Powering the Digital Transformation in the Utility Sector

Power and utility companies that seek to thrive should accelerate their digital journey now that the industry has become a high-tech magnet for a multitude of new players..

Power and utility companies that seek to thrive should accelerate their digital journey now that the industry has become a high-tech magnet for a multitude of new players.

Relying on automation and digitization is nothing new for utilities. In fact, utilities have always gathered operational data to analyze load and customer use aimed at improving reliability and pinpointing where capital investments are necessary.

And yet new technologies, regulatory change and a growing call to decarbonize are transforming the industry, and opportunities for further digitization abound. In fact, 95% of power sector companies called digital transformation a top strategic goal. 

This new digital modernization is transforming the way power and utilities companies operate—how they create value, serve customers, manage costs, optimize processes, and capture new market opportunities.

Forces Behind Utility’s Digital Revolution

The utility sector is no stranger to disruptive influences. Over the last 10 years this has included industry deregulation, rapid demand growth and environmental challenges that brought about positive changes for utility companies and their customers.

Also driving the digital revolution for utilities:

  • Developments in artificial intelligence (AI), distributed ledgers (blockchain) and advanced control algorithms
  • Aging transmission and distribution infrastructure need updates like smart metering to process the massive influx of new data
  • Customer demand for digital engagement (smart phone, IoT) requires significant technology upgrades
  • Renewables and the need for utilities to create more efficient processes internally as our world population grows and utility demands increase

Digital Disruption Is Transforming the Utilities Sector: Challenges Abound 

Ransomware attacks like the recent one against the Colonial Pipeline have put a renewed focus on digitization of utilities as the surge in attacks drew new government attention with President Biden’s executive order aimed at strengthening cyber defenses.

As digitization picks up, cybersecurity remains both a challenge and a focus with at least 38 states introducing bills or resolutions in 2020 to address cyberthreats directed at governments and private businesses. The aftermath of a natural disaster might offer a predictor of the clear and present dangers of a system-wide attack and failure. In 2019, Pacific Gas & Electric Co. elected to turn off the power grid for 1.5 million people in Northern California during a brutal wildfire season to prevent aging electrical equipment from causing more fires during a significant windstorm. Although this was a natural disaster, it gave a small glimpse of what a cyberattack shutting down a utility might do. Nearly 250 hospitals affected were forced to rely on backup generators on short notice and make changes to their operations during the blackout.

Fixing our aging utility infrastructure is another challenge to digitization. According to the American Society of Civil Engineers (ASCE), America’s infrastructure earned a C- this year. That’s because there’s a water main break every two minutes, enough to fill 7,000 swimming pools every day. The ASCE also says all three components of the electric grid (generation, transmission and distribution) are experiencing an investment gap, which is projected to grow to a cumulative $197 billion by 2029. The massive Infrastructure Investment and Jobs Act passed by the U.S. Congress and signed into law by President Biden in November 2021 is a first step toward modernizing our infrastructure. 

The changing needs of our global workforce is yet another roadblock to utility digitization. New digital capabilities mean new worker demands, which will require an influx of computer and tech-savvy individuals to the skilled workforce. 

New and projected renewable energy demands, for example, will create an additional 5.5 million transition-related renewable energy jobs as soon as 2023. Companies will need to seek out third party contractors to meet the volume of demand and the variety of skills to ensure successful operation of their infrastructure. For example, drone operators are in high demand as the technology is employed to conduct more surveying and monitoring of infrastructure. 

Having a robust training program, a contractor management platform and incorporating a “digital mindset” into your organization’s culture will be crucial for success. 

While the COVID-19 pandemic disrupted businesses across the world, one silver lining would be the acceleration of digital adoption across the power utilities sector. As we embark on a new decade, utilities have the opportunity to leverage the power of digital technologies to not only reduce costs, increase efficiency, improve the customer experience but also to pave the path for the inclusion of more renewables, electrical vehicles and newer forms of energy.

For more expert insights on the utilities sector, read our eBook on “3 Challenges Plague the Utilities Sector.”

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