Utility Week

22 | 9TH - 15TH FEBRUARY 2018 | UTILITY WEEK Operations & Assets Market view A ll businesses have had to embrace technology and new ways of work- ing in the past quarter century. For instance, insurers have had to embrace arti- ficial intelligence (AI) to deal with the rise in big data, automotive manufacturers rely on intelligent automation to meet consumer autonomous driving demand, and utility providers have had to adapt to the rising desire for digital offerings and renewable energy through embracing the fourth indus- trial revolution. For more than 100 years utilities have had a simple task: to pump out power to businesses and individual households in a secure, reliable and relatively affordable way. However, in this hyper-connected and more demanding society, this reliable busi- ness model doesn't cut it anymore and this perception is now outdated. Customers now expect more from an on-demand economy and utilities are no exception. How energy is consumed has become a notable focal point for all businesses. There are numerous awards available to compa- nies that showcase their renewable energy sources. In fact, according to the European Commission, almost 17 per cent of energy consumption across the European Union now comes from renewable sources, and by 2020 about 72 per cent of European con- sumers will have a smart meter for electric- ity. The traditional approach of building power systems at scale has given way to the need to create flexible business structures that can accommodate renewable energy and a surge in consumer demand for new digital offerings. Utilities are no longer able to focus on just providing energy. They must develop renew- able, smart offerings where the consumer feels they are not supporting the rise of global warming. Therefore, utilities have had to explore new revenue streams, the likes of solar power, battery storage, electric vehicle charging, and micro-grids are all creating new areas of business and new concepts of value between utilities, their customers and partners. Technology is the fundamental platform all businesses in the fourth industrial revo- lution build from, and utilities are no differ- ent. Utilities need to re-imagine themselves to both discover and create this new value. Thanks to technology, every customer is now unique, and they have been quick to adopt digital tools to take ownership of their energy consumption and spending. This places new demands on utilities, and those wanting to succeed will have to embrace some of the risk and integrate this new value into their operations and infrastructure as soon as they can. This is the emerging energy value ecosys- tem, and utilities that want to succeed in it must find ways to adopt new roles, respon- sibilities and revenue streams by working more closely with their customers, partners and even competitors. Data is society's new oil. If businesses can embrace the data they gather, they imme- diately gain a competitive advantage and develop their understanding of customer expectations. As newly empowered consum- ers demand change, a joint study from TCS and IDC Energy Insights has found that two- thirds of European utilities are already using machine-generated data to meet the chal- lenges of this new landscape, with tools like the Internet of Things (IoT) and AI reliant on open and high-quality data to power them. The need to be nimble The industry should not fear these changes. On the contrary, they are setting up the utili- ties sector to be one of the biggest drivers of global growth – a driving force of Business 4.0. According to the study, European utili- ties are making headway in developing fresh revenue streams – these new products and services will soon make up more than 10 per cent of revenues for 36 per cent of European utilities. Overwhelmingly, more than three- quarters (79 per cent) of C-level executives in the industry think distributed generation will be tied to these new revenue streams in some way, and that low-carbon produc- ers will be the most important players in the utilities industry by 2020. Although there are obvious signs of utilities' potential, they must ensure they become more receptive to change and are able to build new ecosystems and adapt what they have in place in response to the ever-changing business landscape. It is good to see the research showing that the indus- try is starting to make this shi now. In fact, half of European utilities are already creat- ing joint ventures to explore new ways of working, while 60 per cent are collaborating through strategic partnerships. Almost half (47 per cent) are even running new busi- nesses within the perimeters of their organi- sation, while just over a quarter (26 per cent) are creating dedicated strategic units for new ventures. The importance of the cloud for the utili- ties industry should not be underestimated. With this digital shi occurring at lightning speed, utilities need to be sure their digi- tal technology infrastructures can bear the load of these changes. There's an awareness across the industry that moving systems and soware to the cloud is vital to evolve busi- ness models, with the study showing the UK and Germany leading the way over Nordic and southern European markets. However, in a world of changing consumer expecta- tions where each customer is more valu- able than ever before, more than a quarter of respondents said they will invest more in social media than any other area of tech- nology over the coming years. This wave of social investment will finally make social networks fully-fledged customer engage- ment channels that also generate consumer intelligence. The industry should be excited by all this. The new emerging energy value ecosystem, driven by Business 4.0, will push them closer to their customers and will see them evolve into real-time digital enterprises. Utilities need to seek strong technology partners and embrace the flexibility of cloud platforms as well as understand what data insights can bring. The combination of these elements is indicating huge changes in the industry. Sudheer Warrier, vice president and global head utilities, TCS The new energy ecosystem A new energy value ecosystem is emerging, driven by renewables, distributed generation and Business 4.0. Sudheer Warrier explains how incumbent utilities can best surf the wave.

• Cover