The capability crunch
Will a skills shortage threaten the power and utilities (P&U) sector’s “smart” transformation? How can utilities ensure they have the right people in place at the right time? Benoit Laclau, our Global Advisory Power & Utilities Leader, shares his views on this critical issue.
Benoit says the P&U sector is in the midst of “probably the biggest change ever to affect the entire industry,” as huge projects driven by the smart transformation get underway across the world.
As investment surges, so does the demand for workers. The P&U sector is creating high quality jobs at a time when other sectors are struggling.
“When the UK was in recession between 2008 and 2010, the energy industry was among the few to create employment over that period,” he points out.
“Now the new nuclear plant at Hinkley Point C will create tens of thousands of enduring jobs over the next few years.”
While a booming industry is positive news, it comes with a catch. Benoit warns the demand for skilled workers is creating a “capability crunch.” If not managed carefully, it may cause cost blow-outs and project delays, and may also threaten decarbonization targets.
Skills gap across all areas, roles
Benoit has more than 15 years’ experience in P&U, and was in charge of business improvement and transformation for French utility EDF before joining EY. He says that while the sector has seen skill gaps before, the scale and complexity of today’s shortage is unprecedented and compounded by an ageing workforce.
“We are seeing a lack of capacity across all areas and types of jobs — IT, customer services, field forces, and even with the IT and business consultants.”
The first challenge is the sheer size of the projects, particularly the smart meter rollout.
“Utilities are used to replacing meters every 15 to 20 years, and their workforce is designed around this. Now they must roll out meters within five to eight years — meaning they need three to four times as many resources to do it.”
The second challenge is the complexity of what is required.
“Unlike traditional meters, smart meters must be connected within the house to many devices, the gas, electricity and to the back-end billing systems. That back end, depending on the countries, is a set of centralized and decentralized communication and billing systems.”
“This more complex technology and the shorter life expectancy of smart meters will affect the replacement frequency and associated human efforts required.”
“There is also a need for people to work on the infrastructure behind this new technology, and manage the deployment of millions of meters. Therefore, the IT function of utilities will need to do more regarding security, managing data, communications and so on.”
Operating in an “ecosystem”
Just as the causes of the capability crunch are complex, so are its potential solutions.
“Partnering with a single partner organization — traditionally, systems integrators — to help solve the smart metering skills problems doesn’t work anymore,” says Benoit.
“Instead we are seeing new models evolving that are like ecosystems. For example, smart meter projects are made up of three, four, even 10 organizations that are working towards achieving the goal for their customers. These organizations may include those that manufacture meters, transport them, install them, train the workforce and manage the systems used to deploy and use the data they generate.”
While this model is an efficient way to find the right resources, it is more complicated.
“Utilities now have to manage multiple relationships, as opposed to just one. At EY, we are working with clients to take away some of that complexity, by managing the ecosystem and moving people between geographies according to our client’s needs while reusing expertise.
“For example, the UK has been deploying smart meters for two or three years while Germany is about to get started. It may be that when the UK is well advanced into its deployment, much of the rollout in Germany will take place. That’s a perfect example of how we can move people between two countries.”
Recreate the consumer relationship
Despite the pressure on resources, Benoit says the opportunities of the smart transformation are significant.
“At last, utilities have access to real-time data. They are becoming more like telecom organizations. They will know what the customer consumes and understand them better. This data will open up many possibilities for utilities in terms of offers and promotions for consumers.”
It is an opportunity to “recreate the relationship between the energy company and the consumers” to help address the sector’s priorities.
“Smart metering connects the consumer to their energy usage, helping them consume less. The three key issues of the energy industry: affordability, sustainability — making sure that we don’t destroy the planet — and security of supply — that when we press the switch, the light comes on — all of these will be addressed through smart metering.”
“That’s probably the part I find most interesting. Smart metering is doing something about helping people to consume less and actually addressing the big issues of our sector.”