Classical utilities: At the front of the grid for generating value from digital

Posted on: April 29, 2019 by Franck Chevalley

Contrary to some common thinking, established utility companies are in pole position when it comes to taking full advantage of the digital opportunity. Digital offers them big opportunities that are simply out of reach of the newer, smaller players entering the market. But many tradition players are concerned that the road to digital may be a tough one to follow.

In this blog, I take a close look at why the digital journey may not be as daunting as it first seems before exploring why incumbents are ahead of their more agile counterparts when it comes to generating value from digital. Let’s start by taking a quick look at why digital is a must for established utilities.

Overwhelming drivers for change

Climate change. Renewables development. Tougher regulation. Resource and market uncertainty. Never before have utility companies faced such formidable forces for change. And we shouldn’t forget their customers. Whether B2B, B2G or B2C, customers are eagerly looking for new ways to interact with their energy provider as they strive to become more energy efficient and environmentally friendly.

If established utilities don’t develop new services that offer their customers more interaction, new market entrants will. And if classical service providers don’t adopt new business models, newer players could become intermediaries or even replace them entirely.

Change is hard. And not every utility is succeeding in managing change. Many analysts see classical utilities constrained by their huge and costly infrastructure. However, it is also a given fact that digital is an essential tool for enabling change – for helping utilities adapt their business models.

Digital offers utilities a great opportunity to transform the entire classical value chain, from generation to the end consumer, and develop new value all along their businesses. It also opens up new opportunities, with smart cities and mobility, for example. And the adoption of domestic solar panels in B2C is not only changing the network; it also gives distribution companies a unique opportunity to develop and offer novel services around these.

Change isn’t so hard

We’ve seen how change is both pushing and pulling traditional utilities. Digital is now a must for mere survival. The path to digital is not only enticing but, with expert support, also a lot more straightforward than many would anticipate.

You see, many utility companies are already quite advanced on their digital journey; they already have lots of digital systems connected and interacting with their business – and not just the smart meters that are game changers for the distribution part of the value chain.

In generation, all assets are connected to and interacting with digital systems. In transmission, to optimize and manage grid flexibility, TSOs are developing more and more advanced functions – on top of their classic SCADA systems. For distribution, digitization is more recent, but adoption is pretty high and rising fast. Last, but not least, retail has made huge investments in digital, far beyond the classical invoicing and CRM systems.

And there we have a digital dilemma. Those legacy systems and all the data they provide create both a threat and an opportunity. While the weight of this legacy and the number of customers using systems may pose a barrier to change, the immense volume of data available creates a very interesting platform for utilities to develop new services and more value for their customers, subject to regulation.

Data puts incumbents ahead on the grid

Established utilities’ huge data volumes mean they can develop new business models more quickly and more efficiently than agile new entrants, who will have to start from scratch.

Utilities that have spent many years aggregating data could also, for instance, use this data in machine learning or artificial intelligence to expand the life of their legacy assets. Transmission and distribution companies could use their large volumes of data to analyze their entire legacy estates in detail for predictive maintenance. Or they could use the insights gained for optimization in long-term investment planning. Taking into account the risk that regulation allows, they may decide to defer some investment if they see the assets are in good shape.

Incumbents can unleash even more value by connecting the various systems that have lived their lives completely separately. Digital twin, for instance, unleashes value by aggregating asset information from Enterprise Asset Management with information from operational systems, such as SCADA, and external data information from IoT systems. Connecting and sharing data between those systems brings immense value, especially in generation and grid – both transmission and distribution.

Digital offers utility companies a wealth of great opportunities. And many are already advancing on their digital journey. While there are digital dilemmas that have to be faced along the way, the value offered by digital is immense. Our latest Journey 2022 ‘Resolving Digital Dilemmas’ report, researched and written by the Atos Scientific Community, examines and explores E&U’s emerging Digital Dilemmas.

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About Franck Chevalley

Head of Global Market Energy & Utilities and CEO Atos Worldgrid
Franck joined Atos Worldgrid in 2012, to develop the smart utilities global business line.  He became CEO of Atos Worldgrid France in 2013 and of Atos Worldgrid global operations in 2017. Since June 2016, he has also been the Atos Global Client Executive for EDF.With a graduate degree from Paris Business School and a postgraduate degree in software engineering, Franck joined CORYS, a company specializing in training simulators for the energy and transport sectors. Here, he successfully managed international sales and marketing, then finance and administration, becoming CEO in 2001. In 2007, he became CEO of Gaz Electricité de Grenoble, a regional utilities company comprising of generation, grid and retail activity for electricity and gas, where he developed smart grid projects, such as Greenlys.

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