportunities are also opening doors for startups, entrepreneurs, and companies from adjacent industries who may compete with incumbents and disrupt the industry. Ideally, organizations should adopt an innovation process that enables them to rapidly design, test, and iterate each concept through to launch. Almost half (48 percent) cited changes in fuel prices and availability, most likely referring not just to an abundance of relatively low-priced natural gas, but more broadly to the rapid decline in the cost of solar and wind power, which increasingly undercut other resources for power generation (see figure 2). Renewables, distributed generation, and smart grids demand new capabilities and are triggering new business models and regulatory frameworks. tab. In other words, they need to become ‘Live enterprises’ and thereby continuously observe, evolve and learn. The key action areas for digital transformations are outlined in Exhibit 3. cookies, McKinsey_Website_Accessibility@mckinsey.com. As daunting as digital transformation programs might appear to individual companies, the potential opportunity is worth many times the attending cost and risk. The power and utilities sector is in an unprecedented period of disruption and transformation as a multitude of forces reshape it, and a wide array of new players appear to want in. Many digital companies are transforming organizationally, operationally, and behaviorally to support the digital business environment. After analyzing the customer journey, one company streamlined its product portfolio by 30 percent and established a customer-friendly digital channel for its core products. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Plants have higher heat rates and availability, are more demand-responsive, and profitable. The earlier or quicker utilities can prevent the waste of treated water, the higher the savings, not to mention the boost in customer confidence. Download this eBook on Digitalizing Power & Utilities industry … DTTL and each of its member firms are legally separate and independent entities. If you would like information about this content we will be happy to work with you. How digital do we need to become? They can plan confidently for transformative enhancements in productivity, reliability, safety, customer experience, compliance, and revenue management. This is the key finding of the IEA report “energy and digitalization” which was published in November 2017. We use cookies essential for this site to function well. Digital transformations must go forward in an environment of the existing IT architecture and processes. Digitalization has led to the transformation of the water sector, becoming essential in most processes , both at the level of water infrastructure operation as well as commercial management and related corporate processes: financial, HR or marketing, among others. As utilities pursue these opportunities, the effects are already being felt by retail customers. The postmortem review of user experience is not the best path to adoption success. Although digitalization of energy sector is progressing at a fast pace, energy and utilities companies are only approaching the Energy 4.0 and smart energy concepts, nevertheless paving the way to digital transformation of the entire industry. For more on the Future of Work, see Deloitte’s collection at /content/www/us/en/insights/focus/technology-and-the-future-of-work.html. Utilities are looking to a new generation of digital projects. The business horizons for utilities have traditionally been of long or medium duration, and for good reason. ​As disruptive forces transform the power and utilities sector, many companies are turning to digital technologies and a more innovative mindset to thrive in the new era. For utility companies to keep pace with the changing paradigm in power generation, distribution and storage, they need to become more responsive and agile just like living beings. They can use digitization to streamline operations and enhance customer services. The platform delivers a personalized, data-driven customer experience in real time, as well as services such as home energy management enabled by AI; transactions management; and other products and services in addition to electricity. By using customer data analytics to make process improvements, one northern European energy supplier was able to increase up-selling and cross-selling significantly, while simultaneously increasing usage of its digital channel. Digital technologies offer unlimited potential to transform the world’s water systems, helping utilities to become more resilient, innovative, efficient, empowering them to arrive at more economically viable strategies. For utilities, transformations can yield productivity improvements, revenue gains, better network reliability and safety, enhanced customer acquisition and retention, and entry into new business areas. Utilities can use information from smart meters to realize additional applications in this new business area, alone or with partners. Water utility asset management in the cloud Effortless compliance with government regulations; Project monitoring in real time; Accessibility of data to the public . Its main goal was to keep the lights on without breaking the bank. Today digital business is everywhere around us, and companies that master digital technologies are creating new markets and disrupting the existing ones. For those incumbents, a lot may be at stake, and even more may be possible. For the success of most digital transformations, therefore, two-speed IT architecture is needed. To activate this catalyst, a company should determine: How digital are we today? For utilities, the transition from time- or condition-based maintenance to risk-based maintenance strategies is inevitable. New market entrants, increasingly frequent cyberattacks, and natural disasters are also high on the list of impactful events and concerns. Deep Dive Digitalization beyond data aggregation: NYPA's progress The New York Power Authority set out to become the first fully-digital utility in the United States, and that goal is … The power and utilities industry is seeing unprecedented opportunities for innovation and growth from rapid technological advances and cost declines in areas such as solar power, battery storage, wind power, electric vehicles, smart buildings, two-way power flows, microgrids, and more. The design requirement is tightly linked to the movement to an iterative agile management and development philosophy. Top management would do well to afford these teams the greatest possible freedom when it comes to taking action, since experience shows that agile teams foster digital success. Here success depends on new capabilities, especially the rapid scaling of innovations. Utilities struggle with digitalization – especially in retail business Similar to the smart home market, utilities struggle to make use of digitalization in the customer segment as well. collaboration with select social media and trusted analytics partners Most investment in new energy technologies is coming from outside the utilities sector, including venture capital that is flowing into digital-native, new energy start-ups, particularly in electrification (including development of smart-charging and vehicle-to-grid systems), decentralization (including microgrids and renewable generations), and digitalization (including energy management, … In the aftermath of COVID-19, digital platforms have become the coveted assets for utilities in their business continuity and resiliency. This could mean restructuring the organization to increase collaboration and decentralize decision-making. Once they understand how customers interact with them from touchpoint to touchpoint, many utilities alter their management approach. It is only more recently that incumbents have woken up to the challenge and opportunity of digitalization. A podcast by our professionals who share a sneak peek at life inside Deloitte. Essential success factors are discussed in the following set of topics. From rising costs and changing load patterns, to newly viable technologies, regulatory change, and the growing call to decarbonize, disruptive forces are transforming the industry, driving it toward a new and different future. Digitalization and digital maturity can help power & utilities companies to answer the challenges of decarbonization and growing demand. Digitalization of Water means adopting a smarter approach to water management. has been removed, An Article Titled Digital innovation Applications for bill notification, presentment, and the agile approach 15, 2019 (! 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