Woman interacting with large grid map

Why the future of power and utilities depends on data

Trey Thornton

EY Americas Power & Utilities Leader

5 minute read 02 Dec 2022

Today’s power and utilities companies are not using data to its full potential nor meeting growing needs for data sharing.

In brief

  • The energy industry depends on a reliable data for all day-to-day operations, including safety, compliance and system reliability. 
  • With energy and renewable companies, data quality can be hampered by noncompliant and mismatched data coming together from different source systems. 
  • Weak data controls can lead to security concerns. Data officers must set governance allowing data sharing without compromising privacy, security or trust.

Across the energy sector, organizations are discovering that their data strategy will not enable their future. In fact, the data capabilities at many power and utilities companies do not even meet today’s needs for reliability, efficient costs and employee productivity, let alone the evolving data-sharing needs related to emissions reporting and sustainability efforts.

Quality data is needed for all day-to-day operations for power and utilities companies, for compliance, grid reliability, financial reporting and to improve customer experience. Companies depend on data to keep lights on and homes warm during a storm, plan for peak energy demands despite volatile weather, get ahead of maintenance and mitigate damage by more quickly knowing the impact of natural disasters.
 

More than just a tool to avoid trouble, data can be an asset that strengthens the future of the organization. Business users need the latest data to innovate and build an agile data marketplace. With access to accurate data systems, users can develop self-service analytics capabilities to explore new ways to address operational and energy supply challenges.

  • Data can be used to identify short- and long-term trends and to plan for alternate scenarios, which enables companies to become more adaptable.
  • Artificial intelligence (AI), machine learning and predictive analytics can monitor data to detect unusual patterns and diagnose long-term risks.
  • Data can be used for predictive maintenance and improve safety of workers on-site.
  • Employee productivity improves as data is integrated across systems, and employees spend less time reconciling reports.

A recent EY survey conducted across a segment of the electricity industry shows that power and utility executives see the value in data as an asset, but many companies are at the nascent stages of establishing a modern data plan. None of the respondents has a chief data officer, and less than one-third have a formal data strategy that serves both IT and business needs.

Checking equipment in solar power plant
1

Chapter 1

Develop energy data strategy at the executive level

Leadership sets the agenda for power and utilities companies to advance digital initiatives.

We see a direct relationship between senior leaders’ commitment to improving data governance and the organization’s success rate with digital maturity and data accuracy, reporting and strategy.

In an EY report, The DNA of the Chief Data Officer, we explore the potential the chief data officer (CDO) holds in power and renewable companies as organizations look to align data strategy to business strategy. An effective CDO is the foundation for helping energy and resources organizations build transformative, digital and data-driven capabilities.

While a CDO, specifically, isn’t mandatory, it is essential to have a formal oversight, process or center of excellence that works collaboratively to manage how data is collected, protected, shared and controlled. Centralize the data, establish who is going to own it and empower them to become the “data governor” of the organization. Creating one source of truth is the goal. From there, information can be organized and extracted by each function of the business and stakeholder group.

Does your organization have a data strategy?
29%
A recent EY survey shows most utilities do not have a data strategy that services both IT and business needs. (Source: EY Power & Utilities Data Governance Survey, December 2021)
An electricity meter with blue cables mounted to a wooden pole
2

Chapter 2

Changing times will require data and power to flow both ways

Utilities are examining their data strategy and governance to prepare for reporting requirements

Power and utility data executives must also look ahead to compliance needs and the changes that will come with renewable energy integration and global warming, including mitigation strategies related to environmental disasters and climate change.

 

New regulations will transform the way utilities use data. In addition to using asset data for system planning, operations and scheduled inspections, companies will use asset data to enable emissions reporting and other forthcoming environmental, social and governance (ESG) data reporting mandates, where consistent, accurate and timely energy data and statistics are fundamental.

 

A free flow of information across the sector will also be necessary for utilities to meet customer expectations and to effectively embrace the future of the sector — such as when renewable energy (wind, hydro, solar) is purchased from customers or the increased adoption of electric vehicles (EVs). Some utilities are experimenting with two-way power flows, which send excess energy from a residential customer through EVs or solar panels back to the grid during peak demand.

 

Utilities whose data capabilities do not transform to meet these levels of performance stand to have their shortcomings exposed. Many utilities are conducting a comprehensive review of whether their data systems are accurate.

 

Some data systems and architectures have been patched together after mergers and acquisitions or infrastructure upgrades, resulting in mismatched data. One utility found it had three record systems that contained materially different data about the number of transmission towers, and it could not identify a single system of record. Advanced digital systems cannot work to their full potential if sensors are not recording the right information, if data is assigned to the wrong asset, if data is stored across a wide array of business functions or if the business users don’t have access to reliable data.

 

Utilities need to establish data strategy now to meet stakeholders’ expectations.

How would you assess the maturity of data governance within your organization?
57%
Of power and utility executives surveyed are at a developing or initial level or maturity; none have advanced practices.

Questions to ask when establishing data strategy:

  1. How are we measuring data quality?
  2. Are our key internal stakeholders involved, including senior leaders and IT?
  3. Have we identified the ESG sustainability trends that will impact our business?
  4. Do we have the right data strategy to give business users the right access to the right data at the right time?
  5. Do we have the right data strategy to advance self-service analytics?
  6. How can we understand all stakeholders’ needs, to deliver on their expectations?
  7. How can we use our data as our most valuable product?
  8. Who is reviewing those data quality results?

Summary

For most power and utilities companies, their existing data systems and strategy will not enable tomorrow’s needs for data sharing and interconnected digital technologies. Energy companies need to operationalize their data strategy to prepare for needs across the value chain. However, many utilities are not able to manage the process because they haven’t established a centralized model for data governance or a future-focused data strategy.

About this article

Trey Thornton

EY Americas Power & Utilities Leader

Experienced business leader. Active leader in the Southern California business community.

Related topics

Energy and resources
Power and utilities

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