Building
the digitally
powered utility
of the future
Is your business fit
for a digital world?
Imagine the future
What might the energy industry look
like in the future? Will it be just a more
efficient version of today’s model or will
radical disruption force energy players to
reinvent themselves? How can they create
a digitally powered utility to capture new
opportunities and drive productivity?
For today’s energy companies, that are facing sweeping industry
changes, standing still is not an option. Their traditional
industry model is being turned upside down. Electricity and gas
companies face a range of new and complex demands forcing
a need to rethink their traditional business models.
1
| Building the digitally powered utility of the future
A changing customer
Influenced by digital experiences in
other industries, today’s customer is
informed, connected and accustomed
to high-quality, personalized and ondemand service. As a result, customers
are demanding a radically new level of
experience from their energy providers.
The relatively large share of household
and business spend for these services
is also driving customers to take a more
active role in conserving and generating
energy. Customers are becoming energy
producers and managers, representing
a powerful shift that will prompt
today’s utilities to re-examine their role
if they are to avoid becoming mere
infrastructure providers. Meanwhile,
consumer behaviors are changing as the
millennial generation of digital natives
enters its prime spending years. Meeting
these new expectations in a digital world
will be critical if energy players are to
survive and thrive.
A collision of technologies
A combination of new digital technologies,
such as big data, mobility, the internet
of things (IoT), smart meters and digital
grids, are quickly transforming how
assets and operational processes can
be managed. In parallel, new energy
technologies are enabling commercial
adoption of distributed generation that
is disrupting the traditional energy value
chain. According to the Australian Energy
Council, Australia has the world’s highest
rate of household solar panel installation
at 15%1 and the deployment of battery
storage is expected to rapidly increase
as technology matures and costs come
down. These technologies are not only
completely changing how our energy
is generated and managed, but also
ushering in a range of new competitors
and altering how customers interact
with energy suppliers.
Growing stakeholder expectations
Utilities need to meet higher demands
from better informed stakeholders.
Regulatory scrutiny has increased,
consumer pressure over rising retail
prices is growing, environmental
demands are tougher and shareholders
expect better performance amid volatile
economic conditions. Energy players
must become increasingly commercially
minded if they are to grow new
sustainable revenue and fine-tune their
business performance.
Aging infrastructure and workforce
In the face of rising energy prices, today’s
utilities are being challenged to increase
performance and optimize capital
expenditure by safely extending the life
of older generation, transmission and
distribution assets. This requires a new
and more innovative approach to drive
asset performance — leveraging data and
insights to make real-time optimization
decisions. At the same time, the impact
of technology, particularly on customer
service and security, is disrupting the
skills needed in the workforce of today’s
energy company, just as many utility
workers near retirement age. In this new
digital world, knowledge needs to be
strategically managed and effectively
transferred to the next generation of
digitally savvy workers.
A new competitive market
Energy players of the future will need to
respond quickly, not only to disruptions
in technology, but also from aggressive
new market entrants. Industries such as
communications, broadcasting, health
care, transportation and hospitality
have already been turned upside down
by companies such as Netflix, Airbnb
and Uber who have taken the concept of
leveraging underutilized capacity and new
delivery platforms into the mass market.
These competitors are also using digital
channels to quickly lower costs to serve
and enable new product offerings. The
emergence of technologies that enable
peer-to-peer sharing and the production
and storage of distributed energy may
see this type of new model rolled out
even faster. New digital capabilities and
the ability to adapt fast will be critical
to successfully compete in this new
distributed market.
1. Renewable energy in Australia – how do we really compare? Australia Energy Council, 2016.
Building the digitally powered utility of the future |
2
Utilities must
adapt quickly
These factors have already changed the
landscape in which energy utilities operate
and grow new revenue. There is limited
time for the steady incremental evolution
that has defined the energy industry’s
regulated history. Market players will be
under increasing pressure to adapt quickly
by adopting new digital capabilities and a
more agile commercial mindset.
The utility of the future will need to be:
• Customer-centric: It’s time to move
the focus from managing assets and
connecting homes to truly enhancing
the energy customer experience
• Hyper-connected: Utilities will need
to build an integrated and secure
ecosystem that leverages digital
intelligence to integrate information
about its workforce, assets and
customers and enable “always on”
functionality
• Proactive and predictive: Utilities
must take on a new proactive approach
enabled by better use of digital
technologies and data insights driving
the optimum productivity of assets,
operations and customer service
•Adaptive: Innovation and agility
will be critical to the success of
the utility of the future. Businesses
must be looking ahead to predict
unknown disruption and seize
business opportunities. They will
need new commercial and innovation
skills to enable them to react nimbly,
make smarter decisions and even be
prepared to fail fast
•Automated: Utilities will need to adopt
a production line approach and operate
with simplicity, scale and speed to drive
productivity and reduce costs. They
will need to embrace new technologies
such as robotics, IoT and big data to
transform the way they deliver services
• Performance focused: Energy
players must align all capabilities and
processes around a clear business
purpose and prioritize investments with
a laser focus on end-to-end, quantified
business outcomes
The hyper-connected
utility of the future
A cornerstone of this change will be their
ability to leverage digital technology
which can help them to:
1. Redefine the customer relationship,
understand customers, compete at
the right cost and provide innovative
products and services that their
customers want
2. Build a more intelligent network
that improves operational efficiency,
reduces the need to fund additional
infrastructure and enables a better
customer experience
3. Engage and empower the workforce
to cultivate an entrepreneurial culture,
increase digital readiness and improve
safety and productivity
4.Ensure the sustainability of our
energy supply through enhanced
environmental performance and
enable an efficient and flexible
distributed energy value chain
5.Strengthen the security and privacy
of customer, network and employee
information to mitigate growing risks
in a digital world
Adopting these capabilities will require
today’s energy utilities to rethink and
re-imagine their ‘future ways of working’.
The EY Digital Australia: State of the Nation 2015-16 research
paints a powerful picture of how digital, within just a few years, has
made an impact on almost all aspects of Australians’ daily life:
38%
of Australians prefer to
make transactions over
the internet than by
phone or face-to-face
3
| Building the digitally powered utility of the future
nearly
6 in 10
smartphone users have
more than 10 apps on
their phone
third
More than a
of Australians have engaged
with companies on social
media
Digital change has started
Some global utilities are already
heeding the call from customers and
investing in a better digital experience.
EY’s Digital Readiness Index sees the
power and utility industry investing
in capabilities and in some markets
ranking above average in digital maturity.
While this improvement is encouraging,
it is clear that energy players have
more work to do in leveraging the
pervasiveness and the power of digital
technology if they are to compete and
adapt to change. An intelligent and
integrated approach to holistically
transform business practices will be
critical to doing so successfully. Too many
organizations on this journey have found
out the hard way that this is not about
developing a cool app or a new website.
Rather, true digital innovation must be
embedded with a utility’s overall strategy
and DNA if it is to be sustainable and add
genuine value both to customers and to
the organization.
Digital intelligence driven by integrated
data will be the key competitive
differentiator.
So, what’s the game
changer?
Utilities will need to master many of these
technologies and trends in parallel if they
are to achieve real breakthroughs. This
means developing new capabilities that
will allow them to operate and compete in
a digital world.
Digital integration
Many aspects of today’s digital life,
such as social media, the cloud and
mobility have been around for some
time. However, the game changer
is the collision of these established
digital technologies with a raft of newer
technologies, such as geographic
information systems (GIS), big data, IoT,
augmented reality, robotics and artificial
intelligence. This is driving the ability to
radically rethink complex challenges in
ways unimaginable in the past.
Let’s imagine a world where successful
energy companies are bold, nimble,
ambitious and customer-focused. Let’s
use digital to help make this vision a
reality and build the hyper-connected
utility of the future.
Changing demands on energy players
have created a compelling reason to
innovate. Utility companies are starting
to adopt innovations from adjacent
industries such as telecommunications,
aviation, oil and gas, and defence to
become more connected and intelligently
manage customers, assets and
services. They are also using digitally
enabled crowdsourcing of ideas to
accelerate innovation.
Digital is also changing consumers’
expectations of their energy providers:
“The danger is to think that
a new digital world is just
about the technology. The
real challenge is to identify
high-value areas to digitally
innovate and create
breakthrough experiences
for customers.”
Stuart Hartley, Asia-Pacific and Digital
Power & Utilities Advisory Leader, EY
1% of what could be
connected in the world
actually is …
50b
internet connected “things” by
2020 including sensors, RFID
chips, etc.3
17%
of consumers
say that energy companies
offer Australia’s least
engaging digital experience.2
More half
than
(55%) of those surveyed would
consider accessing real-time
energy usage information and
energy saving tips from their
energy supplier.2
Digital
disruption
52%
has demolished
of the
4
Fortune 500 since 2000.
2. EY Digital Australia Omnibus, EY, 2016.
3. The Internet of Things: How the Next Evolution of the Internet Is Changing Everything, Cisco, 2011.
4. Research Summary: Sneak Peeks From Constellation’s Futurist Framework And 2014 Outlook On Digital Disruption, Constellation Research website,
www.constellationr.com/blog-news/research-summary-sneak-peeks-constellations-futurist-framework-and-2014-outlook-digital, 18 February 2014.
Building the digitally powered utility of the future |
4
What will the digitally powered utility
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Redefine the
customer
relationship
Imagine if utilities could
deepen their engagement
with customers to better
meet their needs, lower
costs and dramatically
increase business
performance.
The customer is fast becoming more
energy conscious, connected and
demanding. The digitization of almost
all facets of everyday life has redefined
expectations around how people buy,
use and control services, including
energy. They expect fast, accurate
and personalized service wherever
and however they want and new
technologies enable these interactions.
The days of passively waiting for the
energy bill to arrive through the letterbox
are long over. In fact, more and more
consumers are becoming “prosumers” —
becoming an integrated participant in the
market — by generating their own energy
to save money and taking control of their
energy management.
Customers have made it clear that,
while they are increasingly cost-conscious
— and better informed of the best deals —
winning their business requires far more
than just offering the lowest price. In fact,
energy customers are willing to pay more
to get the right services delivered in the
right way, with the right advice about
usage, disruption and service.
Attracting and retaining these domestic
and business customers present a more
complex proposition. The implication
for utilities is that forming a better
relationship with customers and
understanding their “moments that
matter” must become a core underlying
capability. That relationship needs to
be built on applying understanding
and insight to generate value to the
customer so that the customer is
encouraged to engage — otherwise it is
just a transaction.
“The future is coming to
us at a lightning pace.
Digital will revolutionize
how customers interact
and participate in a
distributed energy market.”
Serge Colle, Global Power & Utilities
Advisory Leader, EY
And a key element of building that
relationship will be the ability to deliver a
high-quality, interactive and agile digital
experience. Almost half (45%)5 of those
customers we surveyed said that firms
that fail to offer quality digital experience
run the risk of losing them as a customer.
As more and more digitally savvy
competitors enter the energy market,
this is a clarion call to utilities.
“There’s a general theme about the ‘prosumer’ —
customers who are now absolutely in control of their
customer experience and have the channels to be
able to tell these larger corporations that they don’t
like what they’re doing, they don’t like their customer
service, they don’t like their values.
And that’s very powerful.”
45%
of customers said
firms that fail to offer a quality
digital experience run the risk
of losing them.5
Executive — Product Development and Delivery, Global Energy Retailer
5. Digital Australia: State of the Nation Report 2015-2016, EY, 2016.
Building the digitally powered utility of the future |
6
Digital can help deliver
a better customer
experience
Digital will unlock a two-way flow of
customer insights that, if harnessed,
can create a virtuous circle of value for
energy providers. Whilst it’s true that
our digitized world has created new
customer service challenges, it has also
opened opportunities to improve upon
those moments that matter to customers,
such as billing, moving and migrating
to new services. Building this customerfocused culture, with the help of the right
technology, will be essential if energy
providers are to give customers the
experience they expect:
But the real benefit in offering customers
a convenient and appealing experience
is its ability to help redefine the utilitycustomer relationship. Digital gives
energy providers the tools they need
to interact with customers in a different
way. This allows the relationship to
move beyond satisfaction to enhanced
engagement — a springboard to offering
differentiated products and services in
an increasingly competitive market. This
will be critical to ongoing success as the
industry faces less growth prospects
for traditional grid-supplied electricity
as energy efficiency improves and
customers find it increasingly feasible to
adopt new ”off-grid” distributed energy
solutions. Some areas where digital will
help transform the customer experience:
• Seamless integration of traditional and
digital channels that allow a customer
to engage when and how they want
• Support value-based pricing and
innovative energy aggregation
offerings
• Self-service opportunities that are
customized and low cost
• Seamlessly facilitate customer
service including moves, billing and
credit management
• Information that is easy to access,
understand and act on
• Provide information and create
dialogue about new personalized
energy offerings
• Personalized and targeted product
and service offers that are relevant
and appealing
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Value for
energy
providers
6. EY Digital Australia Omnibus, EY, 2016.
7
| Building the digitally powered utility of the future
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• Provide customer and usage insights
that can be used to sustain competitive
prices and drive down the cost to
manage assets and serve customers
• Support peer-to-peer trading
While some utilities have begun building
elements of a better digitally-enabled
customer experience, too many are
yet to execute digital in a strategic and
integrated way that differentiates them
from competitors.
“Utilities such as Enel in
Italy, Engie in France
and Centrica in the UK
are capturing value in
competitive markets by
aggressively expanding
new beyond-the-meter
services such as home
energy management
and connected homes.”
Matt Rennie, Global Power & Utilities
Transactions Advisory Services Leader, EY
Dri
ve
sl
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venue
d re
an
ei
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s e r co st
D ri ve s
r
we
an d lo
to
• Develop new beyond-the-meter
products and services that transform
the home
• Better predict and meet the urgent
needs of “at-risk” customers
lty
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s
Many of these options will also allow
utilities to gather and predict customer
behaviors that can help optimize business
costs by improving service levels,
asset planning and driving operational
efficiencies.
• Enable contestable metering
services and energy solutions that help
customers manage their demand
• Enable new breakthrough services such
as off-grid storage, solar generation
services and new electric vehicle
charging services
Almost half
(44%)
of respondents surveyed would consider
using their utility for trade services while
nearly one-third would consider buying
home internet services from their utility6
Build a more
intelligent network
Imagine if utilities could
intelligently manage
their network and assets
for improved reliability
and efficiency.
The increased emergence of advanced
digital technologies, such as smart
metering, digital grid solutions, network
monitoring and advanced battery
technology, is transforming energy
networks. The next generation of grid
and enabling technologies can now
facilitate the dynamic two-way flow
of energy. They can enable both energy
players and consumers to participate
in the energy market.
This intelligent network and the data it
produces can help utilities optimize the
way energy is delivered. For example:
1. Respond to outages more quickly.
Remote asset monitoring, telemetry,
smart sensors and predictive analytics
can track network conditions and
facilitate an outage response in real
time. Advanced network systems
can dynamically reroute electricity
(“self-healing”), while GIS tools can
help better direct field workers to fix
the problem
2.Reduce losses. Smart meters and
network sensors can detect theft
and leakage while advanced
processing software platforms can
make real-time remedial measures
to avoid technical losses
3. Enhance productivity. Real-time
information about the status of assets,
field work and customer requirements
can enable the accurate trade-off
between different network spend
decisions and lower infrastructure
and operating costs
4.Balance the grid. Digitally enabled
demand-side management solutions
such as reflective pricing tariffs,
energy storage and home energy
management solutions can help
balance the grid and reduce long
term infrastructure investment
67%
of customers
surveyed said they would
use online portals to report
energy leaks or outages7
Using drones to
inspect powerlines
5.Maintain physical assets. Artificial
intelligence, drones and machine
learning can monitor physical asset
conditions and optimize proactive
maintenance
6.Support the virtual grid.
Technologies such as the IoT and
blockchain will support interoperability
of network devices and peer-to-peer
(P2P) trading of energy. Digital
asset monitoring can help create
a comprehensive “cradle to grave”
maintenance history that better
manages risk and optimizes asset
management
Right across the globe, utilities
including Duke Energy, National Grid,
Southern Company and Transgrid
are testing the use of drones to
inspect transmission and distribution
lines for damage from storms and
normal wear and tear. They are
also identifying new opportunities
for this innovative solution to assist
with maintenance throughout
their networks.
In this way, a digitally enabled network
helps utilities both improve operational
efficiencies and enhance the customer
experience.
7. EY Digital Australia Omnibus, EY, 2016.
Building the digitally powered utility of the future |
8
Historically, utilities collected less
than 10 usage data points each year
per household.
A household smart meter can allow
utility companies to collect almost
3,500
data points8
Using meter data
to digitally map the
network
Maintaining up-to-date low voltage
(LV) network mapping for a large,
complex and constantly changing
network is challenging. With large
numbers of customers affected
by planned outages each year, the
level of precision required to avoid
breaches is very high and manually
checking and fixing LV mapping
errors is expensive. It’s thought
that many distributors overstate
the accuracy of their LV network
mapping and affected customer
lists, leading to false negatives
(breaches) and false positives
(low impact).
Getting these figures wrong risks a
utility’s reputation, incurs regulatory
fines, reduces customer satisfaction
and can cause serious safety issues
for customers on life support.
Some energy distributors are
approaching this challenge by using
data within Advanced Metering
Infrastructure (AMI) and network
control systems. By mapping the
wave patterns from transformers
to the wave signals from smart
meters, energy utilities can
match the “digital fingerprints”
of the transformer and ensure
the accuracy of their LV network
digital mapping. This approach also
reconciles the outage notification
list against AMI meter ‘Power On’
signals to retrospectively learn from
any mistakes should they arise.
To support this new technology,
some energy players have also
deployed new portals that keep
customers notified of planned
outages, lets them register
unplanned outages and ensures
that life support status is up to date.
Making the most of
digital grids
The digital transformation of the grid
comes at the same time as other new
game changing technologies such as
augmented reality, robotics and artificial
intelligence are reaching maturity.
Together, these innovations are creating
both challenges and opportunities
to improve grid operations and the
customer experience.
Perhaps the biggest challenge may
be determining how to best connect
elements of new network technology
to the legacy systems that support
them. Key questions to consider include:
• How can utilities use information from
the digital network to give customers
better information more quickly about
energy usage and outages?
• How can smart appliances (and
meters) be configured to make
adjustments on energy use in
context of other events impacting
the network?
• How will improved network data
provide better insight into future
asset management plans and avoid
or defer the need to fund additional
infrastructure?
• How can both digital and the network
be used to balance demand and supply
in the increasing multi-directional
flow model?
| Building the digitally powered utility of the future
Executive General Manager,
Service Delivery, Global energy transmission
and distribution player
Making the most of digital networks will
require utilities to commit to investing
in the digital grid. This means building
appropriate systems to store and process
additional data, investment in the
capabilities to analyze this data in order
to extract actionable insights and then
communicate relevant and helpful data
to customers via their preferred channel.
Digital grid technology to deliver US$18.8b in
cost savings worldwide by 2021 — mostly through
reduced energy use and avoided emission costs.9
8. EY Analysis.
9. Smart cities – on the faster track to success, Juniper Research, 2016.
9
“Digital is becoming a vital
weapon in managing
the effectiveness of
networks and operations.
The insight from smart
meter usage data is vital
as it allows us to more
proactively manage and
monitor the network,
which means fewer
outages for customers and
more targeted investment
in grid improvements.
We are at the start of this
critical innovation.”
The collision of technologies
is driving true innovation
How are utilities
embracing geospatial
analytics?
CenterPoint Energy, Inc. is a
domestic energy delivery company
headquartered in Houston, Texas.
The utility provides electric
transmission and distribution, natural
gas distribution and energy services
operations across six states serving
more than 5 million customers. They
have embraced geospatial analytics
to provide rich digital visualization
of complex data to help with realtime decision making. In addition
to having a highly visual overview
of the network assets, CenterPoint
Energy has used geospatial analytics
combined with mobile data solutions
to assist with critical activities such
as storm vulnerability assessments
— helping the utility rapidly respond
to severe weather events such as
tornados and prioritize resources
to address the impact on critical
infrastructure such as hospitals.10
What happens when
digital takes to the air?
A leading Australian energy
distributor with customers spread
over 1.7 million square kilometers
needed to address the condition
monitoring of 150,000km of
powerlines and almost 1 million
power poles. Inspection and
clearing of vegetation represented
a significant component of their
cost of supply. LiDAR imagery and
new techniques for detection of
powerlines and classification of tree
species were developed.
Advanced analytics were used to
extract management clearances
from the vast amount of data
captured and eliminated significant
labour costs associated with manual
inspection and processing.
New route optimization techniques
for aerial powerline inspection, based
upon biologically-inspired metaheuristics, delivered inspection routes
with 20% shorter flight times.11
10. “CenterPoint embraces GIS,” (video – runtime 1:25 minutes), Esri website, http://www.esri.com/industries/electric, accessed 7 October 2016.
11. Zhengrong Li, Rodney Walker, Ross Hayward, Luis Mejias, Advances in vegetation management for power line corridor monitoring using aerial remote sensing techniques,
www.eprints.qut.edu.au/39272/1/CARPI_2010.pdf, 2010.
Building the digitally powered utility of the future |
10
Engage and
empower the
workforce via digital
Imagine if a field worker
could be guided by an expert
in another region through
augmented reality technology.
Just as utilities tackle the challenges
of an aging workforce, they face an
urgent need to acquire digital-savvy
employees with the skills and capabilities
needed to build a digitally enabled,
customer-centric utility.
The battle to attract talent with the right
technological and customer skills, as
well as an entrepreneurial mindset, pits
utilities against almost every other global
industry, many of which are far more
advanced than they are when positioning
themselves as employers of choice.
Energy companies will need to drive a
culture of ambition, courage and agility
if they are to attract staff with the right
skills and then make the most of this
potential to help become a utility of the
future. They will also need to be mindful
of bringing current long-term employees
on the journey into this future as well,
ensuring that their experience and
knowledge is respected and transferred
to the next generation of workers.
In the future, digital tools and insights
will improve the productivity and job
satisfaction of a utility’s workforce
and, crucially, enhance the customer
experience. For example:
• Analytics can predict potential
customer issues and proactive options
for workforce responses
• Fieldworkers can be better directed
to where they are needed and access
real-time information to enable faster
response to problems
• Service delivery personnel can
use apps and other mobility tools to
directly engage with end consumers
and improve both the customer and
employee experience
• Building a “digital twin” of the network
that is continually refreshed with data
from LiDAR and other sources can
ensure that field crews are working
proactively and minimise disruptive
“false alarms”
• Smart wearables could ensure safer
working in high risk situations
“Innovative utilities across
Europe are embracing
digital to enhance grid
intelligence, optimize work
processes and improve
efficiency across the
value chain.”
Benoit Laclau, Global Power & Utilities Leader, EY
In many industries, digital technology
is already making field work safer, more
efficient and with less environmental
impact.
For some utilities, gaining innovative
skills quickly may be best achieved
through partnerships while others
may consider spinning off separate
“innovation hubs”. These may better give
employees the room to collaborate on
projects in entrepreneurial environments
that allow the freedom to innovate
quickly, fail quickly and learn fast.
• Real-time data and digital channels
can allow quicker resolution of
customer issues — fixed first time with
closed loop real-time feedback
“A company that embeds an ‘intrapreneurial’ spirit
is able to encourage innovation and therefore raise
productivity and efficiency. An added benefit is that
it curbs high levels of employee turnover and will
help in the long-term with attracting new talent.”
Nearly 60%
of the global utility workforce
is aged over 40 years12
Case study
A leading UK infrastructure operator
was under increasing pressure to
improve operational efficiency and
safety, realize financial savings and
increase the capacity available to
its customers on its network. The
company determined the need to
increase its enterprise-wide view
on network and asset information
leveraging visualization, analytics
and mobile.
EY worked with the client to
structure the major IT and business
transformation program, setting out
a clear vision and roadmap.
A strong focus was establishing
upfront and ongoing engagement
with the workforce. Through agile
and accelerated delivery, the
program has delivered a detailed
and multi-layered visualization of
the network, with decision support
tools realizing millions of pounds
in savings. The company now has
a mobile-enabled workforce. Using
iPads, regularly released apps and
augmented reality, engineers can
visualize infrastructure and diagnose
faults remotely, saving time, reducing
operations and maintenance costs
and improving safety.
But the success of these initiatives is
not due solely to the technology but
the fact that these digital solutions
were implemented with a focus on
the people using them, who played a
key role in the development of these
apps and tools.
Nancy Altobello, EY Global Vice Chair, Talent
12. EnergyCentral, energybiz website, www.energybiz.com/event/webcast/aging-utility-workforce-business-impacts-and-strategies.
11
| Building the digitally powered utility of the future
Rethinking ways to
sustain our energy
supply
Imagine if customers
could be empowered
and motivated to work in
partnership with utilities to
reduce carbon emissions?
As utilities face increasing pressure to
reduce emissions, digital technology
can help drive positive changes to energy
supply practices while encouraging
customers to do the same. Research
shows that customers are keen to be
more energy efficient – 57% of those we
surveyed were considering installing solar
panels on their home13 – but they don’t
want it to be expensive or difficult.
Used in the right way, digital can help
make energy efficiency an easy option
for consumers while also helping change
processes and operations to reduce their
environmental impact. For example:
• Smart cities can enable improved
monitoring of air conditions, traffic
flow and energy usage. Advanced
analytics can enable real-time
assessment of trade-offs for action
with respect to cost, risk, performance
and environmental impact.
• Smart appliances and meters can help
customers manage energy usage and
improve energy efficiency
• Advanced grid technology and
software can accelerate adoption of
renewable energy, including distributed
generation
• New business models around
ownership and charging are
lowering the barriers to electric
vehicle ownership
• Better use of technology can reduce
travel for field workers, improve
their interactions with customers
and limit the impact of field work
on the environment
• Advanced customer engagement can
lead to incentivizing and gamifying
good environmental practices
More than half
of those surveyed (55%) would consider
accessing real time energy usage
information and energy saving tips from
their energy supplier14
Could your freezer free
up the grid?
In the UK, National Grid is exploring
how an “internet of energy” could
see household appliances like fridges
and dishwashers balance the grid.
In the future, imagine if sensors
could turn on a dishwasher when
wind power is plentiful or turn off
a freezer for a few minutes to help
ease demand at peak times. National
Grid believes that this technology
could reduce electricity grid
fluctuations by 30-50%.15
“Tomorrow’s utility customer will be
better informed and better engaged,
active as part of the energy ecosystem
as a user and generator. As such we
need to build those relationships today
through customer experience and
innovative products and marketing.”
Chief Customer Officer, Global energy retailer
13. EY Digital Australia Omnibus, EY, 2016.
14. EY Digital Australia Omnibus, EY, 2016.
15. Smart energy revolution ‘could help to avoid UK blackouts, BBC News website, http://www.bbc.com/news/business-37220703, 31 August 2016.
Building the digitally powered utility of the future |
12
Strengthen
the security
and privacy of
customer, network
and employee
information
Imagine if utilities could
become trusted custodians
of customer and employee
information while securing
critical infrastructure.
The opportunities of advanced technology
and connection of devices via IP
addresses bring new challenges, including
the increased risk of cybersecurity
threats. The complexity and rapid
pace of change of digital technology is
exposing utilities to more sophisticated
and frequent cyber attacks that have
the potential to breach customer and
employee privacy, incur regulatory action
or even bring down generators and grids.
Cyber attacks are now a matter of
“when, not if” — the ability to prevent
an attack needs to be supplemented
with abilities to detect and respond to
the inevitable attacks.
The convergence of operational
technology (OT) and information
technology (IT) increases the already
significant cybersecurity risks facing the
utilities industry. As critical infrastructure
providers, all utilities are an attractive
target for hackers and cyber-extortion.
IT and OT convergence exposes control
systems to cyber threats. Energy utilities
must now recognize and manage these
threats as genuine and significant
business risks as well as the safety
of citizens.
possible indicators of compromise. This
allows an enhanced capability to respond
to a cyber attack in real time.
A hacktivist group
infiltrated a water
utility’s control system
and changed the levels
of chemicals being used
to treat water.16
Security and privacy concerns should not
be seen as a blocker to innovation, but as
a way to enable trust as a differentiator.
Embedding risk management within
innovation will ensure privacy and
security risks are considered “by design.”
In December 2015,
hackers brought down
Ukraine’s electricity
system, resulting in
outages to 225,000
customers.
OT and process control systems can no
longer be managed in a silo, separate to
corporate IT and risk management.
On the plus side, advanced digital
technologies are also enabling increased
security capability, including advanced
security monitoring and analytics. The
next generation of security operations
centers are using big data algorithms
to analyze patterns of traffic on both
corporate IT and OT networks to identify
55%
of customers
surveyed said their biggest
concern relating to data security
and their utility provider was
the privacy of personal details.17
“The IoT offers consumers
convenience, and provides
businesses with vast amounts
of data on customer habits.
However, this also presents a
greater threat.Security and
privacy must be a forethought
not an afterthought.”
Joshua Axelrod,
Americas Cyber Security Leader - Energy, EY
Watch our video
youtube.com/user/ErnstandYoungGlobal/videos
16.Hackers hijacking water treatment plant controls shows how easily civilians could be poisoned, International Business Times website,
http://www.ibtimes.co.uk/hackers-hijacked-chemical-controls-water-treatment-plant-utility-company-was-using-1988-server-1551266, 23 March 2016.
17.EY Digital Australia Omnibus, EY, 2016.
13
| Building the digitally powered utility of the future
Imagining a digital-driven energy market in 2020
What could the future look like for those utilities that act now
to embrace the opportunities of digital?
In the future, the IoT and digital technologies will improve operations and stakeholders’ satisfaction.
They can support a truly distributed energy world and create an unprecedented multi-way flow of information, for example:
Drones provide 3D imagery on network
assets to enable engineers to remotely
diagnose the cause and point of failure.
IoT sensors, such as
simple accelerometers,
produce large volumes
of data on the condition
of assets.
Artificial intelligence computers
employ machine learning algorithms
to predict and identify at-risk sites
and assets preventing outages
across the network.
A sharing economy built on a secure
and self-verifying blockchain platform,
allowing the network to be monetized
as consumers buy and sell energy
peer-to-peer.
A smart meter
will automatically
provide consumption
data in real time.
A fully integrated digital
solution automatically updates
stakeholders on supply
interruptions in real time.
Artificial intelligence
customer service proactively
engages and responds to
consumers, driving down
OpEx costs and improving
broad measure of customer
satisfaction (BMoCS).
Augmented reality
headsets provide instant
information and visuals
to improve operational
performance.
Cyber resilience built into all
aspects of the IT landscape
will protect against
threats to consumers and
the network.
Some disruptive technologies will become the norm by 2020.
The leading organizations are already exploring how these could be adopted in their business.
Building the digitally powered utility of the future |
14
How might my future energy world change?
er perspec
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o
tiv
st
u
e
C
er perspect
g
a
ive
an
M
• Brings together innovative products and
services beyond energy to holistically solve
customer lifestyle and business needs
• Controls all energy needs, their car (which
they can charge anywhere), wireless
internet, and telco services from a single
digital account
• Generates and stores their own energy
using solar panels and batteries and sells
excess to other customers or the grid
• Lets utilities control some appliances such
as air conditioners to access cheaper tariffs
• Controls their own home and appliances,
depending on complex rules. For example,
the customer can allow their washing
machine to search for the cheapest power
in the next 24 hours and turn on when
electricity is most affordable
• Sells energy stored in electric vehicle when
energy prices reach a particular threshold
• Controls their home’s lighting and
temperature using wearable sensor devices
• Switches retailers automatically and in realtime to find the cheapest source of energy
and services
• Educated about energy use to improve
behaviors and protect the environment
15
| Building the digitally powered utility of the future
• Proactively suggest innovative tailored
solutions which change experience and
lower costs
• Allows customers to manage their own
transactions using self-service tools
• Solves customer queries proactively and
communicates in a way customers choose
(through any channel)
• Predicts service disruptions ahead of time
and informs the customer around next
best action
• Initiates transactions with no input from
a physical person and routes these into
existing service delivery channels
• Knows intimately a customer’s history, financial
state and challenges and can respond in
personalized ways to individual needs
• Knows in real-time competitor behaviors
and can respond quickly with counter value
propositions, including special situations
like hardship
• Delivers on corporate responsibility
priorities and values important to
its customers
• Can see an integrated view of information
at the center around the status of
assets, work and customer needs – to
make proactive decisions to optimize
productivity
• Uses real-time geographic views of the
network to see all incidents currently
impacting its operation
• Lets the network self-adjust and self-heal
in response to conditions
• Reviews the history of network events
in real-time, to identify weak points and
deploy field trucks
• Predicts network failure in response
to projected weather events, and prepositions limited assets as quickly as
possible
• Communicates with customers about
planned or unplanned network events
using automatic digital channels
• Dynamically finds new sources of energy
to supplement the network in times of
high-load stress
• Actively monitors risks to both the
network and customers - proactively
deploys defences to protect against threats
• Manages a digitally connected grid that is
standardized and operates at the lowest
possible cost for customers
rker perspe
o
w
ct
dl
iv
e
i
e
F
e
rator persp
e
p
ec
to
tiv
e
ss
A
• Uses mobile devices to get real-time
information about a particular residence’s
customer, their prior complaints and other
important data
• Engages with the customer, or a selection
of multiple customers, in a geographic
region with a click of a button to access
information about works in that area
• Receives real-time updates from
a customer regarding enquiries or
complaints associated with current works
• Reviews schematic plans and photographs
of particular assets in the field before
commencing jobs with notes from previous
jobs attached
• Sees asset performance and maintenance
history, with intelligence-driven repair and
maintenance activities identified
• Monitors physical conditions to ensure
safer working
• Uses smart-glass enabled safety goggles
to view relevant information in the
peripheral whilst using both hands to
work. The operation can be recorded for
health and safety purposes and continuous
improvement
Building the digitally powered utility of the future |
16
Digital innovation isn’t just about the technology
Imagine a utility of the
future that is bold, agile
and customer-centric
Strategic “get rights” include:
For utilities to really make the most
of digital, they must first accept that
doing so goes far beyond IT. Instead,
digitally-enabled changes must be
part of a greater strategy that is
underpinned by a commitment to
shift from a traditionally risk-averse
mindset towards a more agile and
innovative culture. Doing so requires
utilities to move through several,
inter-connected steps.
The utility of the future will be:
• customer-centric
• hyper-connected
• proactive and predictive
• adaptive
• automated
• performance focused
It will be driven by a clear business
purpose.
Unless these foundations are laid,
any attempts to use technology to
build new customer relationships or
address other industry and external
trends will be superficial and more
likely to fail.
Imagine a utility that makes strategic
and intelligent use of digital to
become more efficient, more
customer-centric and more able to
adapt to the many trends reshaping
the energy world. It’s a vision that is
possible. Energy companies hold the
assets, network data and customer
insights they need to succeed in
a digital world but they need to
quickly rethink their ways of working
to successfully leverage these
inherent advantages. They can do
this by making significant changes
to business models and rethinking
investment priorities, utilities can
seize the promise of digital to
support their transition to the utility
of the future.
17
| Building the digitally powered utility of the future
Frame the strategy: Digital impacts everything — becoming a digital utility may
require a complete rethink of business models. Utilities will need to determine a
long-term purpose, based around current strengths; develop customer-focused
goals; and then take a value-based approach to determining how digital can enable
these goals.
Ready the base technologies: With so many technological advances and options,
it is critical that utilities understand what’s available and identify those that
map to their own business goals. They must master strategic digital capabilities
aligned to their strategy.
Mobilize digital ready people: Technology is only as powerful as the people
who use it. For utilities, shifting the organizational culture from a largely
engineering mindset to an entrepreneurial one is essential but not easy.
Utilities will need to be proficient in change management and developing new talent
with the right skillsets. They need to look to more digitally mature industries, such
as telecommunications and financial services, to extract leading practices.
Develop a digital innovation program: The rapid pace of change requires
utilities to keep up with digital innovation. Investing in continual innovation will
represent a shift in how utilities allocate resources — it’s time to shift towards to a
technology and information based business.
Focus on design: The success of digital within a utility will be determined by how
widely it is adopted. A focus on intuitive, user-friendly and appealing design when
implementing technology will encourage take up. This design must be aligned to
strategic priorities and virtually integrated.
Align to your customer: Utilities need to envision the digitally-enabled customer
journey and then build the infrastructure to support that. This design needs to
encapsulate outside-in thinking and focus on those “moments that matter”. This
means listening to what customers want before making any technology changes.
Don’t waste time and resources developing an app no-one will use.
Structure for success: Companies will need to set up different processes and
teams to deliver various digital capabilities. For example, separate innovation
clusters will need to be set up to manage customer service, grid analytics,
mobility and digital readiness and innovation. Utilities will also need to develop a
digital framework to govern the interactions of these various clusters.
Build necessary security capabilities: New technology = new risks. Utilities
will be vulnerable to cyber attacks unless necessary safeguards are put in place.
This starts with identifying all potential sources and types of threats to a utility’s
infrastructure, designing a cybersecurity strategy to address these and then
investing in the appropriate infrastructure.
Is your business strategy ready for digital?
There’s no point beginning any digital initiatives without first understanding the
capabilities of your business now. EY’s Digital Readiness Assessment can give you
a clear vision of your starting point and a roadmap to help you reach your goals,
using digital tools.
This online, interactive, assessment and benchmarking tool supports you to
benchmark digital maturity across seven focus areas:
• Strategy, innovation and growth
• Customer experience
• Supply chain and operations
• Technology
• Risk and cybersecurity
• Finance, legal and tax
• People and organization
Watch our video
youtu.be/EB_fvRH2BOw?list=PL975E56F131561576
Building the digitally powered utility of the future |
18
EY: building confidence in a digital world
In a digitally disrupted world, EY provides confidence
to our clients and stakeholders through every
digital element of business transformation (tax,
legal, people, regulatory, compliance, technology,
innovation, capital investment strategy). The higher
quality results help grow and protect their business
and build a better working world.
Through our professional insight and judgement,
firm grasp of technology and innovation, and
human intuition, EY helps the boardroom seize the
upside of disruption. As EY builds confidence in the
capital markets, so we will build confidence in the
digital world.
EY’s core digital offerings
19
Enterprise
strategy
Incubation and
innovation
Experience
transformation
We help our clients
re-think their
business strategy
and operating
model for a
digital age.
We identify an endto-end innovation
capability to
incubate new
ideas and
business models.
We embrace the world
of the customer, then
design and recommend
new experiences.
| Building the digitally powered utility of the future
Operations
Trust
We align, enhance
and automate
operations and
supply chain to
support delivery
on the promise
of digital.
We scan the digital
risk horizon and
help our clients
build agility
to respond to
digital risks.
EY contacts
For more information, please contact:
Stuart Hartley
Asia Pacific and Digital
Power & Utilities Advisory Leader
[email protected]
Benoit Laclau
Global Power & Utilities
Sector Leader
[email protected]
Metin Fidan
Germany, Switzerland and
Austria Power & Utilities
Advisory Leader
[email protected]
Stephen Lambert
UK&I Energy Segment Leader
[email protected]
Matt Rennie
Global Power & Utilities
Transaction Advisory Services Leader
[email protected]
Charles-Emmanuel Chosson
Global Power & Utilities
Assurance Leader
[email protected]
Serge Colle
Global and EMEIA Power & Utilities
Advisory Leader
[email protected]
Rocio Reyero Folgado
Global Power & Utilities
Tax Leader
[email protected]
Dana Hanson
Americas Power & Utilities
Advisory Leader
[email protected]
Building the digitally powered utility of the future |
20
EY | Assurance | Tax | Transactions | Advisory
About EY
EY is a global leader in assurance, tax, transaction and advisory
services. The insights and quality services we deliver help build trust
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