4 minute read 19 Oct 2021
Digital transformation - DISCOMs

Deploying digital transformation to help DISCOMs evolve

Indian power & utilities sector needs to keep up with the pace of digital transformation.

The digital transformation in Power and Utilities has driven the sector to keep pace with emerging technologies. Considering the rate at which conventional systems are becoming obsolete, the power and utilities sector needs to evolve and navigate through this rapidly changing and exciting landscape.

Challenges and the need for DISCOMs to evolve

The Indian power sector, the fifth largest in the world, is grappling with many challenges. Some of these include:

  • Poor operational efficiency
  • Lower per employee productivity
  • Higher cost of operation
  • Higher Aggregate Technical & Commercial (AT&C) losses
  • Lower customer satisfaction
  • Lack of consumer data and metering
  • Diversity of readings and deficiencies or losses in energy measurements

Most of these challenges are leading the DISCOMs toward financial unviability. The COVID-19 pandemic has further compelled utilities to speed up this shift.

Government and DISCOMs had come up with many schemes in past like Accelerated Power Development and Reform Program (APDRP), Restructured Accelerated Power Development and Reforms Programme (R-APDRP), Financial Restructuring Plan (FRP), etc. but the power distribution sector is still not a financially self-sustained sector, e.g., short-term liabilities are continuously increasing (with current power procurement overdues at US$13 billion[1] at the end of Sept 2021)

Parity in government and private utilities

The operational and functional comparison amongst the public and private power companies shows a huge parity in the deployment of digital technologies. If we look at it, many similarities like their business processes, assets, consumer type, etc. exist, but a major gap that DISCOMs in India are not leveraging is the true potential of digital initiatives, i.e., doing digital to being digital (leading power distribution companies are being digital rather focusing doing digital). Though the conventional business approach has been an immense success in the past decades, but with the rapidly changing landscape, DISCOMs in India need to keep pace to meet business objectives along with the customer satisfaction.

One example is of AT&C losses. The private Transmission and Distribution utilities have managed to reduce the AT&C losses between 10-13% through of digital transformation, while the state utilities are at 23%[2]. A comprehensive and timely adaption of digitalization at an enterprise level is a critical feature to maximize the unlocked value. However, similar initiatives are being deployed by the government utilities, but in silos, which beat the purpose of digital integration.

Dealing with the data while adopting the digital technologies

The World Economic Forum estimates that digital transformation in the global electricity sector could unlock $1.3 trillion in unrealized value from 2016 to 2025. The fourth wave of industrial revolution also called Industry 4.0 has brought technological advancements like:

  • IoT based solutions
  • Connected devices
  • Augmented and virtual reality (AR/VR)
  • Modern workplace
  • Robotics -process automation

The impact of these digital advances and their rapid deployment across the energy landscape raises the question of how to deal with the unprecedented amount of data and digital they give rise to. Here is where another digital process, data analytics in energy sector comes to the rescue. It’s not something that has arisen out of the blue, but the present need for analytics in managing the tremendous data has exponentially risen.

Data analytics in power and utilities is playing a pivotal role in business transformation

This technology is being used across the value chain by leading utilities and is aligned with technologies like:

  • AI/ML
  • Cybersecurity
  • Advanced Metering Infrastructure (AMI)
  • Advanced Distribution Management Systems (ADMS)

Hence, nowadays DISCOMs in India are gathering a huge set of data (approx. size is in petabytes) and this data can be used for customer segmentation, metering data analytics (tamper events on real time basis), hourly energy accounting, better load forecasting, system planning optimal power procurement, predictive maintenance of critical assets (reducing total cost of ownership (TCO) of assets), consumer data insights (peer-to-peer comparison, consumption optimization in TOD billing regime) through better web self-service portals or mobile app.

Moreover, if DISCOMs are interested in an EV foray, analytics play a significant role to find the best charging location, and the same applies for power transmission and distribution too. For example, grid network optimization and aggregation, grid automation, integrated customer services can be major themes.

Strategy while adopting the digital advancements and managing the change

DISCOMs need to develop a comprehensive strategy to adapt to these digital transformations and analytical solutions, keeping change management at the center of the vision and strategy roadmap. This will play a significant role in addressing problems of DISCOMs in India by turning around the debt ridden DISCOMs into financially strong and better consumer serving DISCOMs. Also, while digitalization can bring many positive benefits like increased productivity, efficiency, and safety across energy systems, it can also make them more vulnerable to cyber-attacks. Digital resilience also needs to be included in technology research and development efforts, as well as built into policy and market frameworks.

What matters is how these changes will be adopted

Achieving the desired goal of digital transformation Power and Utilities is a challenging road. It is difficult to predict the future of power and utilities sector in India however it majorly depends on how these technological advancements are adapted. Policymakers, along with power sector stakeholders have a key role to play and drive towards the desired objective of sustainable power for all.

Vinit Mishra, Director and Jyoti Gakre, Senior Consultant, EY India, also contributed to the article.

Summary

It not just about new technologies, it is about having a defined vision, mindset, approach, and well-skilled team to drive the change in power & utilities.

About this article

By Somesh Kumar

EY India Power & Utilities Leader

Experienced energy leader with deep regulatory knowledge.