If tech powers the future, who powers the tech?

By EY Global

Multidisciplinary professional services organization

6 minute read 3 Jun 2021

Show resources

  • Power Utilities Digital Survey Final (pdf)

As they juggle the demands of decarbonization and digitization, utilities need both people and tech to power transformation.  

In brief
  • A reinvigorated focus on talent and skills is necessary to fully realize the value of technology and propel transformation across the utility value chain.
  • In an EY survey, 85% of power and utilities leaders recognize that the ability to reskill their workers quickly is crucial to success over the next three years.
  • Yet only 57% agree their organization has a robust plan to achieve that reskilling over the next three years. Our four-step plan can help devise a strategy.

For the power and utilities (P&U) sector, the long-imagined future of energy is becoming the present: governments are aggressively planning to decarbonize, the prices of renewables and electric vehicles (EVs) are falling, and both customer and investor expectations are becoming more aligned with sustainability. EV adoption will soar, creating a vast replacement market, new fuel opportunities and a new ecosystem tapping into new value pools, but the market is highly competitive. The new energy consumer will become an active market participant with changing needs and higher expectations. And, new technology will be needed to address hard-to-electrify areas or to offset emissions, but technology risk across the value chain remains high.

Vast opportunities will be created for organizations that accelerate, although significant challenges to achieving success remain.  Against this backdrop, a new EY survey (pdf) shows profound ramifications — in what technologies merit greater investment and which skills will power the next generation of energy.

P&U executives from across the world foresee dramatic changes over the next three years, our survey shows. They say new technology, advances in renewable energy sources and the response to decarbonization will be the top three positive drivers for the sector. More than 90% say they will be adapting to increasing consumer expectations for a cleaner-energy economy. 91% say they will be changing their mix of energy sources over the next several years.

Survey says

91%

will be changing their mix of energy sources over the next several years.

To navigate these drivers of change, executives recognize they need both the right digital technology and a dynamic, skilled workforce that can operate in new environments, many of which are just starting to be imagined. New skills and capabilities — in areas such as digital fluency, data analytics, continuous learning and adaptability — are needed for companies to thrive in the future. But how and where can they be found?

The gap to achieving ‘Being Digital’

Yesterday’s drivers of success no longer resemble tomorrow’s, as economic models and operating environments are changing. Core financial, engineering, customer experience and command and control operational capabilities remain crucial to the performance of P&U organizations, but many additional skills are needed.

 

Digital skills gap

89%

of P&U executives report too few workers with the right skills as a challenge to digital technology adoption.

You can see the gap within data capabilities in particular. As utilities rely more on digital technologies, the amount and scope of data has surged, and so has its importance. But turning data into insights requires critical analytical skills utilities often lack, hindering their ability to maximize the investment return and improve on customer service delivery.

In addition to technical skills, adaptive skills such as communication and decision-making are rated by executives as highly important to their organization’s success. Of note, analytical acumen was rated less of a priority to the respondents, which may further challenge adoption of data-intensive technologies such as artificial intelligence and machine learning.

Ultimately, utilities recognize the need for data analytics and digital skills, but do not place a premium on the acumen that serves as a foundation for capturing and optimizing data collected from smart grids, advanced control systems, customer experiences and preferences, and asset management platforms. This is a symptom of how utility companies are focusing on business priorities such as advanced operational systems and data collection without aligning the supporting skills.

Challenges to closing the gap

Identifying the required skills is one step but closing the skills gap will prove more difficult: about 9 out of 10 P&U executives identify both training (91%) and hiring (86%) as challenges to technology adoption. They also estimate three out of every five workers in the industry need reskilling or upskilling, yet of the three, only two actually will be reskilled or upskilled.

Despite a recognition that the ability to reskill will determine their organization’s success over the next few years, only 57% say they have a robust plan to achieve it over the same time period. Further, one-third say they are unable to measure the gap between the skills they have and the ones they need. They also cite a shortage of teachers and trainers (83% identifying it as a challenge to reskilling), difficulties in developing effective curricula (89%), and challenges in assessing employees’ progress (81%).

And executives are not talking about minor changes around the edges of employees’ skill sets. They estimate, on average, it will require 7.5 months and US$4,650 to reskill or upskill the average employee who can be, needs to be and will be reskilled or upskilled.

In addition, structural and cultural challenges to change are some of the most difficult to solve as they touch all aspects of an organization. Infusing digitization into an organization’s culture requires buy-in from executive leadership down to each field worker and other individual contributors. For leadership to simply say they want their employees to have a digital mindset is not enough — tangible structures that integrate digital thinking into existing ways of working are necessary to reinforce digital innovation as a priority.

Building the bridge to close the gap

While utility executives point toward an all-of-the-above approach to solving for skills shortages — build, borrow, buy — organizations are more likely to be “planning” or “likely” to carry out each of the 10 strategies for filling skills shortages than they are to be currently executing it.

Disruptive forces are only accelerating. Utilities need to proceed with unwavering focus to simultaneously identify and fund a cohesive strategic plan that creates both the right skill sets and mindsets to power their investment in technology. Unfortunately, there isn’t a one-size-fits all solution.

Utilities need to proceed with unwavering focus to simultaneously identify and fund a cohesive strategic plan that creates both the right skill sets and mindsets to power their digital investments. 

Key questions to consider as you move forward

1. Set your strategy for transformation: 

Do you have a comprehensive view of your needs and resources to strategically prioritize efforts and position your organization for success, both now and in the future? Are your leaders aligned on the value of and the pathway to digital, and around the process and priority of unlocking your workforce’s potential? If you wait to come out of the downturn to invest, you will likely sacrifice talent to more proactive sectors. Skills, adaptivity and continuous learning cultures will be a competitive advantage.

2. Identify your talent needs:

Do you have an accurate understanding of your employees’ current skills and development potential, and, therefore, a sense of how many will need to and can be reskilled or upskilled? What are the current maturity, availability and access levels of critical skills within your organization and local market? What systems are necessary to begin to consistently and accurately measure those levels? This is crucial for understanding where gaps exist between your digital and skill investments.

3. Determine how to reskill and upskill: 

What tools, partnerships and other resources exist or are available to aid in this transformation, and which still need to be identified, forged or acquired? To build, encourage and incentivize learning, you can develop recognized accreditations such as learning badge programs and create curricula that curate open-source learning materials that align with on-the-job learning experiences.

4. Identify and eliminate roadblocks to change: 

What structural and cultural barriers exist in your organization? These can include a lack of leadership support amid competing priorities, general resistance to change, entrenched standards and mindsets, and governance and organizational design elements that hinder flexible, rapid decision-making and innovation. As utilities implement new technologies and processes to meet consumer needs and decarbonization demands, focusing on workforce and culture issues can make a true transformation possible.

  • Methodology

    In January and February 2021, TRUE Global Intelligence on behalf of the EY organization fielded an online survey of 159 P&U executives across the globe who hold a breadth of functional roles, including IT, HR, operations, strategy and digital departments.

Summary

As power and utilities companies implement new systems, tools and processes to meet customer needs and evolving sector demands, focusing on the workforce and the alignment between talent and tech can make true transformation possible.

About this article

By EY Global

Multidisciplinary professional services organization