A digital revolution is coming to the power industry. Renewable energy, distributed power generation and smart grids are demanding new capabilities and triggering new business models and regulatory frameworks. Data collection and exchange is growing exponentially, creating valuable opportunities as well as digital threats. Competition for customers is moving to online channels. The Internet of Things promises new products and management options. Entrants in the digital economy are disrupting the industrial landscape, and governments and regulators are looking to encourage smarter measurement systems and greener standards for power generation and consumption.
To thrive in these challenges, the utility of the future will be fully digital systems. This means utilities today are facing digital transformation of their organizations and businesses. This can start with a quick move to improve efficiency and expand your customer base. As innovation builds momentum, it must open up deeper digital opportunities across a wide range of sectors.
Opportunities exist throughout the power industry value chain, from power generation to customer relationship management. As utilities pursue these opportunities, retail customers are already seeing the benefits. Many utilities have launched mobile applications for bill notification, presentation, and payment, as well as outage management. In the near future, mobile applications will extend to smart homes and connected buildings. Digital management of distributed energy resources, from individual sites to entire systems, has already begun. Many projects within the utility are digitally focused and use digital economy technologies such as agile development.
Digital opportunities to improve operations and increase flexibility span the value chain (Exhibit 2). Conservative estimates, backed by real-world analysis, show that digital optimization can increase profitability by 20-30%. Utilities can realize most of this potential through three means: smart meters and smart grids, digital productivity tools for employees, and automating back-office processes.