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Utilities Move Toward Greater Digitalization

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Many industries are moving toward greater digitalization in their operations. The power sector is no exception. According to a Power Engineering International article, “The power sector is particularly ripe for realising value from rapid digital transformation.” Some of the benefits of digitalization for utilities include cost savings, performance and safety benefits, regulatory compliance, and innovative customer-focused products and services. Utilities face some special challenges in implementing digitalization, but many have found ways to overcome them.

What Is Digitalization?

Digitalization involves integrating technology into all areas of operation. Specific technologies include:

Artificial intelligence (AI). Automates operations from low-level maintenance to forecasting the amount of power that will be needed on a given day.

Machine learning. A subset of AI that makes it possible for machines to learn independently without human intervention. Could be used to effectively run power plants amid ever-changing conditions.

Blockchain. Used to execute contracts, and manage DER power sharing.

Cloud technology. Enables utilities to use existing systems without having to update them, often at a lower cost.

Internet of Things (IoT). Includes devices that monitor the condition of equipment, drones that gather information from disaster areas, and smart grid devices that continuously record data.

These technologies can be used to improve and streamline any number of functions, including equipment maintenance, DER management, smart city deployment, and customer care. Digitalization may help to fill some of the gaps left by the dwindling utility workforce. It can also play a role in the development of new utility business models.

Barriers to Implementation

Utilities that want to adopt digitalization may face challenges when trying to integrate new technology with legacy systems. According to a Strategy + Business article, “digital transformations can be daunting and risky undertakings in this industry. Unlike digital natives such as Uber, Google, and Facebook, utilities have legacy IT systems and must work with a large, aging asset infrastructure base while meeting challenging regulatory commitments.” In addition, utilities must adopt new workflow models to ensure a productive blend between the functionality of technology and the humans that operate it.  

Moving Toward Success

Technology modernization can be costly, so utilities should consider completing it in stages, rather than all at once, based on priorities. Utilities may need to use a recursive process to figure out which offerings to maintain, and which to let go depending on which technologies will work best to enhance or replace existing systems. Another consideration is ease of maintenance for each new system.

Workforce management is equally important, and leaders must be aware of the impact of change on their workforce. The Power Engineering International article states, “Organisational engagement is fundamental to achieving coherent meaningful digital transformation no matter how many agile teams you throw at it.” As with conversion to the new technology itself, workflow transformation can be done in stages.

The Strategy + Business article notes that utilities have increasingly established a Chief Digital Officer position, or enhanced the Chief Information Officer position to include digital implementation. It states, “Today, most utility executives believe that digitization is a core component of their strategic agenda, whether their current focus is performance improvement, customer enablement, cost reduction, or disruptive growth.”

The process of digitalizing a utility isn’t an easy or straightforward one, and each company must approach it with a keen understanding of market conditions, integration with high-level goals, careful planning, and collaboration between departments.

How has your utility adopted digitalization? If so, to what degree? What challenges have you faced, and how have you overcome them? Please share in the comments.

Karen Marcus's picture

Thank Karen for the Post!

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