Utilities sector must cater to the ‘prosumer’

Martin Richards, of OpenText, examines the key factors driving the UK power sector’s quest to improve operational excellence – and how companies can do so by going beyond data analytics.

Until recently, the sole purpose of the power industry was to generate and distribute a safe and consistent supply of energy, while maintaining good capacity planning, ensuring minimal outages and keeping customers satisfied.

This is no longer the case, with factors such as climate change, ageing infrastructure and a raft of new legislation and regulations changing everything. And now that the utility market has become smarter – smart grids, smart cities, and smarter customers – power companies must also become smarter if they are to succeed in today’s digital era.

A smart approach to energy generation and distribution begins by driving excellence through all parts of a power utility company’s operations – from how well it manages assets, to how well it responds to rapidly changing customer demands and market conditions.

Operational excellence can pay dividends in terms of cost savings, improved efficiency and enhanced customer experience. But success depends on a company’s ability to unlock the value of the information it holds, which starts with overcoming four major challenges.

The evolving energy landscape

Renewables are the fastest growing source of energy in global power markets, and the costs are falling too. Energy is becoming more distributed and the “consumer” is giving way to the “prosumer”. At the same time, energy consumption patterns are declining, particularly in developed countries.

It’s vital that power utility companies react to these changes, prioritising the customer experience and improving this through the use of smart girds and smart meters. These smart technologies provide a granular view into individual consumption patterns, giving utility companies the information they need to empower their customers to better manage energy usage and cut costs where possible. The objective is not to generate more revenue from each customer. Instead, by encouraging customers to take greater control over their consumption, power utility companies can improve customer satisfaction and minimise the risk of losing customers to a competitor.

Catering to the ‘prosumer’

Despite having become largely consumer-focused, the utility sector has a poor record for customer satisfaction. It consistently ranks second worst, for example, in an annual survey of customer experience, and was recently found to offer the least satisfactory digital experience of all sectors.

Furthermore, a recent report has indicated that 26 per cent of UK consumers do not have a sense of loyalty to their utility provider – with almost a quarter (22 per cent) of customers switching provider in the past year alone. Given the competitive landscape within which the industry now operates, the need to properly and positively engage with customers has never been greater.

Offering a superior service through operational excellence, in which customers benefit from individual, tailored pricing and minimal outages, is essential. It’s worth noting, however, on the whole customers don’t expect 100 percent reliability from power utility providers, but they do expect proactive and ongoing communication.

Customers expect the same customised personal communication and self-service functionality they get elsewhere. The type of communication, delivered to consumers through their preferred digital channels and devices, is now the level of service demanded by many consumers but, as in the retail industry, delivering it depends on being able to facilitate consistent, omni-channel engagement.

Coping with an ageing infrastructure

In 2019, power utilities are required to increase operational efficiency while minimising production downtime and service outages, and ensuring compliance with industry regulations and safety guidelines.

At the same time, they must contend with ageing energy generation and distribution infrastructures. This is rapidly becoming one of the biggest challenges facing the utilities sector, as it has a huge impact on the ability to provide a reliable, cost effective and future proof provision of power for end users.

Power companies should look to digitalise their assets to create digital workflows. This will not only provide greater visibility into operations, enabling them to effectively manage risk, but will also help to control costs and drive performance. Reducing planned downtime, for example, and making more accurate “repair or replace” decisions, based on real-time asset monitoring and predictive maintenance strategies, will help to maximise asset availability.

Balancing supply and demand

The ultimate goal of operational excellence is to gain a perfect balance between supply and demand – producing just the right amount of electricity when it is needed. The combination of a bi-directional flow of information between the supplier and consumer, and the ability to apply complex load forecasting analytics and greater control of the generation facilities, makes this a realistic objective.

The solution is more than analytics

The key to achieving operational excellence lies in a company’s ability to glean and use insights from its data to optimise and innovate. Indeed, our research conducted with Utility Week discovered that achieving operational excellence was the principal driver behind the majority of investments in data analytics in the utility sector.

However, in delivering an operational excellence programme that meets the challenges posed by market conditions, data analytics alone is not enough. The ideal solution would be an enterprise information management platform – one that combines data analytics with content services, customer experience management, and B2B integration. Only then can utilities release the value of their information and engage effectively with customers, suppliers and partners to transform all parts of their operations.