Challenging the Status Quo and Modernizing Utilities Through Applied Technology
Operating in a risk-averse, highly regulated industry can make it tough to innovate—but innovation is no longer optional.
Governments and global manufacturers are setting goals to achieve net-zero carbon and greenhouse gas emissions, utility customers are demanding easier ways to manage their own energy, and more severe weather events are ratcheting up the risk of widespread outages. Energy companies are stepping up their efforts to meet these challenges. I saw this first-hand during my five years leading a Fortune 250 Electric & Gas Utility’s innovation program for Vectorform. Even if energy companies can’t be the first to adopt shiny new technologies (the nuclear grid is no place to roll the dice!), they are embracing proven technologies to adapt, innovate, and move forward.
Innovating with our energy partners, affords us a front-row seat to the progress being made to improve reliability, transform the customer experience, and modernize energy operations, and we’re encouraged by what we’re seeing.
Meeting the reliability mandate
The far-reaching impact of a power outage explains why utility companies are so closely regulated. The sudden loss of electricity can disrupt communications and traffic flow; shut down stores, gas stations, and banks; cause food spoilage and water contamination; stop in-home medical equipment from functioning; expose people to severe weather impacts; and—as we saw in the Texas deep freeze of 2021—cause supply chain disruption and billions of dollars in economic losses.
Simply put, if the grid isn’t up, nothing else matters.
That’s why electric companies have invested more than $1 trillion into energy infrastructure over the past 12 years and spent $143 billion in 2021 alone to make the energy grid stronger, smarter, cleaner, and more secure. Forward-thinking utilities are doing more than patching up their old systems. For example, DTE Energy (DTE) has implemented smart pole-top sensors which alert them to circuit overloads that could trigger a shutdown. Utilities such as Public Service Electric & Gas Company (PSE&G) are incorporating microgrids into their distribution systems to create a more reliable energy supply1. These microgrids are often being designed to accommodate emerging energy sources such as microturbines, solar panels, and EV chargers. PPL Electric Utilities’ smart grid network – a combination of sensors and switches, coupled with advanced software systems – instantly reroutes power to contain any outages to the smallest footprint possible.
As pressure on the grid continues to mount, $27 billion in federal infrastructure funding will help, but it won’t be enough to drive industrywide innovation. It’s still up to utility companies to find ways to ensure they not only keep their customers’ power on, but also deliver the kind of digital experiences those customers have come to demand.
Delivering a better customer experience
While digital innovation might have been a “nice-to-have” in previous decades, it’s now a necessity. A 2021 McKinsey study2 found that utility customers’ expectations around digital interactions accelerated during the COVID-19 pandemic, with digital CX—especially self-service experiences—linked directly to overall satisfaction with a utility provider. It’s further confirmation that modern utility customers expect to be empowered with online options for saving money, conserving energy, and investing in renewables. And they want the process to be as personalized and seamless as re-ordering their favorite Thai food through Alexa or watching Ted Lasso on their iPhone.
Applied technology is helping utilities bring customers closer to these goals. With 40% of all U.S. power generation coming from clean sources, carbon-conscious consumers want on-demand access to those green sources. That requires new digital solutions—and new levels of transparency—from utilities. Smart meters are one way of enabling both. There are now more than 115 million smart meters installed in the U.S., providing a valuable source of real-time data.
DTE and Vectorform used smart meter data as the starting point for transforming the customer experience. The Energy Bridge solution autobinds to the smart meter quickly and securely, enabling direct communication in the mobile app. DTE customers are able to see the energy use and operating cost of any appliance in their home by measuring its real-time current with a simple wave of their phone or flip of their switch. To take CX a step further, within the app consumers also see personalized recommendations and weekly challenges that encourage them to complete energy-saving tasks. Gamifying the experience more than doubled user retention rates, and the app created a positive customer touchpoint with DTE—an often-rare event in the world of utilities. It also generated the highest aggregate savings for an energy efficiency program and was eventually spun off into a new joint venture, proving that great CX can also deliver great rewards for utility companies.
The operator experience at utilities is also overdue for transformation. Power plants are continuously collecting vast amounts of data, but most of it gets lost in legacy systems that don’t talk to each other. Based on the latest McKinsey research3, only 20-30 percent of stored data is actually used to inform decision making among power plant operators—and that’s a major roadblock to modernization.
Utilities are learning that before they can reap the efficiencies and cost savings of Industry 4.0, they need to get a better handle on their data. Some utilities are making the leap from old on-premise servers to the cloud—a transition Vectorform is enabling with clients by using Azure to transition their point solutions. This approach enables better continuity across platforms, faster diagnostics, more proactive troubleshooting, and quicker outage resolution, all of which help to keep costs down and CX high.
Machine learning and artificial intelligence can be used to drive even broader transformation of utility operations. When Mitsubishi Power America’s (MPA) CEO told Vectorform he wanted to manage his operations as easily as he manages his smart home, we knew we needed to invent something that pulled in best practices from other industries. MPA’s TOMONI solution is connected to the plant’s most important data, updated in real-time, and accessible via voice or touch commands.
The requested data is served up on clear, actionable dashboards that show operators how specific turbines are functioning, how valves are performing, which plant documents have applicable procedures, and more. The system also proactively identifies problem areas and notifies operators about any abnormal conditions, including aging equipment. Mitsubishi can now identify suboptimal turbines and proactively schedule maintenance or order new parts BEFORE they’re needed—a key advantage in today’s world of constant supply chain disruption.
External forces (and forward-thinking executives) will continue to push energy companies toward digital innovation. As the world pursues a more planet-friendly future, there are also opportunities to learn how other sectors are applying technology to unlock new value. For example, smart dosimeter badges that track radiation exposure in medical employees could provide real-time readings for nuclear plant workers. The virtual reality-based training used in manufacturing and aviation could be applied to immerse energy employees in high-risk environments without exposing them to real-life risks. Mobility companies designing electric vehicles could help utilities plan for customer expectations around charge times and energy sharing options. As they apply technology to their toughest challenges, energy firms will not only improve their own services, but can also be part of how the world rises to meet our shared climate challenge.
Are you ready for what’s next?
If you’re an energy company exploring digital transformation, it’s important to have a solid innovation plan in place to guide your investments and decisions. Ask yourself the following questions to get started:
- What does your culture of change around innovation look like? Are there tools and processes in place that let employees safely experiment with technology that aims to improve reliability, increase customer satisfaction, or improve operations?
- What does your customer experience look like? Do you have a customer-centric business model that leverages technology to give consumers the personalized experience they’ve come to expect?
- Are you prepared for the shifts in consumer expectations and transformation to a greener, more planet-friendly future?
Interested in learning more? Let’s start a conversation.