How digital do we need to become? It is only more recently that incumbents have woken up to the challenge and opportunity of digitalization. Phase 1: In this phase, ideas and concepts are generated, inspired by external events, customer feedback, innovation pilot programs, or other sources. Please use UP and DOWN arrow keys to review autocomplete results. In addition, digital twins of the company’s installed asset base, which duplicate physical asset specifications and operating parameters, apply real-time data to help predict and identify failures. This is a significant departure from the slow-moving culture for which most utilities are known. McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. But some bright spots are on the horizon that can help chart the path forward. View in article, In additional, unpublished survey results from “Deloitte Resources 2018 Study– Energy Management: Businesses drive and households strive,” one quarter to one half of residential respondents said they would be willing to purchase additional services from their electricity provider, including internet service (49%), energy efficiency services (47%), cable television service (34%), and telephone service (25%). One form of digitalization is a smart utility that can provide experience and quality at different levels, he said. Smart meters and the smart grid. Share. Experience in other industries has already revealed that the possible gains from digitization are greater than early project planners had believed. Use minimal essential Everywhere you turn, leaders are talking about the digitalization of utilities and the new, agile, and innovative capabilities that such advances bring to power providers. This is the key finding of the IEA report “energy and digitalization” which was published in November 2017. The DSO gained 50 percent efficiency and saved EUR 9.44 million over 10 years in capital expenditures.11. Adopting these “agile” business practices means transforming the organization to deliver digitally by shifting the mentality away from linear, stage-gate activities, toward a more flexible, collaborative, self-organizing, and fast-changing environment. Since 2014, utilities have been increasing their investment in digital infrastructure. For utility companies to keep pace with the changing paradigm in power generation, distribution and storage, they need to become more responsive and agile just like living beings. Many utilities already offer solutions for networked energy management that include the remote control of buildings. The mounting pressure to transform also offers the rare opportunity to rebuild strategies, structures, and processes from the ground up. This is a model designed to triage and socialize ideas and proposed changes across an organization. Before long, mobile applications will extend into smart homes and connected buildings. To begin, they must develop a digital transformation strategy that can be successfully embedded and … Learn about How Hard is Digitalization to Implement? The power and utilities industry is seeing unprecedented opportunities for innovation and growth from rapid technological advances and cost declines in areas such as solar power, battery storage, wind power, electric vehicles, smart buildings, two-way power flows, microgrids, and more. But to thrive in this bright future, power and utility companies will need to develop new capabilities and transform their working environment. The power and utilities sector is in an unprecedented period of disruption and transformation as a multitude of forces reshape it, and a wide array of new players appear to want in. Digitalization is strategically crucial for the sector as a whole, as a digitalized industry is more likely to deliver lower costs, optimized production, greater flexibility, and increased energy efficiency. Many digital companies are transforming organizationally, operationally, and behaviorally to support the digital business environment. It’s easy to get stuck in this phase of continually implementing individual digital projects, rather than integrating digital capabilities enterprisewide. While solid and dependable, the sector wasn’t generally considered cutting-edge, innovative, or exciting by any stretch of the word. During his 25 year career as an oil and gas leader, he occupied senior roles in both  major oil, gas, and chemicals companies and consulting/advisory firms. Certain services may not be available to attest clients under the rules and regulations of public accounting. Sources: US Bureau of Economic Analysis, National Income and Product Accounts, Table 1.1.6. Construct minimum viable changes (MVCs) that will help infuse the needed digital DNA into your organizational DNA. The power and utilities sector was traditionally where many parents or grandparents parked their savings as they got older, attracted by low volatility and stable returns. Digitalization of Utilities. A key challenge is to adopt this approach not only within a specially trained “digital” team, but across the entire enterprise. The digitalization of infrastructure data allowed them to have maps and inspection data available to anyone in the organization at any time, and accessible with mobile apps. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the "Deloitte" name in the United States and their respective affiliates. Overlaying these trends is the advance of digital technologies, sometimes at a breath-taking pace. Since smartphones provide the platform, grid companies can now digitize the core process of work management to greater effect. View in article, Ibid. collaboration with select social media and trusted analytics partners The utility customer of the future has a personal relationship with their utility, which provides a dedicated “smart home platform” that they can access through their phone, laptop, tablet, or smart home speaker. This report will discuss the multitude of forces disrupting and driving change in the power and utilities sector, explore the exciting future the industry is moving toward, and help companies plot a digital path to thrive in that future. On the left side of the continuum are organizations that are still dabbling with traditional technologies in the “exploring digital” phase. Once they understand how customers interact with them from touchpoint to touchpoint, many utilities alter their management approach. Entrants from the digital economy are disrupting the industrial landscape, while governments and regulatory bodies seek to encourage smarter measuring systems and greener standards for generation and consumption. Digitization is changing industry boundaries and dynamics. Process-efficiency opportunities are also evident in the significant variation among retail providers in cost per customer, the cost of resolving errors, and billing inquiries. Please email us at: Our series on developing corporate and business-unit strategies in a digitally disrupted world. The responses discussed here are from the 81 respondents in the power and utilities sector. Something went wrong. Digitalization. The future power company has real-time situational awareness of its generation, transmission, and distribution assets. Digitalization and innovation drive the emergence of a digital utilities business. Utilities can realize most of this potential by three means: smart meters and the smart grid, digital productivity tools for employees, and automation of back-office processes. Home INSIGHTS Digitalization of utilities operations. Today digital business is everywhere around us, and companies that master digital technologies are creating new markets and disrupting the existing ones. Productivity tools for employees. However, energy demands are expected to grow between now and 2040. Utilities can use information from smart meters to realize additional applications in this new business area, alone or with partners. Start-ups such as Thermondo in Germany, a provider of highly customized heating solutions, have based their business model on improving various customer interaction points and so are altering business dynamics in the industry. The agile test-and-learn approach, on the other hand, requires an IT environment that can flexibly respond to changes in portals, mobile apps, and other aspects of the end-user interface. Digitalization is when you use digital technologies to change a business model and provide new revenue and value-producing opportunities. Real Gross Domestic Product, Chained Dollars and US Energy Information Administration, Electricity Data Browser, accessed March 18, 2019. Use cookies essential for this site to function well requirement is tightly linked to the online channel ; internet. Approach to change a business model and provide new revenue and value-producing opportunities iPhone, iPad, exciting. Foundries should have leaders who understand how to best prioritize and allocate to. And exchange are growing exponentially, creating digital threats but also valuable opportunities download this eBook on power... 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