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EY - Women in power and utilities
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Smart metering presents the power and utilities (P&U) industry with complex strategic, operational and technological challenges, as well as major opportunities. Utilities are in a prime position to lead the smart transformation – if they are prepared to adapt almost every aspect of their business.

In this latest issue of Plug in, we draw upon our extensive experience of smart metering to examine the issue from multiple angles. These articles highlight the key impacts now and in future and discuss how companies can best address this fundamental change.

EY - The smart future is now

The smart future is now

Against a 'perfect storm' of game-changing factors, utilities are in prime position to lead the smart transformation

Smart transformation of the P&U sector is happening quicker than the industry anticipated. With new players entering the sector, traditional utilities need to act fast. Embracing transformation will set the leaders apart from the pack. Here's how.

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    “Threat or opportunity? Smart will transform the utility business model. I believe that utilities are best placed to lead the smart transformation — if they are ready to change almost every facet of their business.” - Alain Bollack, Director, Global Power & Utilities Center, EY

    The velocity of change in the P&U sector, fuelled by political, regulatory and technological developments, demands brave responses from companies that want to lead the way.

    New competitors, such as Google, Nest, Toshiba and Honeywell, are entering the sector and challenging the status quo through their customer service and digital offerings. But many utilities are in an excellent position to fend off new market entrants and lead the smart transformation.

    The leaders in this era of transformation will be those willing to change almost every aspect of their business. There is no single “right” answer. While each utility will have its own unique issues, here’s how leaders are addressing four common challenges.

    1. A strategic approach to capital

    The combination of tighter revenues and the complex infrastructure demanded by smart transformation makes attracting investment a struggle for many utilities.

    With current estimates projecting a US$17t investment in global power infrastructure through 2035, leading utilities are treating finance leaders as strategic business partners - tasked with sourcing and negotiating innovative methods of funding over the long-term.

    2. Investing in workforce transformation

    Skills shortages, ageing workforces and changing requirements mean that utilities are faced with several challenges. These include shedding roles made redundant by new technologies, hiring new experts in fields such as data analytics and digital media, and mass-scale succession planning. The latter is to replace the over 40s, who are expected to retire in the next 10-15 years.

    Leaders stand out by cultivating a strong employer brand, competitive packages, cutting-edge recruitment processes, international resourcing and investment in training.

    3. Embracing conscious cultural change

    Innovation must be a priority. By embedding a framework of values, methods, processes and rewards for employees, at every level of the organization, utilities can proactively engineer new ways of meeting customer needs.

    According to industry association Eurelectic, faster innovation by utilities could be worth €70b to the European economy by 2030.

    4. Adopting a customer-centric approach

    Today’s empowered customers demand more choice, different products and better service. With only 20% of customers trusting their utility provider, according to an EY survey, utilities must change in order to engender loyalty and attract new custom.

    Leading practices include transparency and fairness and involving customers in the journey through new approaches to communication, engagement, support and service delivery.

    For more information, contact:

    EY - Alain Bollack

    Alain Bollack
    Director, Global Power & Utilities Center


    +44 207 951 7147

     

    Read the full article Welcome to the smart future

EY - You don’t understand me

You don’t understand me

Five key ways to make customers feel more valued … and loyal

It’s no secret that most utilities do not have good customer relationships. But innovation can lead the way to building positive and more profitable relationships. Here’s how.

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    “Innovation across almost all aspects of the business will be essential if utilities are to use smart technology to build positive and profitable relationships with customers.” - Cornelius Anger, Partner, EMEIA Advisory Center, EY

    Gone are the days when customers were viewed as one-dimensional meter readings. Today, if utilities want to thrive, they need to recognize customers are multidimensional, with evolving needs. Here are five ways in which utilities can foster customer goodwill and loyalty.

    1. Change your mindset

    Reliability has always been the operational driver for utilities. However, today’s customers also look for choice, flexibility and transparent pricing from their supplier.

    To attract and retain customers and develop positive relationships, utilities need to broaden their priorities and invest in addressing all of their customers’ wants and needs.

    2. Offer frequent, positive experiences

    Rather than cutting back on customer interactions to reduce risk and save costs, utilities would benefit from increasing the number of positive experiences they offer to customers.

    The rollout of smart meters is an ideal opportunity to integrate positive interactions into the deployment process. For example, call center agents can be trained to advise on energy use as well as answer questions about smart meters. Thinking creatively about ways to build customer value into businesses processes will reap dividends for utilities, fostering goodwill.

    3. Master omni-channel communication

    Today’s digital world means there are a myriad of touchpoints where customers can interact with businesses – apps, email, websites, social media, as well as texts and phone calls.

    Smart metering means utilities must enter and master the digital domain too. An innovative approach to using these channels, for example through relevant games, infographics, videos and forums, can add value and engage customers more deeply in the utility’s brand.

    4. Show customers the benefits of data sharing

    Facebook has shown that people are prepared to share data if they perceive value from doing so. One example of intelligent use of customer data within the P&U sector is Google’s Nest division, which partners with third parties to allow users to control their thermostat remotely.

    Focusing on offering valuable products and services, and communicating robust privacy and protection policies, will encourage customers to share their data.

    5. Use start-ups to incubate innovation fast

    Utilities often struggle to compete with the speed and agility of new entrants. Separating the innovation business from the main utility provides a more flexible way to meet customer needs without being tied to traditional planning cycles.

    For example, E.ON SE recently launched a program called “Agile” as well as a “Digital Transformation Unit.”

    For more information, contact:

    EY - Cornelius Anger

    Cornelius Anger
    Partner, EMEIA Advisory Center


    +49 711 9881 22079

     

    Read the full article Innovate to build customer relationships.

EY - Making the grid smarter

Making the grid smarter

Is your grid smart enough to handle renewables and distributed energy?

Real-time data is the hero of effective distributed energy management, helping utilities to achieve efficiency, reliability and resiliency. But to get ‘real’, utilities need to optimize their grid.

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    “It may seem like a very difficult and confusing time for the P&U industry, but it also represents some of its most exciting challenges and opportunities. With the right strategy in place, we will all be better off with a smarter, more integrated grid.” - Mike Elzey, Partner, Advisory Services, EY

    “It may seem like a very difficult and confusing time for the P&U industry, but it also represents some of its most exciting challenges and opportunities. With the right strategy in place, we will all be better off with a smarter, more integrated grid.” - Mike Elzey, Partner, Advisory Services, EY

     

    Knowledge is power. In the case of electricity, knowledge = real-time data, which enables companies to optimize the efficiency, reliability and resiliency of their grid.

    EY infographic

    At the heart of today’s drive towards intelligent power management are renewable and distributed energy resources (DER). These are a growing market force that offers the potential of cheaper power. Many predict that by 2020, rooftop solar power will be cheaper than power from the grid in most parts of the US.

    However, DER is intermittent in nature. Its multiple, disparate sources of generation create new, unprecedented demands on electricity flow management. To maintain reliability and avoid blackouts, utilities need a smart grid that enables two-way communication between customer locations and their operations, providing real-time usage data.

    Successful integration of renewables and DER is just one of the many benefits of an optimized smart grid. It also:

    • Positions utilities to take advantage of future developments and compete with new market entrants
    • Enables utilities to develop new products and services based on accurate customer data and segmentation.

    We are helping clients determine their approach to optimizing the grid, as well as the related challenges of smart deployment and managing the smart transformation.

    For more information, contact:

    EY - Mike Elzey

    Mike Elzey
    Partner, Advisory Services


    +1 404 817 4035

     

    Read the full article Optimizing the grid.

EY - Smart meter rollout: an Olympic challenge

Smart meter rollout: an Olympic challenge

In-depth planning and preparation are critical to success

Smart metering will impact nearly all of a utility’s operations and processes, and completely change the way it does business – not a challenge for the faint-hearted. We look at the role and process of setting strategy to ensure success.

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    “Smart metering will impact nearly of a utility’s operations and processes and completely change the way it does business. With so much at stake, careful preparation, a business-led approach and end-to-end management is critical to the success of smart at “go live” and beyond.” - Richard Sudlow, Director, Transaction Advisory Services, EY

    The daunting size and scale of smart rollouts, as well as regulatory pressure, can create a rush to rollout. But time spent upfront on developing a robust, well-thought out strategy will reap dividends throughout the process, helping to:

    • Minimize risk
    • Optimize investment
    • Provide a shared roadmap to keep the project on track and/or adapt intelligently to challenges
    EY infographic

    The best rollout strategies are aligned to overall corporate objectives and include cost-effectiveness as a key driver. This does not mean doing the project as cheaply as possible, but directing investment where it will deliver the most value.

    For example, investment in a marketing campaign that creates awareness and a “buzz” around smart may help lower the overall cost of the program if it increases the likelihood that customers will be at home when installers arrive for their appointments.

    Whatever the reason behind the rollout, embedding the business case into every phase of the project will help guide key decisions and help ensure that high-level objectives are met.

    There are four key principles to bear in mind when developing a rollout strategy:

    1. See the bigger picture

    Rather than viewing smart rollout as a standalone project, see it as part of a pipeline of organizational change. Its processes, milestones and measures of success and those of other major programs are interdependent. Therefore, they need to take into account the company’s overall goals, as well as project management.

    2. Structure the project

    Put an appropriate governance and project structure in place to effectively manage vendors and measure progress. We help many clients to create a collaborative hub that features clearly-defined responsibilities and outcome-focused contracts to incentivize good performance.

    3. Think beyond “go live”

    Project management does not stop on the go-live date. Continuing to track and measure progress post-rollout will protect the business from poor practices and identify areas for improvement over the long term.

    4. Seize the opportunity

    Develop a clear strategy, commit to the business case and invest in strong project management that embeds accountability and measures progress.

    This business-led approach will ensure that your rollout realizes its potential and will add value across the business, preparing your organization for future changes in the sector.

    For more information, contact:

    EY - Richard Sudlow

    Richard Sudlow
    Director, Transaction Advisory Services


    +44 207 951 4532

     

    Read the full article Managing the smart transformation.

EY - Where are the hot spots?

Where are the hot spots?

Smart meters are a global phenomenon, but some countries are leading the way

We reveal some of the mega statistics describing the smart state of play and look at the key drivers behind global progress.

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    “Smart meters have the potential to drive down operational costs, increase energy efficiency, shift peak demand, introduce new products and services and integrate renewables and distributed energy resources into the grid. These factors are driving their global footprint.” - Knut Haukenes, Senior Consultant, EY and Shubhanshi Gupta, Senior Analyst, EY

    The smart meter revolution is being driven by a “perfect storm” of influential forces:

    • Increased customer expectation
    • Rising distributed energy resources (DER)
    • Increasing peak demand in emerging markets
    • Pressure to optimize network performance
    • The need to improve cash collection and reduce theft
    • Ambitious targets set by governments and regulators

    Of all these factors, the regulatory push has been the biggest driver. On the upside, the regulator’s holistic view across the entire value chain is essential to drive deployment. On the downside, the slow pace of regulatory change can sometimes fail to properly incentivize smart investments.

    The overall impact of smart in different regions can be seen below.

    EY infographic

    For more information, contact:

    EY - Knut Haukenes

    Knut Haukenes
    Senior Consultant


    +44 207 951 0967

     

    Read the full article The smart state of play.

EY - What’s shaping your roadmap for rollout?

What’s shaping your rollout roadmap?

We look at how different drivers and priorities impact deployment strategies

There’s no one-size-fits-all approach to smart meter deployment. Strategy must align the business’s unique drivers to smart and tailor the deployment to emphasize different priorities.

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    “It’s easy to think about deployment success just in terms of delivering on time and on budget, but there’s more success to be had beyond “getting it done”. A strategic approach to deployment will deliver value to the business now and position it for future success.” - Paul Micallef, Senior Manager, EY

    An effective deployment strategy will take into account different business drivers and priorities, and explore the cost impacts and trade-offs of a range of tactics.

    Thorough planning at the outset can also help pinpoint and mitigate for possible constraints such as workforce capability, access to capital and supplier capacities.

    The final roadmap will be shaped by the utility’s unique business case and imperatives. But given the huge investment at stake and the risks involved, even those with mandated smart meter rollouts need to consider how to deliver as much value to the business as possible.

    EY infographic

    For more information, contact:

    EY - Paul Micallef

    Paul Micallef
    Senior Manager


    +44 20 7951 4500

     

    Read full article The deployment dilemma.

EY - The deployment dilemma

The deployment dilemma

If you thought technology was the main cost of a smart meter rollout, think again.

Getting the right person with the right materials to serve the right customer at the right time makes fieldforce costs the number one cost of deployment. We look at critical mission control imperatives.

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    “Just do it” may sell shoes, but it’s not a wise approach to smart meter deployments. Rollout must be guided by a considered strategy aimed at aligning the overall business to smart.” - Paul Micallef, Senior Manager

    It is people, not technology, that present the biggest costs of smart meter deployment. The sheer scale and complexity of deploying experts with the right kit to each individual customer means that every utility needs a highly efficient operations center: a mission control.

    Mission control brings together all parts of the deployment process and executes contingency plans when things go wrong. And things do go wrong, from late shipments to faulty products and over-ordering. There are almost endless scenarios to consider, all of which can impact success and have implications for fieldforce management, which is driven by a set of critical goals:

    • Notify the customer of the need to install smart meters in their home
    • Give them flexible time slots, so they can choose an appropriate time
    • Have a professional and polite fieldforce worker show up on time
    • Ensure the worker installs a smart meter that works well and is easy to understand

    Mission control is also pivotal to managing any skills gaps by choosing and implementing the most appropriate fieldforce model. This typically falls into one of three broad models:

    1. Insource — Training and recruiting of internal resources to support the full deployment cycle

    2. Mixed model — Using some insource and some third-party vendors, balancing employee KPIs with service-level agreements to measure and reward high performance

    3. Outsource — Using contractors for the full deployment life cycle, managed closely by an internal team to ensure they are meeting targets and complying with pre-agreed service level agreements

    If this all sounds daunting, it is important to remember that utility leaders are not on their own. We’ve been there and can help clients use the lessons we have learned to avoid pitfalls and achieve success.

    For more information, contact:

    EY - Paul Micallef

    Paul Micallef
    Senior Manager


    +44 20 7951 4500

     

    Read full article The deployment dilemma.

EY - The big numbers

The big numbers

20 facts and statistics that put industry change into perspective.

As we head towards an investment in infrastructure of US$17t by 2035, we look at some of the other monumental figures and facts that describe the industry’s journey.

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    1. 700 million smart meters are to be deployed worldwide by 2020.
    2. China alone is expected to install 435m devices by 2020.
    3. Brazil leads the way in South America, with 38 million smart meters to be installed by 2020.
    4. In Europe, member states are required to deploy smart meters to 80% of consumers by 2020, equating to 195 million devices.
    5. Japan plans to roll out 78 million smart meters by 2020.
    6. The US is expected to reach 91% penetration by 2022.
    7. Rolling out smart meters worldwide is an US$200b investment.
    8. Current estimates indicate that funding the development of the complex infrastructure demanded by smart meters will reach US$17t through 2035.
    9. Renewable energy is predicted to replace coal as the primary source of energy by 2035.
    10. By 2035, 7,000TWh of renewable energy will need to be integrated into the electricity grid.
    11. The price of solar panels has fallen by 75% since 2006.
    12. According to Eurelectric, the pan-European industry association, faster innovation by the utilities would be worth €70b to the European Union in 2030.
    13. In 2014, microgrid installations generate about 866MW of electricity worldwide.
    14. Microgrid energy generation is expected to reach 4,100MW worldwide by 2020.
    15. Energy storage is expected to see annual installations reach 6GW by 2017 and 40GW by 2022.
    16. By 2022, more than 35 million electric vehicles will be on the road.
    17. Charging a plug-in car can increase a home’s power consumption by 50% or more.
    18. An EY survey found that only 20% of customers trust their utility provider*
    19. Approximately 60% of the global utility industry is over 40 years of age, with many expected to retire in the next 10 – 15 years.
    20. 30: the number of rollouts around the world that EY has worked on.

    *Richard Postance, “Trust: the energy industry at a crossroads…” The Raconteur, 1 May 2013

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