Organizations in every industry, when faced with challenges, leverage them to innovate and differentiate; and those who do not capitalize on them, get trapped and tip off the profitability curve.
The utilities industry is no different. Today, the utilities industry faces a number of challenges due to numerous disruptive changes and uncertainties primarily triggered by the economic, regulatory, technological and customer-centric factors. The question that poses utilities now is whether they can turn these challenges into opportunities instead of terming them as hurdles against growth.
Let us explore some of the challenges and understand how utilities can leverage them:
- Rising grid parity of renewable energy is increasing the popularity of decentralized power generation. Renewable energy, especially solar power has achieved grid parity in a number of countries. More number of countries will witness this parity by 2020. Further, new financing options are making solar power accessible to both lower and middle-income people. Use of technology such as the net metering, is further promoting the use of solar energy by consumers. In California, schools and public agencies with solar power will benefit an estimated $2.5 billion in direct savings through net-metered solar systems.
- In the UK, last year, about 750,000 homes suffered a power outage for several days due to a severe storm that affected the area. This earned much disgrace for the power companies and shoved them into the limelight of the regulators. These companies may end up paying an estimated amount of ₤4 million in compensation to those affected.
- Over the next 18 years, many utilities may have to spend a total of US$100 billion a year, for the upkeep or replacement of power plants, meet new regulatory requirements and implement new technology to keep up with the changing times. This is a huge cost when compared to the ROI with respect to time.
Can these above examples be understood as challenges or can they be considered as opportunities to differentiate? Why do utilities find it difficult to outpace these challenges or rather turn them into opportunities?
Most of these utilities suffer from delayed decision making that often proves to be expensive. For instance, spending on maintenance or upgrading the power plants after a breakdown or frequent outages may be a costlier affair than if scheduled maintenances are performed. For this, the key decision makers should have a real time insight into what is happening or might happen to facilitate a timely intervention or action.
Using the right technology to gather real-time data from internal and external data sources and applying advanced analytics to derive real-time meaningful insights can help decision makers to shift to a more predictive mode of functioning than a reactive one. This will help these utilities to reap benefits in the long-term. They will be able to improve product quality, boost customer satisfaction levels, run targeted campaigns to promote environment-friendly usage, predict outages or threats and ensure timely submission of compliance information.