Digital transformation amidst Covid-19: How the energy and utilities companies are adapting to disruption
Jon Sasserath, Head of our Digital Transformation Practice, discusses the role new technologies have played in the energy and utilities sector and how digital transformation is playing a part in their response to the Covid-19 pandemic
The story so far
The UK utilities sector has been in a period of transformation for some time as a result of a range of new expectations, demands and innovations. These disruptions have stemmed primarily from the emergence of new technology and from increasing environmental concerns. Across the sector, utilities companies are being faced with increased pressure from the government and regulators to contribute to environmental targets, an example being the roll-out of smart meters for energy or the focus on leak reduction for water. But the demand is really being driven by the customers. As more renewable sources and new technologies to support sustainable energy production and water supply are being developed, customers are changing their expectations of utility providers.
There has been a recent surge in the number of new energy providers entering the market with offers of lower prices, better customer service and, increasingly, provision of renewable or zero carbon emissions energy. This new focus on sustainability is also being addressed with smarter technology to control and manage energy and water supply. This trend for utility management tools has emerged as a result of the movement towards connected homes but, it is anticipated to really take off as a result of the move to electric vehicles.
Utility and energy businesses have been responding to these competitive and operational pressures with new operating models and, critically, have concentrated investment in digital technologies. There have been substantial programmes across the sector as companies have focused their efforts on improving customer service with the implementation of analytics tools, self-service systems and chatbots. Some utilities and energy suppliers have advanced further with investment in the use of AI and machine learning to streamline processes. On the operational side, digital technologies have been a key strategy in improving the monitoring of networks. Real time diagnostic systems are being rolled-out to predict points of failure and to manage fluctuating patterns of demand.
The newly arisen Covid-19 challenges
This year has seen new disruption in the form of the Covid-19 pandemic. It has tragically impacted the lives of so many people and has had a huge impact on businesses large and small. We all rely on the providers of critical national infrastructure at such a time, and our utility providers are key to all of us.
Over the past few months, the UK utilities have experienced significant challenges as a result of the pandemic and the subsequent lockdown measures. Above all, companies have reacted quickly to ensure the safety of the workforce. This has meant a reduction in capacity, which, coupled with the implementation of safe working protocols has had an impact on face-to-face activity, such as installations, meter readings and maintenance activity, as well as in back-office operations.
However, a diminished workforce has come at a time of huge change requiring more support than ever. The changes in consumer behaviours as we have shifted to an exclusively home-bound lifestyle has caused unusual patterns of network usage and unpredictable spikes in demand. The move to remote working has also meant B2B energy and commercial water providers are facing great challenges for their revenue and profit. The industry is used to responding to the unexpected, but the scale, scope and unpredictable duration of the current crisis is truly exceptional and having a decreased capacity to take this on is significant for the sector.
The response of the energy and utilities sector has been both prompt and effective. This was aided by the pre-established crisis response plans of the national infrastructure which have ensured resilience of supply. The sector has a strong track record of performing well in emergency situations and coupled with a fantastic culture of public service, it is unsurprising how well they have managed the situation.
Collaboration has been a key element of the response. Although a highly competitive market, there has been a joint-approach to overcoming the short-falls, such as sharing staff and equipment to cover for depleted workforces. The regulatory bodies are also taking a cooperative and pragmatic approach with their industry partners for the implementation of regulatory process. The sector is taking the position that service provision, particularly to the vulnerable, is the highest priority.
Furthering this, the industry recognises the challenges their customers may face in payment. Companies are reacting to this need and enacting new policies to support the financial situation of their customers. There have been new schemes to assist with bill deferrals, and there has been a suspension of debt collection and supply disconnections.
Digital is playing its part in this response in its ability to make processes more hands-off. The roll-out of smart meters across the country and the provision of self-service systems are reducing the requirement for physical meter reads and enabling domestic customers to make informed decisions around their new usage patterns. This change in demand is being managed by advanced telematics and analytics processes which are being used to flex and adapt the generation, supply and distribution networks.
In terms of the workforce, the move to remote working has been successful in maintaining the necessary customer support without the need for fully manned offices and contact centres. And actually, the sector is seeing back-office automation enabling faster resolution of problems and more effective response to customers questions and challenges. This move has also been critical in deploying field maintenance where necessary with real time prioritisation which manages the depleted capacity yet ensures the safety of the people involved and the completion of essential repairs work.
Our utilities industry is in a process of transformation to respond to market conditions and environmental demands. The current crisis is reinforcing the imperative for this transformation and accelerating the pace and digital nature of the strategies being executed. Those organisations that are more digitally enabled will be heads above others in responding to the current circumstances and will be best placed to thrive as we emerge from the crisis into what may be a very different world.
Navigating this disruption is not straightforward and businesses need to have a robust plan in place to ensure business continuity. Energy and utilities companies can call on the expertise of an independent consultant to support them at this time. An external transformation or strategy expert is able to advise companies in the immediate as well as navigating the situation longer term as we move out of the current lockdown and into a new normal.
For more information please contact Jon Sasserath.