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The Future of Utilities Trends Report

An industry strategic foresight trends report

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  • Organizations are overwhelmed by the number of unprecedented changes and disruptions.
  • Leadership teams often lack insights to identify relevant and critical trends.
  • There are uncertainties about transforming the digital business to adopt rapidly changing technologies.

Our Advice

Critical Insight

When facing disruptions, utilities need to focus on strengthening core business capabilities and embracing technology advancements to bolster business resilience.

Impact and Result

Info-Tech’s trends report on the future of utilities investigates strategic foresights and highlights the relevant trends for business and IT leaders in utilities. Our goal is to guide you through the energy transition journey to the future we reimagine together.

This report aims to:

  • Perform a broader scan to highlight the proven and relevant trends to utilities.
  • Help organizations identify the trends to follow depending on their maturity.
  • Highlight the impact of the trends to business and IT leaders.
  • Guide organizations for required changes driven by the regulators and desired by customers.

The Future of Utilities Trends Report Research & Tools

The Future of Utilities Trends Report – This strategic foresight trends report highlights four transformational utilities industry trends to guide business and IT leaders through the energy transition period to the future of utilities.

This trends report will provide insights on the opportunities and challenges ahead leading to the utilities of the future. Built upon the enablement of foundational IT elements, transformational trends identified in this report will identify the signals, drivers, and impact on your organization as well as recommendations from Info-Tech.

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The Future of Utilities Trends Report

AN INDUSTRY STRATEGIC FORESIGHT TRENDS REPORT

Analyst Perspective

Utilities organizations are going through unprecedented disruptions and challenges, such as:

  • A growing call to decarbonize.
  • The transition to electrification.
  • An increase in adoptions of renewables.
  • Unpredictable weather patterns.
  • Elevated customer expectations.
  • Global supply chain interruptions.
  • The record-high energy wholesale market price.
  • The post-pandemic mindset shift of the workforce.

Utilities must understand what core business capabilities and technology enablement are required to contribute to the sustainable future. It is the role of IT/operational technology (OT) to provide thought leadership to guide organizations to build business resilience in the face of disruptions.

Info-Tech’s trends report on the future of utilities investigates strategic foresights and highlights the relevant trends for business and IT leaders in utilities. Our goal is to guide you through the energy transition journey to the future we reimagine together.

The image contains a picture of Jing Wu.

Jing Wu

Principal Research Director, Utilities Research

Info-Tech Research Group

Executive Summary

Your Challenge

  • Organizations are overwhelmed by the number of unprecedented changes and disruptions.
  • Leadership teams often lack insights to identify relevant and critical trends.
  • There are uncertainties about transforming the digital business to adopt rapidly changing technologies.

Common Obstacles

  • Business leaders often think IT does not have an important role in defining and achieving digital business goals.
  • Risk-averse utilities do not see the value of trends and how they link to the digital business plan.
  • IT leaders might not think that industry trends have a significant impact on the IT organization.

Info-Tech’s Approach

  • Perform a broader scan to highlight the demonstrated and relevant trends to utilities.
  • Help organizations identify the trends to follow depending on their maturity.
  • Highlight the impact of the trends on business and IT leaders.
  • Guide organizations on required changes driven by regulators and desired by customers.

Info-Tech Insight

When facing disruptions, Utilities need to focus on strengthening their core business capabilities and embracing technology advancements to bolster business resilience.

Utilities are facing unprecedented challenges

Plan for external disruptions and internal challenges, and then act on changes required to adapt to the utilities of the future.

Trifecta of Change

COMMITMENT TO DECARBONIZATION

Make aggressive commitments to reduce greenhouse gas emissions and achieve a carbon-neutral future. In the next decade, utilities will be among the sectors most called upon to make changes.

Strengthen infrastructure resilience to manage widely-adopted renewables and fast-evolving electrification penetrations.

EXPECTATION OF REGULATORS AND CUSTOMERS

Build a customer-centric culture. Utilities are struggling to provide delightful, reliable, and, at the same time, affordable services to customers with growing expectations in the digital age.

Regulators need to provide incentives. Utilities are not motivated by regulators to make changes. Lengthy timelines to gain approvals from regulators can obstruct changes.

RISK OF RELIABLE INFRASTRUCTURE

Upgrade aging infrastructure and build a preventative maintenance plan to provide utilities with the capability to maintain a sustainable ecosystem.

Prepare for unpredictable weather patterns that often cause major damage to utility infrastructures and introduce significant outages to essential services.

Utilities are in transition for a clean future

Utilities are undergoing an unprecedented rate of change and disruption. Electricity and natural gas are among the most high-profile and high-impact sectors to lead the way to net-zero targets. Digitally transforming the utility business to strengthen its business capabilities is key to building its resilience. Those who seize the opportunities through the industry-in-transition period will set the stage for the clean future.

OLD-SCHOOL WAY OF THE PAST
[PRESENT]

INDUSTRY-IN-TRANSITION DIGITAL AGE
[2-5 YEAR EST.]

UTILITIES OF THE FUTURE
[5-15 YEAR. EST.]

Current state – steady pace of reliable service provision and enjoyment of a somewhat monopolized status:

  • Conventional business model of investing, building, and operating critical infrastructure and providing necessary services at a profitable rate of return.
  • Transition from paper-based operations processes to digitized systems on all fronts with plans to completely transform to a digital utility.

Mid-state – set the pace of technology advancement and develop a resiliency plan to manage disruptions:

  • Accelerate the digital business transformation agenda as a result of the pandemic.
  • Develop a proactive and secured approach to build resiliency against rapid and unprecedented levels of change.

Ideal state – embrace the race to net-zero emissions while level-setting the impactful plans:

  • Enhance grid and network transformational capabilities to embrace the centralized and decentralized prosumer two-way ecosystem.
  • Implement a sustainability action plan to move toward the net-zero future while promoting social equity to reimagine the future together.

The Utilities-of-the-Future Perspective: What trends open the door to the ideal state?

Utilities of the future are adaptable

TRANSFORMATION IN INNOVATION

LEADERSHIP IN SUSTAINABILITY

COMMUNITY PARTNER IN TRUST

  • Become a digital leader by building a digital utility strategic and tactical plan to implement flexible technologies such as smart grid, digital twin, and advanced data analytics platform.
  • Leverage proven innovations such as drones and AI-powered robotic process automation (RPA) to automate processes, and provide various digital channels (e.g. chatbot, virtual agent, and virtual reality training) to customers and employees.
  • Reduce greenhouse gas emissions through aggressive measures such as strong support of electric vehicle (EV) rollout and a dramatic switch to renewable clean energy sources.
  • Enable greener energy by leveraging IT/OT technologies such as a distributed energy resource management (DERM) system to help manage the penetrations of various green energy sources connecting to the electricity grid.
  • Balance an interdependent ecosystem between a conventional centralized business model and the emerging decentralized prosumer model.
  • Become a trusted community partner providing reliable and enjoyable services and leading the sustainable future while keeping abreast of the directions steered by regulators and policymakers.

The future of utilities: Foundational IT elements

THE BUSINESS REQUIRES LEADERSHIP FROM IT FOR THE DIGITAL TRANSFORMATION TO SUCCEED

WORK AND ASSET GIS SYSTEMS

Effective use of the GIS-powered work and asset management system is the cornerstone of operating a reliable and resilient infrastructure in the utilities business.

CUSTOMER INTERACTION

Elevated customer expectations require utilities to provide an intuitive, unified omnichannel platform to interact with customers for all services provided.

DIGITAL FRONTLINES

Deployment of mobile devices and applications to assist frontline workers with near-real-time data to support their daily operational tasks is essential to realize the benefits of the digital transformation of utilities.

HYBRID INTEGRATION

A hybrid integration framework to support various integration patterns such as on-premises to on-premises, on-premises to cloud, and cloud to cloud is key to enable IT capabilities.

CYBERSECURITY

A robust cybersecurity program covering both the IT and OT landscapes is critical to ensure organizational information and assets are protected against the onslaught of various forms of attack.

ADVANCED DATA ANALYTICS

The enablement of an advanced data analytics platform to support data-driven digital utilities is the foundational step necessary to support any core business transformation initiatives.

The future of utilities: Four IT/OT transformational trends

NET-ZERO PATHWAYS FOR UTILITIES

Finding your pathway in the race to net zero

Utilities have a high impact in contributing to the net-zero target. An achievable sustainability plan is becoming a top priority for utilities.

SUSTAINABLE GRID/NETWORK TRANSFORMATION TRANSFORMATION

Building a resilient physical and digital infrastructure

Disruptions such as extreme weather patterns and EV penetrations require utilities to optimize the investment in maintaining the aging physical infrastructure and building up its digital twin to provide further insights.

CONNECTING WITH THE EDGE

Expand digital intelligence

Evolving from the pervasiveness of Internet of Things devices, edge devices allow decentralized computing to complement conventionally centralized decision making.

DARE TO INNOVATE

Networks of collaboration to challenge the status quo

Challenges utilities face are complex in nature and require collaborations across nations and borders. Rethinking innovation in utilities is much needed during the industry-in-transition period.

“The energy sector is the source of around three-quarters of greenhouse gas emissions today and holds the key to averting the worst effects of climate change, perhaps the greatest challenge humankind has faced.”

(Source: IEA, 2021)

Download the 2022 Tech Trends Report

Next step

Leverage this trends report to develop your digital business strategy

THE FUTURE OF UTILITIES

BUSINESS CONTEXT & IT STRATEGY

TRENDS REPORT

IT Strategy Digital Strategy

Leverage this trends report for priorities that drive measurable, top-line organizational outcomes and to unlock direct value.

The future will bring more trends and technologies, making it pivotal that your utility continues to establish itself as the disrupter, not the disrupted. You must establish a structured approach to innovation management that considers external trends as well as internal processes. Info-Tech’s Define Your Digital Business Strategyblueprint and Build a Business-Aligned IT Strategy blueprint give you the tools you need to effectively process signals in your environment, build an understanding of relevant trends, and turn this understanding into action.

Trend 01

Net-zero pathways for utilities

Finding your path in the race to net zero

Utilities must find ways to reach the net-zero target

Utilities are a major contributor to global warming. Globally, all nations (at different paces of commitment) are working together to limit the rise of global temperature to 1.5°C. Utilities, especially the electricity industry, have been identified as one of the major sources of greenhouse gas emissions.

Utilities are not reaching targets. Driven by policy makers, regulators, stakeholders, and customers, utilities are making strategic plans and pledges to respond to the call to net zero. However, the most recently published benchmarking study of 50 world-renown utilities showed that 94% of them have not made enough progress to reach the target set by the International Energy Agency (IEA) (WBA, 2021).

There are multiple ways to reach net zero. Different pathways leading to the net-zero future pinpoint disruptions connecting to the electric grid such as large-scale renewables adoptions, electrifications to replace fossil fuels as energy sources, and electric vehicles (EV). Large investments of physical infrastructure and technologies such as distributed resource management systems are required for utilities to accommodate the demand and manage its infrastructure for reliable services.

LARGE INVESTMENTS ARE NEEDED FOR THE ENERGY TRANSITION

Annual investment in energy infrastructure needs to be more than doubled, on average between $3.1 trillion and $5.8 trillion per year over the next three decades.

(BloombergNEF, 2021)

25% Electricity produced one quarter of all US greenhouse gas emissions in 2020.

(EPA, 2022)

Driven by regulators and policy makers, electricity and other utility providers are expected to implement aggressive measures to meet the net-zero target in the next three decades.

Signals

What we are seeing

Having a sustainability plan is a top priority for utilities

  • 67% of the 130+ utilities across the US have a sustainable plan to reduce their carbon footprint (SEPA, 2021).
  • 18 states in the US have developed tactical pathways and measures with strict timelines (DOE, 2021).
  • US Federal Agencies are seeking 100% carbon pollution–free electricity on a net annual basis by 2030 (The White House, 2021).

LEADERS IN ACTION

The image contains the logo for conEdison.

is committed to provide 100% clean energy to New Yorkers by 2040.

The image contains the logo for PG&E.

plans to reach a net-zero target by 2040, which is five years ahead of California’s current goal.

The image contains the logo for love every drop anglian water.

will generate 50% of its energy from renewable sources to achieve net-zero carbon status by 2030.

Drivers

WHY YOU SHOULD CARE

Utilities are adding environmental, social, and governance (ESG) programs as one of their key business drivers to contribute to the sustainable future, largely driven by policy makers and regulators.

Utilities must transform and expand the grid infrastructure to manage a large influx of renewables and EVs connecting to the grid to continue providing reliable services.

Utilities are required to provide equitable services to all customers. Managing expectations of customers who are early adopters of solar photovoltaic (PV) and EVs becomes a balancing act for utilities.

Opportunities and challenges

OPPORTUNITIES

Business Resilience

  • Strengthening business resilience requires investments to build energy infrastructure and advanced technologies to modernize and transform the grid and network. This leads to a lot of opportunities to accelerate digital business and investment in enabling technologies.

ESG Commitment

  • ESG commitment is mainly driven by policy makers and regulators, and investments in green energy technologies will be favored when justifying rate adjustments. Utilities can make meaningful, tactical commitments following their ESG pledge.

Community Partnership

  • Incentives are required to promote options for achieving the net-zero target. Incentives will allow business and IT leaders to offer different services to employees and customers, allowing utilities to play an active role in building a sustainable future as a community partner.

CHALLENGES

Achievable Measurements

  • Business and IT leaders should collaborate on key performance metrics and plan viable pathways for their organizations. There are risks for organizations making commitments that cannot be monitored, tracked, and achieved.

Readiness

  • Assessment of business maturity and technology readiness within organizations is a critical step in the initial stages of aligning with the expectations of senior leadership. Lack of assessment introduces the risk of overcommitment without understanding what is required from people, process, and technology.

Support Alignment

  • Implementation of technologies requires support from both IT and OT teams to work together to deliver secured, well-supported systems for many years to come.

What this sustainability trend means to Info-Tech members

BUSINESS LEADERS

IT LEADERS

  • Set clear commitments and directions for the pathways to drastically reduce the organization’s carbon footprint during the industry-in-transition digital age (two to five years)
  • Work with policy makers and regulators to create high-level incentives for both utilities and customers to reduce emissions.
  • Educate employees, customers, and stakeholders on the complexity of the issue to create a sense of urgency and understand the interdependencies with other systems and organizations.
  • Engage business leaders to understand business challenges and guide the practical plans to reach the net-zero target.
  • Partner with business leaders to assess business capabilities and technology readiness to identify roadmaps for the short-term, medium-term, and long-term initiatives to support the net-zero commitment of your organization.
  • Develop a data-driven strategy to help collect, track and monitor, and report priorities and key metrics to help your organization stay on top of the commitment.

KEY TECHNOLOGIES ASSOCIATED WITH THIS TREND

Renewable Energy

Electric Vehicles

Distributed Energy Resource Management (DERM)

Recommendations

Collaborate internally and externally. A complex challenge requires collective intelligence to solve. Collaboration among Info-Tech members across the globe to share pathways, actionable insights, and learnings is essential to reimagine the future together.

Assess priorities and build a roadmap. Based on the organization’s commitment, build an equitable and viable pathway with identified priorities and guarantee investments to support technology advancement.

Deliver and measure. Implement the net-zero pathways and assess the key metrics to measure the progress periodically. Demonstrate measurable, improved results to your employees, customers, stakeholders, and regulators.

INFO-TECH RESOURCES

Trend 02

Sustainable grid/network transformation

Building a resilient physical and digital infrastructure

Maintain physical infrastructure and empower digital twins

Utilities are ranked as one of the top sectors being impacted by unpredictable extreme weather patterns such as snowstorms, severe heat, and flooding. Damages to electricity assets such as power lines and transformers are costly to repair. Overflows of sanitary water systems due to major flooding are detrimental to the environment and introduce risks to the health and safety of the communities. Large-scale customer outages are often time consuming to restore.

Modernizing physical infrastructure is a key for building resilience. In addition, while good for the environment, large numbers of EVs charging during peak hours will devastate the electric grid. The utilities industry must plan to modernize its already aging infrastructure and expand its capabilities to accommodate increasing demand during energy transition times.

Digital twins provide insights. In parallel with maintaining physical infrastructure, utilities are accelerating their digitalization journey with the goal of leveraging additional insights from digital twin investments.

$40 billion worth of global insured losses for the first half of 2021 were due to damages caused by extreme weather patterns.

(S&P Global, 2021)

UTILITIES ARE BUILDING GRID EXPANSION AND CAPACITITES

40% Accelerated grid infrastructure expansion is required by 2030, driven by renewable and electrification penetrations.

30% Increase of substations capacity is required by 2030 driven by renewable and electrification penetrations.

Modernizing aging physical assets including electricity, the grid, gas pipelines, and water networks is essential to continuing to provide reliable services to customers. Building a digital presentation of the grid/network infrastructure provides insights to enhance its sustainability.

Signals

WHAT WE ARE SEEING

Protect physical infrastructure and leverage insights from digital systems

  • $20 billion in funding is planned by California’s PG&E to bury its wires after a recent high-profile climate casualty (S&P Global, 2021).
  • Capital investment on electric distribution power lines has increased 64% from 2000 to 2019 (EIA, 2021).
  • 92% of electricity outages from 2014 to 2018 are due to failure of distribution infrastructure, with severe weather being the predominant cause (Infrastructure Report Card, 2021).
The image contains the logo for City of Atlanta Watershed Management.

implemented an Optimizer software to improve hydraulic performance and water quality.

The image contains the logo for PPL Electric Utilities.

recently completed a three-year Keystone Solar Future Project (KSFP) by implementing a DERM solution.

The image contains the logo for Northern Gas Networks.

implemented a data-driven analytics solution to support its asset risk management framework for its gas distribution infrastructure.

Drivers

Why you should care

Utilities must develop the resilience of their physical infrastructure based on insights from digital systems to guide their asset maintenance and capital investment plans.

Utilities are mandated to provide reliable and affordable services to customers despite disruptions and challenges exacerbated by the growing expectations of customers in the digital age.

Operational excellence and efficiency can be gained via data-driven decisions made by leveraging digital systems and protecting physical infrastructure based on risk analysis.

Opportunities and challenges

OPPORTUNITES

System Reliability

  • Disruptions and challenges require utilities to assess sustainability of their physical infrastructure and identify a risk-based and data-driven approach to analyze, plan, and execute asset maintenance. Having a reliable and sustainable physical infrastructure will reduce customer outages and increase customer satisfaction.

Operational Efficiency

  • Accelerate the digitization journey to leverage insights from the digital twin. Through digitalization and process automation, operational efficiency could be gained through easy access to asset, inspection, work order, and GIS data sets.

IT/OT Convergence

  • Digital utilities advocate IT/OT convergence. The journey of building the digital twin of the physical asset will force the organization to accelerate IT/OT convergence because systems such as advanced distribution management systems (ADMSs) and DERMs rely heavily on data and integrations from IT systems like GIS and work and asset management systems.

CHALLENGES

Data Readiness

  • Risk-based asset maintenance programs depend on data being available and accurate. When trying to accurately model the physical asset in a computerized system, organizations that often claimed to have accurate data might be surprised by the demand for more structured, consistent, and precise data.

Project Duration

  • Large grid modernization projects often have multiyear durations from regulatory approval to project completion depending on the jurisdiction and regulator.

Resource Impact

  • Knowledgeable resources will be stretched thin within business, OT, and IT departments. Organizations should help them balance between project execution and regular business operations during the project as well as after completion.

What the grid/network transformation trend means to Info-Tech members

BUSINESS LEADERS

IT LEADERS

  • Expect a large increase of investments in maintaining critical infrastructure for climate adaptation.
  • Work with IT leaders to leverage digital systems and data to assess the risks and drive the most cost-effective insights to future-proof assets and facilities.
  • Embrace organizational changes as a result of the grid/network transformation. Business leaders’ support for changes such as IT/OT convergence can remove cultural roadblocks for this inevitable direction.
  • Work closely with OT leaders to align future initiatives strategically. Building a sustainable grid/network transformation plan requires both IT and OT to plan the project business case, capital and operational budget, systems implementation, and upgrades to keep better alignment.
  • Work with business leaders to assess organizational readiness prior to embarking on large grid/network modernization projects. The readiness assessment should include regulator support, culture climate, resource availability, and data accuracy.
  • IT/OT leaders should expect a need for budget increase to upgrade and maintain digital systems at a more frequent cadence to avoid system failure.

KEY TECHNOLOGIES ASSOCIATED WITH THIS TREND

Advanced Distribution Management System

Digital Twin

Distribution Automation

Recommendations

Assess maturity and readiness. The first step is to understand the fundamental capabilities of the existing infrastructure to provide reliable and sustainable essential services. Identifying the problems and gaps specific to the organization is essential to drive future physical infrastructure and digital transformation investment.

Transform physical and digital together. Leverage data-driven insights from the digital systems to build, operate, and maintain the grid/network infrastructure. Digitizing the physical infrastructure also relies on the intelligence of various grid/network smart assets and devices.

Align the business, IT, and OT. Given the organizational impact of the transformational journey, maximizing its benefits requires business sponsorship of IT and OT alignment not only strategically but also tactically, including budget planning, resource sharing, project collaboration, and support management.

INFO-TECH RESOURCES

Trend 03

Connecting with the edge

Expand digital intelligence

Digitally transform your ecosystem with edge

$2.4 trillion in value will be gained from the grid edge over the next ten years.

(World Economic Forum, 2017)

The demand for edge devices has drastically increased in utilities due to many driving factors including electrification, digitalization, and smart cities. Internet of Things (IoT) devices alone no longer suffice in providing the level of control and computing intelligence that edge devices can.

Edge devices are more capable than IoT devices and create more possibilities. Harnessed with a real operating system (OS) and cloud-native container capabilities, edge devices are designed to intelligently compute and analyze data at a higher resolution without transmitting data to a centralized data center that is prone to attracting malicious attacks. The decentralized design paradigm brings many other benefits such as reducing network latency, emitting less greenhouse gas, and improving data security.

Leverage fit-for-purpose edge devices for utilities. Together with customer technologies, edge devices connected to the grid/network will have a profound impact on the future of the utilities and their ecosystems. Just like any other innovations, utilities need to learn how to use this double-edged sword and deploy edge devices that can bring business value to the organization.

EDGE-ENABLED INTERNET OF THINGS IS GROWING FAST IN ENTERPRISE AND CONSUMER MARKETS

3.5 Billion Number of edge-enabled IoT devices, including sensors, smartphones, and security cameras, worldwide in 2022

6.5 Billion Forecasted number of edge-enabled IoT devices worldwide by 2030

(Statista, 2021)

Development of various edge devices, together with IoT devices, allows two-way data exchanges and decentralized computation. Securely collect, store, and analyze data and generate business insights closer to the action.

Signals

WHAT WE ARE SEEING

Edge complements to IoT continue to be widely adopted across industries

  • 200,000 Tesla Powerwalls (home battery storage) were deployed globally in 2020 April (Tesla, 2020).
  • 230 million EVs will be in use in 2030 to achieve sustainable goals predicted by IEA if policy makers and regulators decide to accelerate the race to net-zero (IEA, 2021).
  • 4.6% of global infrastructure edge is associated with smart grid compared to 27.5% from mobile consumers (LF Edge, 2021).

LEADERS IN ACTION

The image contains the logo for PG&E.

is deploying a 2023 Demand Response Auction Mechanism to seek a local and flexible pay-as-bid solicitation of a monthly demand response system.

The image contains the logo for sigfox.

empowers IoT (AMI) solutions for meter reading, remote connect/ disconnect, and leak detection in the water market.

The image contains the logo for Saint John Energy.

is deploying heat pump controllers to residents, which allows them to remotely set schedules with a mobile app.

Drivers

WHY YOU SHOULD CARE

Utilities need to expand the security ecosystem to edge devices and identify maintenance and support processes and skill sets required to manage intelligent devices.

Powered by intelligent edge technologies, customers interact in real time with centralized systems provided by utilities. Utilities need to redefine their roles to provide value-added customer experiences to meet growing expectations.

Leveraging computational power at the source, utilities can gain operational efficiency by reducing process wait time, network congestion, and latency.

Opportunities and challenges

OPPORTUNITIES

Business Growth

  • New business models can support business growth. For example, partnering with retail services at EV charging stations can potentially bring in new revenues.

Operational Efficiency

  • Efficiency could be gained through strategic infrastructure investment. Edge technologies such as demand response create flexibility to adjust the level of demand and generate resources strategically throughout the day. As a result, they could reduce investment in physical infrastructure expansions. Edge monitors can detect water pollution and poisonous gases and act rapidly and autonomously to correct or mitigate issues.

Customer Satisfaction

  • Edge technologies incorporating customer technologies will redefine customer experiences. Future utilities customers will see two-way, real-time interaction with the grid/network. A flexible pricing model can be an attractive and economical option.

CHALLENGES

Technology Maturity

  • Technology maturity assessment is required to identify fit-for-purpose solutions. While exploring potential edge technology use cases within an organization, IT leaders must provide holistic insights in technology feasibility and assess adoption readiness within the organization.

Regulation Alignment

  • Work with regulators closely to define frameworks and regulations. Grid edge technologies such as distributed generations require real-time, bidirectional flow management. Regulators often struggle to define the revised roles of utilities operators. The erosion of the electricity industry’s revenue will challenge regulators to set a fair rate for customers.

Interoperable standards

  • Interoperable standards are evolving. Agreement between utilities and technology companies on interoperable industry standards of integration, control, and security will be a challenge.

What the edge trend means to Info-Tech members

BUSINESS LEADERS

IT LEADERS

  • Recognize the opportunities and challenges that come with edge devices and understand the impact on both IT and OT teams for broader adoptions.
  • Evaluate hosting capacity with the understanding of edge technology penetration status and its adoption rate to make strategic and tactical plans to manage the influx of intelligent edge devices connecting to the grid and network infrastructure.
  • Work with IT leaders to define data strategy within the organizations produced by both edge devices and IoT devices. The data strategy should include usage of data by external parties such as customers, third-party developers, and governments.
  • Help businesses to understand edge technology vs. IoT technology by exploring value demonstration use cases and enhancing previous IoT strategies with edge strategies.
  • Work with OT leaders to identify roles and responsibilities to deploy and maintain edge technologies. Collaboration between IT and OT is required from inception to completion.
  • Follow industry standards and regulations pertaining to the business use cases. A cybersecurity program covering the grid/network to the edge is required to ensure the business is secured and compliance requirements are met and addressed properly.

KEY TECHNOLOGIES ASSOCIATED WITH THIS TREND

Distributed Generation

Advanced Metering Infrastructure 2.0

5G

Recommendations

Identify edge technology needs. The initial step is to understand the fundamental capabilities of edge devices and assess where the edge technology can drive values that align with the organization’s business objectives.

Assess organizational readiness. Assessment of the readiness in people, processes, and technologies should be examined. Identify the fit-for-purpose technologies for the organization.

Adopt a proof-of-value model. Identify use cases or quick wins to pilot, test, and proof values. Skill-set requirement, support model, and security should be considered before wider adoption.

INFO-TECH RESOURCES

Trend 04

Dare to innovate

Networks of collaboration to challenge the status quo

Innovation must drive changes

Innovations move slowly in a highly regulated industry. There are limited incentives for utilities to innovate within a somewhat monopolized industry with a risk-averse culture. Regulators often frown upon investments in not fully proven technologies accompanied by rate increase requests.

The unprecedented challenges today are forcing the industry to consider innovation. That includes regulators, product companies, and utilities themselves. For instance, the Department of Energy in the US funded a comprehensive report on the role of innovation in the electric utility sector to provide insights on future regulations.

The industry is in dire need of deployable innovation technologies. With increased speed to market, utilities are adopting technologies already proven in other highly competitive sectors such as AI/ML and drones. However, a major acceleration of frontier technology adoption is required in order to meet the net-zero target. For example, US$90 billion has been mobilized to complete a portfolio of innovation technology demonstration projects before 2030 (IEA, 2021).

$1.7 million was spent on innovation by Canadian utilities between 2017 and 2019.

(Statistics Canada, 2021)

BUSINESS DIGITALIZATION GENERATES OPPORTUNITES FOR INNOVATION

44% The percentage of power companies that will explore distributed energy resource management (DERM) solutions in their digital strategies.

42% The percentage of power companies that will explore data analytics, artificial intelligence, and machine learning in their digital strategies.

(Deloitte, 2021)

Rethinking innovation for utilities means a mindset shift to challenge the status quo and find alternatives for a better outcome via collaboration and networking with your inner and outer circles.

Signals

WHAT WE ARE SEEING

Innovation will become a top focus for utilities

Utilities are the major users of the following proven innovative technologies according to a 2021 technology and innovation report published by the United Nations:

  • Drones – The utilities industry is the top spender on drones, driven by the increasing demand of GIS, LiDAR, and mapping services.
  • 5G – Energy utilities will be among the three largest 5G-enabled industries by 2026.
  • Solar Photovoltaic (PV) – Utilities is one of the top three users, alongside residential and commercial sectors, of a $334 billion market in 2026.
(UNCTAD, 2020)

LEADERS IN ACTION

The image contains a logo for Southern California Energy.

collaborated with an AI analytics company to co-develop a grid monitoring analytics product.

The image contains a logo for Kansai Electric Power

is developing wireless power using radio waves with startup Space Power Technologies.

The image contains a logo for Northern Ireland Water.

plans to deploy an AI-powered asset monitoring system for its submerged assets.

Drivers

WHY YOU SHOULD CARE

Leveraging value-proven innovative technologies can help utilities improve operational efficiencies and automate manual processes.

Cultivating an innovative culture can empower employees and create a sense of fulfillment and loyalty toward the organization.

Innovation in people, process, and technology can challenge the status quo and identify alternatives in order to mitigate the risks brought by emerging disruptors and challenges.

Opportunities and challenges

OPPORTUNITIES

Operational Efficiency

  • Adoption of proven innovative technologies can improve operational efficiencies. For example, leveraging drones to inspect remote facilities can provide insights that are difficult to obtain traditionally as well as reduce the need to dispatch crew.

Employee Engagement

  • Embracing innovation allows organizations to engage a tech-savvy workforce to innovate and create a sense of personal achievement and enhanced loyalty to the organization. For example, leveraging robotic process automation (RPA) tools to streamline redundant and repeated manual processes can increase employee engagement.

Customer Satisfaction

  • Providing innovative options can improve customer satisfaction. For example, leveraging AI-powered chatbots can provide more-personalized real-time services.

CHALLENGES

Corporate Culture

  • Absence of senior executives’ support for innovation will stifle any progress toward fostering impactful transformation in the organization.

Secured Investment

  • Without funding to support development, strong business resilience will continue to be a desired state and not a cultivated business model to drive desired business outcomes.

Resource Availability

  • Lack of skilled staff and dedicated time to cultivate innovation can be a major roadblock. As a result, it can deprive business and IT of the ability to make impactful differences.

What the innovation trend means to Info-Tech members

BUSINESS LEADERS

IT LEADERS

  • Continue relying on innovation leadership from IT to help improve operational excellence and enhance the customer experience.
  • Encourage employees to innovate and promote different ways to achieve more effective business outcomes.
  • Increase funding for research and development (R&D) efforts to promote low-carbon technology solutions.
  • Help business leaders define impactful innovation strategies for the organization and produce measurable metrics to track, monitor, and promote innovations for desired business outcomes.
  • Help provision technologies and tools to pilot ideas and leverage cloud technologies to increase speed to market.
  • Advocate a data literacy culture in the organization and educate business leaders on the importance of data availability, readiness, and accuracy to support any meaningful and impactful innovations.

KEY TECHNOLOGIES ASSOCIATED WITH THIS TREND

Artificial Intelligence and Machine Learning

Drones

Robotic Process Automation

Recommendations

Shift the mindset. Given the conventional stigma against innovation in utilities, organizations must shift their mindset to embrace an impactful innovation strategy and establish a mutual agreement with regulators to accept the cost for innovation to support critical commitments such as net-zero emissions goals.

Build an innovation model. Build an effective and agile operating model for your employees to collaborate internally and partner externally. Adopt a DevOps model to pilot, iterate, and deploy that promotes a new way of working to gain operational excellence, improve customer experience, and enhance reliable services.

Align funding and support. Fund innovation with a minimum viable business case to prove value and accelerate speed to market. Gain organization-wide support of resource availability and strategic importance.

INFO-TECH RESOURCES

Contributing Experts

YASIN ALSAGOFF

CIO

HAWAII GAS

JAMES BLAIR

HEAD OF DIGITAL/CISO

TODD ENERGY LIMITED

Qing LIU

CIO

OREGON PUBLIC UTILITY COMMISSION

ROBERT DANG

PRINCIPAL RESEARCH ADVISOR

INFO-TECH RESEARCH GROUP

SCOTT Holland

MANAGING PARTNER

INFO-TECH RESEARCH GROUP

JOHN KEMP

EXECUTIVE COUNSELOR

INFO-TECH RESEARCH GROUP

JENNIFER PERRIER

PRINCIPAL RESEARCH DIRECTOR

INFO-TECH RESEARCH GROUP

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Author

Jing Wu

Contributors

  • Yasin Alsagoff, CIO, Hawaii Gas
  • James Blair, Head of Digital/CISO, Todd Energy Limited
  • Qing Liu, CIO, Oregon Public Utility Commission
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