No. 4: Supply shortages, quality or safety issues
Access to safe, reliable and affordable energy and water is a worldwide challenge. The EY 2016 Megatrends report found that in 2015, the world’s population consumed the equivalent of 1.6 planets’ worth of resources — and this will rise to 2 planets’ worth by 2030. This growing pressure is why 58% of respondents ranked this in their top three operational risks.
The stress on resources is being made worse by growing interdependencies: it takes enormous volumes of water to produce electricity, and tremendous amounts of energy to produce clean water. In fact, energy accounts for as much as 80% of the cost of producing drinking water.
For instance, the 2014 decision by the city of Flint, Michigan, to switch water supply sources without putting in place adequate corrosion controls while the new pipeline was under construction led to its population being seriously affected by drinking water that contained lead and other toxins. The city now has to make costly improvements to water treatment plants that will also require extensive upgrades to energy-intensive systems, such as pumps and transfer stations.
Investment in assets today has cost implications decades into the future. However, remediation and recovery costs, as well as the avoidance of reputational damage associated with catastrophic asset failure and supply interruptions, will likely far outweigh the costs of replacing, maintaining or upgrading these assets.
The rise of innovative new technologies, such as smart meters and thermostats, presents enormous opportunities for P&U organizations to collect, manage and analyze detailed data from millions of customers. This could lead to a greater understanding of customer needs and the opportunity to provide more valuable personalized services to encourage customers to stay loyal.
With the ongoing cyber threat and a renewed regulator focus on data privacy, the associated risk in managing and protecting such customer information is substantial, both financially and reputationally.