June 16, 2023 Digital Transformation’s Role in the Energy Transition

To enable effective communication between distributed energy resources, utilities need to tackle five crucial digital initiatives.

By Ana Belén Durán López

As the world strives to reduce carbon emissions and move to a more integrated and open energy model, energy transition has emerged as a driving force for digital transformation and innovation in the utility sector. This transition highlights challenges and opportunities, including the electrification of transportation, the growth in renewable energies, the expansion of microgrids, and a less predictable energy generation model.

The pressing need to modernize the grid has intensified with distribution, integration, and control shifts. The move into a more integrated and open energy model requires investments in technologies such as artificial intelligence (AI) and machine learning (ML).

To succeed during the energy transition, utilities need to tackle five critical digital initiatives:

1. Define and drive a digital transformation road map

Many utility companies rely on outdated systems, often using homegrown solutions that have become obsolete. To effectively incorporate new technologies and meet evolving business and operational needs, companies must take a step back and evaluate their current state, identify areas of deficiency and potential improvements, and establish a clear vision for the future.

By defining the necessary capabilities required to achieve their goals, utilities can devise a comprehensive digital strategy and road map. This may involve migrating infrastructure from on-premises to the cloud, or upgrading their core enterprise solutions systems.

Strategic assessments can help organizations maximize their long-term success by identifying untapped opportunities and allowing them to adapt to future demands by modernizing their operations in the rapidly transforming energy landscape.

2. Modernize architecture, infrastructure and security with cloud-based services

Modernizing the architecture, infrastructure and security of energy systems is crucial to enable the seamless integration of renewable and distributed energy resources. Cloud-based services offer scalable, flexible, and secure solutions that enhance operational efficiency and enable real-time data analysis.

However, as more devices connect to the grid, the number of potential weak points for cyberattacks increases. Each company must assess their unique needs based on factors like customer base and operational size.

The chosen architecture and infrastructure should not only cater to present requirements, but also facilitate future growth and agility. Anticipating emerging needs enables companies to avoid extensive system overhauls, allowing them to adapt in the face of technological advancements.

3. Centralize data to enable cooperation, efficiency and communication

As the energy industry becomes more decentralized, efficient data management becomes critical for facilitating cooperation and communication. Many utility companies operate their departments in silos, making it challenging to consolidate and analyze data. By bridging the gap between customer and operational data, a holistic understanding of how these aspects influence each other can be achieved.

A strong data governance program ensures that data is managed efficiently, with clear policies, processes, and protocols in place. It establishes accountability, data quality and security standards to safeguard the integrity and privacy of information. With a well-defined data governance framework, utilities can optimize the potential of centralized data, embrace AI and ML and make informed decisions that improve operational efficiency and preparedness for future challenges.

4. Advanced data and analytics to streamline operations, forecast demand and elevate the customer experience

Data and analytics play a pivotal role in streamlining energy operations and improving customer experiences. By harnessing the power of data, utilities gain valuable insights into energy consumption patterns, optimize demand response strategies, and improve asset management.

Advanced analytics can facilitate accurate forecasting of energy demand, enabling utilities to optimize energy generation and distribution. Data-driven insights empower utilities to personalize customer experiences, offer targeted energy-saving recommendations and enable flexible pricing models.  

5. Incorporate AI and ML to manage consumption, distribution and capacity

AI and ML technologies can analyze vast amounts of data, and accelerate the pace of data analysis, paving the way for predictive analytics. Predictive capabilities empower utilities to anticipate and address issues before they manifest, enabling proactive maintenance, feeder improvements, infrastructure upgrades and more. These algorithms can optimize energy distribution, match supply with demand and manage grid capacity more efficiently.

Finally, AI and ML can also be leveraged to anticipate the needs and concerns of customers, enabling proactive resolution during their initial contact, rather than requiring multiple calls to address subsequent issues. By embracing these technologies, utilities can enhance operational efficiency, improve customer service experiences, and streamline processes throughout the industry.

The energy transition presents immense opportunities for digital transformation. However, the path to success requires strategic planning, organizational readiness, investment in technology and a strong focus on cybersecurity. Forward-thinking utility companies that embrace digital transformation will be at the forefront of the energy transition revolution and can position themselves as successful trailblazers, driving the industry’s sustainable future. 

About the Author:
Ana Belén Durán López is a manager in the Digital consulting practice at Baker Tilly specializing in enterprise transformation, digital strategy and solutions. She has extensive utility experience and led the creation of a digital-first customer service strategy and operating model at a Fortune 500 utility company.

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