The Energy Utilities Series: The Challenges Facing Energy Utilities
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Over the next few years, energy utilities will face significant challenges and disruption as the consequences of decarbonization, electrification, digitalization, and regulatory changes hit home. In a series of articles, we’ll look at the different challenges and disruptions facing the utilities and examine how modern data management platforms, such as the Denodo Platform, can help them address these challenges.

But first, let’s look at the major challenges facing the utilities:

Decarbonization: Energy utilities are under increasing pressure – political, regulatory, and social pressure – to decarbonize their operations and reduce their carbon footprints. This will require significant investment in renewable energy sources and infrastructure upgrades, as well as new business models to support the transition. The increased dependency on renewable energy sources will also mean moving away from large, centralized generating capacity to smaller, heavily distributed energy sources with fluctuating generating capacity, such as solar plants and wind farms.

Electrification: Transitioning energy systems away from fossil fuels, such as gasoline and diesel, to electricity – is gathering pace around the world and is driven by government net-zero commitments. For example, the U.K. Government has committed to stopping the sale of gasoline and diesel vehicles by 2030. The European Union and, in the United States, both California and New York, have committed to doing the same by 2035. Natural gas heating systems are similarly being phased out and replaced by heat pump systems and electrical heating systems. These changes are going to impact not only the demand for electricity but also the demand profile, as there will be an increase in electric vehicles being charged overnight at traditionally low-demand times.

Digitalization: Energy utilities, like many other companies, are generating and using vast amounts of data. This data can come from smart meters and from power generation and distribution equipment. It can be weather data or market data for the energy traders. It can even come from the utilities’ customers.  Harnessing the value of this data enables utilities to provide better customer service, manage generation capacity more efficiently, and so on. This is a strategic initiative for most utilities, especially in the face of competition from the more nimble “smart grid” companies.

Regulatory Compliance: Energy utilities face a complex and changing regulatory environment. The recent spikes in energy prices, alongside the recent cost of living crisis, has intensified regulatory scrutiny. The utilities will also need to comply with, and report on, new regulations related to ESG and net-zero targets. These regulations might also require them to change or adopt new business models such as dynamic pricing.

Customer Engagement: Challenged by smart grid competitors, the more established energy utilities need to up their game when it comes to customer engagement. The smart grid companies use data and analytics to better serve their customers’ needs – they provide their customers with better awareness of their own energy usage and costs which, in turn, increases participation in energy saving programs. The ease with which customers can switch between suppliers makes it imperative that the energy utilities are not laggards in the area of customer engagement.

In the following articles in this series, we’ll have a closer look at each of these major challenges and how the utilities can use modern technologies, such as the Denodo Platform, to help them address each challenge.

Paul Moxon