Making the best use of the mass amounts of data that players in the utilities sector constantly collect, is fundamental to the ability to remain relevant in today’s highly-competitive market. An initial process of digital and data transformation must take place within these companies to set them along the right transitional path, as they aim to harness the real power of analytics. Utilities have been comparatively slow to adopt Big Data tools and strategies, mostly due to their rather distinct role, and the often bespoke challenges that they face because of this.
Challenges facing the sectors
Utilities face challenges that are either exclusive to them, or are magnified in their market(s) to some extent. PWC point-out several key points which are currently testing the industry. Rising capital costs, the imposing of increasingly stringent regulations and compliance requirements, heightened competition, and the transitioning to renewable and ‘cleaner’ energy are all having an impact.
It has been widely suggested that data and the harnessing of analytic potential are the first and most important steps for companies to take in order to remain successful in the face of ever-fiercer competition. Digital-only providers are on the rise, adding to the 60+ energy suppliers already challenging the oligopoly of the ‘Big Six’ in the UK. Competing companies will need to deepen their understanding of existing and prospective customers to keep-up with the pace.
Capgemini detail the top challenges for utilities when they are implementing Big Data analytics tools and/or strategies. These are some of the reasons why the sector has been relatively cautious about adopting such things. High data storage and manipulation costs, data complexity, as well as issues around accessibility and privacy have held adoption back. Within the industry, there has also been a skills shortage and a lack of management support for implementation; although these problems have been increasingly overcome in recent times.
Giving the green light to improving insight
With improving awareness of the benefits which Big Data and analytics can have on companies working in the sector, pathways are being furrowed to allow for the transition. There are now around 14 million smart meters in UK homes, a roll-out which began in 2011. This marked the beginning of utilities harnessing customer and usage data in a more constructive way. The plan remains to meet the 50 million target before the 2020 deadline, as smart meters become increasingly popular with early issues affecting the up-take being nullified.
According to BizTech magazine, companies plan to invest heavily in data analytics and supporting technologies in the coming years, as they look to gain advantage over competitors and save themselves money in the process. Limitations to current industry data, practices and systems mean that a prompt transition is needed. Poor and mixed data quality and creaking infrastructure will no longer be an issue if the move towards a ‘modern grid’ is completed. For more information on the ‘modern grid’ read this article on energydigital.com.
Realising the benefits
Once infrastructure has been updated to allow Big Data analytics to revolutionise the industry and the ‘modern grid’ is in-place, companies will begin enjoying the benefits almost instantly. With data quality improved, more accessible, and able to provide insight during decision-making processes, advanced capabilities of analysis will prove crucial to success in the sector.
Much has been written about the benefits of Big Data, as companies and entire industries begin to realise its full potential. Capgemini’s publication puts forward indicative use cases from two main areas which will profit most from Big Data and analytics, marketing & customer relations and operations:
- Marketing and customer care
- Offer and services – tariff optimisation, energy management tools, smart home.
- Proactive marketing – customer management, enhanced brand & communications.
- Network and production management – customer base management, enhanced brand & communications.
- Support function optimisation – supply chain.
- Asset management – real-time asset monitoring, predictive maintenance.
- Demand forecast – energy consumption forecasting, trading optimisation.
- Customer relations optimisation – electricity load optimisation, capacity planning.
- Revenue assurance – fraud detection, network loss prevention.
According to the same article, the potential applications for an advanced set of analytics will most likely manifest themselves in a staggered fashion, as capabilities mature. For instance, the area of reporting and business intelligence will be followed by more advanced areas of predictive and real-time analyses as time goes on.
By investing in Big Data and their analytical faculties, companies operating in the utilities sector will stay ahead of the curve and begin to enjoy benefits in a range of different areas. These benefits will lead to improved revenues, higher customer satisfaction and retention rates, as well as more insightful decision-making.