Energy sector has been undergoing massive transformation over the last decade. Several megatrends including changing customer expectations, rapidly evolving regulations and energy mix, new competitors, and pressure to reduce emissions are threatening the existence of traditional business models. Utilities are increasingly facing resiliency challenges driven by climate change and energy transitions. This is resulting in additional investment in transmission assets which is required to integrate renewable assets and balance production and demand resources. Further, Grid modernization because of extreme weather changes and energy transition is becoming more dominant as utilities look to improve reliability and resiliency of their infrastructure. As a result, we are seeing two types of responses. On one side, we have energy companies which are undertaking large digital transformation exercises with focus on protecting the core and entering the unchartered areas. On the other side, some companies are taking small steps and undertaking pilots across the value chain. While we have successful use cases in both the approaches, it is critical to identify your north star before you dive into it.

Workforce Transformation with Focus on Digital Upskilling

One of the major challenges faced by all energy companies is to keep pace with hiring, retention, and upskilling the employee base to remain relevant. As per several recent surveys, almost 90 percent of companies mention they have a very few workers with the right skills and that is challenging their ability to adopt digital technologies, with many lacking a plan on how to proceed. Further, energy companies are now competing with technology companies to hire the same digital talent, thus, facing significant challenges to attract and hire new employees with the right digital and analytical skills. In 2022, we will witness companies leveraging technology to scale capabilities, tap into diverse talent pools, and collaborate to address workforce management challenges. Use cases of using AI and ML to hire talent, measure workforce productivity and satisfaction will gain prominence. Similarly, we will see a heightened focus on transforming employee value proposition to attract talent. As per a PwC survey, 14 percent of surveyed millennials said they would not want to work in the oil and gas sector due to its image, making it less popular than both the defense sector and the finance sector.

Emerging Tech use Cases to Boom

Historically, US utilities depended on decentralized systems for grid management which led to inaccurate power grid failure predictions, customer dissatisfaction, and commercial losses. The 2021 Great Texas Power Crisis is a perfect example where outages impacted 4.5 million homes and businesses at its peak. The economic loss because of the power failure is estimated to be around $295 billion. In 2021, we saw several companies leverage 3D printing for equipment manufacturing, drones for aerial inspection, digital twins at plants, intelligence energy storage, predictive maintenance at grid level, and customer analytics at the retail level. This has resulted in efficiency improvements, accurate failure predictions, and improved customer experience. In 2022, use cases for emerging tech will increase at an exponential pace across the energy value chain. Energy companies are likely to focus on partnerships with start-up accelerators, and technology vendors to drive growth. Watch out for tech-driven deals and partnerships in the energy sector.

Role of Data Governance & Architecture to Grow Exponentially

With technologies such as cloud computing, AI, Blockchain now being deployed across the grid, huge amount of data will be generated. As more and more connected devices come on to the grid, such as electric vehicles, smart homes, the volume of data will see an exponential growth behind the meter, and only players who have the right tools to capture, analyze, and monetize it will emerge as winners.  In 2022, utilities have started prioritizing investments in data analytics capabilities, and partnerships with vendors. The Energy and utility analytics market size is expected to grow at a CAGR of 17.4 percent between 2022-27 to reach $5.6 billion by 2027.

Digital Tools & Analytics to Tailor Enhanced Customer Experience

Customer experience is one of the key focus areas for energy companies and utilities alike. Even regulators are looking at customer satisfaction metrics to determine the future of energy companies in a process known as performance-based regulation. During peak summers there is an influx in customer calls for critical issues such as outages and restoration estimates. Utilities rely heavily on manual agents during these periods which require ramping up costly live agents to handle higher call volumes. However, slowly, utilities are using technologies and automation to accurately identify power outages and restoration times. It is becoming critical to optimize customer touchpoints around key products and services via channel optimization, focus on CRM, and leveraging front-end technologies. We are likely to see investments in AR/VR, metaverse and several other customer experience tools and platforms in 2022.

Cybersecurity

According to NextGov.com between 2018 and 2020, 10 percent of ransomware attacks that occurred on the US industrial and related entities targeted electric utilities. Further, over the last two years, ransomware attacks on utilities have increased by 50 percent. Utilities across the globe are now using advanced analytics across the ERP systems to mitigate cyber-attack threats. Focus is growing on independent audits ­ we are seeing several energy companies engaging in third-party tests and audits to identify access points vulnerable to external threats. For all the energy and utility companies who are just starting on its digital transformation journey, it will be critical to embed technology as the DNA rather than scattered pilots at the functional level. Measuring continuous RoI of digital investments, integration with existing systems, and strong change management programs will decide the success.