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The Disruption of the Energy & Utilities Sector: Future Scenarios

With the radical changes affecting both business and technology, the energy sector has to deal with significant upheaval in the coming years, focusing on the key themes of digital transformation, electric mobility and people.

01 June 2021 • 4 min read

A profound transformation, both in business and in technology, is impacting the energy sector. Digital transformation, electric mobility and people are the main challenges for Utilities in the coming years.

The Energy & Utilities sector is going through a time of profound change. The contraction in demand, the collapse of energy prices and the impacts of the temporary moratoriums on energy bills announced by the governments of various EU countries to deal with the pandemic are all putting a strain on the investment capacity of companies in the sector, in favour of greater stability of current expenses and liquidity.

2019 was a very positive year for the sector. According to NetConsulting cube market estimates, the digital market in the Energy & Utilities sector in Italy reached a value of over €1.8 billion, showing an increase of 4.9% on the previous year. 2020, on the other hand, is characterised by a significant slowdown in spending on digital innovation, which will grow by only 0.9% and then resume with more sustained growth from 2021.

The scenario

In a scenario in which the contingent situation is giving an unprecedented boost to the digitisation of companies in all sectors, the players in the Energy & Utilities sector will necessarily have to face a transformation, not only technological but also business.

“The profound changes taking place are leading companies in the Energy & Utilities sector to rethink their business models: both externally, investing in development of new services for customers; and internally, focusing on people and lean organisations.

From a technological point of view, innovation is a fundamental enabler of the competitiveness of the sector. This is also indicated by the intervention lines of the National Energy and Climate Plan (PNIEC), where the IoT and the collection and analysis of data will allow recovery of important efficiencies in terms of energy supply. At the same time, services based on 5G technologies will be able to contribute to better management of grid balancing.

So what will be the main technological areas of investment in the agendas of the sector’s CIOs for the next two years? From a NetConsulting cube survey that analyses the technological spending drivers of companies in the sector, the main technologies will be:

  • Cybersecurity: IT security remains a priority investment area for companies in the sector. Securing IoT and SCADA networks and devices is a growing priority proportional to the proliferation of the number of connected devices, whose complete visibility and continuous updating constitute an element of potential vulnerability for companies in the sector.

  • Internet of Things: Utilities are increasingly investing in IoT technologies for monitoring and managing networks. The collection and storage of data from the field, thanks to the use of these technologies, is driving the development of data management and data platform or data lake strategies and projects.

  • Artificial Intelligence / Machine Learning: 2021 will see the launch of numerous projects involving the use of machine learning, deep learning, neural networks and image recognition algorithms. The main areas of implementation will concern, on the one hand, the search for ever greater efficiencies in the management of core activities (e.g., the development of predictive models for consumption management); on the other, in the Marketing and Sales field, the projects will address advanced customer clustering initiatives for the creation of customised offers and the reduction of churn.

  • Intelligent Automation: Investments in process automation technology will also be consolidated in the sector. Robotic Process Automation (RPA) solutions are already widespread, in particular in Administration, Operation and Customer Care, while the Artificial Intelligence engines will begin to be introduced as orchestrators of the same RPA bots.

Changes in the industry

From the point of view of business transformation, the profound changes taking place in the operating environment are leading companies in the Energy & Utilities sector to rethink their business models, both externally, investing in development of new services for customers; and internally, focusing on people and lean organisations.

Traditional players have to deal with the threats from new potential incumbents from other sectors that see growing business opportunities in the energy sector: car manufacturers like Tesla offering electric services; oil companies like Shell that after the oil crisis triggered by the pandemic, aim to refocus their business on renewable energy and electricity; but also big online players, technology companies and innovative start-ups.

The ever-increasing push of digitisation will lead to a change in business management, with increasingly fluid organisations, where hierarchies and organisational charts will leave more and more space for community and collective intelligence.

Suffice it to say that one of the main competitors of Utilities in the coming years could be the e-commerce giant Amazon which, last June, launched its Climate Pledge Fund.

This makes for a very challenging scenario for Utilities, who must review their business model and develop new services to enter new markets. For example, electric mobility, a market that is becoming increasingly attractive for the energy sector: according to a survey by the Boston Consulting Group, by 2030, 50-60% of vehicles sold will be electric.

This will create opportunities for the development of new products and services for Utilities related to the electric mobility ecosystem, which include vehicle maintenance and operation, installation, operation, maintenance and service of charging points, software solutions for energy management and start-up of the fleet, consulting services.

The challenge for the energy sector, however, does not only concern the evolution of its business model to attract new customers, but also the transformation of the organisation and its human resources, with a renewed attention to caring for its people.

The ever-increasing push of digitisation will lead to a change in business management, with increasingly fluid organisations, where hierarchies and organisational charts will leave more and more space for community and collective intelligence. I am convinced that within the digitisation process underway in companies, the key is the employees – those who in the future will generate value and resilience in companies. Only companies that invest in people will be able to have an agile, flexible organisation.

In conclusion, pursuing technological innovation in the Energy & Utilities sector is fundamental today. NTT DATA, which has always placed people at the centre of its change, is a partner of companies in digitisation projects, thanks to an offer of products and specific services for the needs of the sector. But technology alone is not enough: only those who are able to rethink their business model and invest in people will be able to face the great changes taking place in the competitive environment and emerge as a leader in the future business and market context.

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