Digital transformation in utilities and the power industry is shaped by new technological and ecological trends. The demand for clean energy and the requirements regarding decarbonization force businesses to take a new approach. Today, new business models, distributed energy resources strategies and investments in renewable energy take priority. Also, power and water utilities are struggling to ensure better customer satisfaction.
Even with the best intentions to deliver modern services, organizations in the utilities and power sectors are hampered by aging infrastructure, ineffective data management and unnecessary spending on maintenance. If they are to realize their plans, managers in the utilities sector should overcome bottlenecks and ensure cost reductions in maintenance.
Utilities challenges: rising costs of maintenance
Costs versus automation planning
According to the ‘Top Trends 2020, Utilities – EMEA Regulated’ report, prepared by S&P Global, costs in utilities continue to rise well above historical averages. The reasons behind this are investments in ensuring reliability of aging assets, and the integration of new infrastructure for renewable energy.
It seems that automation of some processes is key to cutting rising costs, but managers seem unable to take advantage of its potential. This confirms one report prepared by Capgemini, in which almost 530 business leaders from the utilities sector presented their views on investments in automation. According to the research, 38% of organizations focus on investing in low-effort solutions in core functions that bring low benefits. Also, only 18% invest in quick wins where the effort is low but the financial results could be higher. A similar tendency is visible for improvements in support functions.
All opportunities are hidden in more strategic planning, defining projects that are not simple improvements but require greater effort engage more business departments.
When it comes to maintenance, the report shows that the greatest potential is noticeable for predictive maintenance technology. Metering and load forecasting can also be profitable, and may support maintenance management issues indirectly. All those may create a smooth process. For example, smart meters may support the identification of outages thanks to predictive maintenance algorithms, and then send tasks to a field service system. The same data may be reused for creating load forecasts.
Utilities challenges: results of poor infrastructure maintenance
Lower customer satisfaction
Aging infrastructure has an impact on client behavior and satisfaction. For example, J.D. Power 2020 U.S. Water Utility Residential Customer Satisfaction Study shows that one quarter of Americans claim never to drink tap water. This is related to the bad smell of the water and fears about water safety. To satisfy clients, the challenge for the utilities sector is to focus on infrastructure maintenance.
According to one senior director of utility intelligence at J.D. Power, “fixing these problems requires significant focus on infrastructure, both to ensure water quality and to communicate with customers, showing them proof that infrastructure is well maintained and that the water is safe”.
Rising maintenance costsThe Bain shows that transmission and distribution infrastructure that was underinvested in for decades results in costlier maintenance. This demonstrates that cost-to-service performance correlates directly to the quality and reliability of circuits. It means that less reliable circuits are more expensive to maintain.
Ineffective asset managementAssets are the core of the power and utilities industry, from power stations to transformers, pipelines, electricity cables and more. However, many companies are still dealing with the same problems that they had a few years ago. A great many organizations lack a single, comprehensive view of their assets and processes. This leads to poor performance and the inability to access the true cost of assets and plan their maintenance. There are also examples of companies that are still overloaded with paperwork instead of using digital records.
To ensure the highest return on investment from introducing digital improvements, utilities companies should seek end to end solutions. Having one system, covering maintenance task management, predictive maintenance and analytics presenting common types of tasks sounds reasonable. Add in the possibility to use those features in the cloud, and the result is greater agility into the business.
In addition, clean, renewable energy is going to play an ever greater role in the near future. This will require some additional planning and maintenance, especially highly efficient industrial photovoltaic as well as wind farms.
Utilities challenges: key takeaway
With so many challenges ahead, leaving the issues of infrastructure maintenance unimproved can eat up most of the potential profits from new initiatives. Postponing changes will not help in the long run, and may affect customer satisfaction and business profitability.
To avoid such problems, it’s worth introducing a single, clear long-term strategy that applies profitable technologies and allows organizations to watch their KPIs improving year by year. This is the key to business development in an age when the environment is volatile but also very demanding.