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Digitalisation: The next frontier for the energy sector

Digitalisation the next frontier for utilities

Why UK network operators should embrace digitalisation

From health and finance, to music and travel, digitalisation has had a profound impact revolutionising entire sectors and uncovering new value propositions.

The energy sector has been one of the last industries to face this transformative wave of digitalisation but for the UK market that is all about to change.

The Office of Gas and Electricity Markets (Ofgem) has been clear that digitalisation progress will now be a licence condition and that sharper regulation will arrive in due course.

Rather than reluctantly do the bare minimum needed to comply with Ofgem and avoid being penalised, digitalisation instead offers an opportunity for the the UK’s 16 network operators to uncover a whole host of benefits and create a truly 21st century energy sector.

In our recent report for network operators - Digitalising the energy sector - we lay out why utilities companies should make their digitalisation strategy a central part of their policy, highlight some of the challenges the sector faces and make some key recommendations for how to make digitalisation a success.

So why should the sector embrace digitalisation?

1. Ofgem compliance

Achieving compliance with Ofgem really is just clearing the lowest of hurdles when it comes to digitalisation. As businesses, governments and consumers all continue to conduct a greater and greater share of their affairs online, the energy sector falling in line and doing the same is an inevitability.

2. Cost savings

In an increasingly digital world, cost savings will be found in monitoring, billing and administering online.

3. Digital revenue stream

It’s already become a cliche in other sectors that “data is the new oil” yet the concept of data becoming an income stream in its own right has yet to be considered by the energy sector.

While issues surrounding personal data protection do limit the scope of monetising data, it can still be commoditised by rigorous anonymising but only if the foundations to do so are laid soon and laid correctly. Increased intelligent data usage in even highly-digitalised areas of energy supply (such as smart meters) has thus far been underwhelming.

4. Supporting leaner, green consumption

Advances in artificial intelligence and machine learning, whilst significant, are dependent on large, high-quality datasets and require tangible use cases. In utilities, there is the potential to utilise data analysis and AI technologies to interrogate energy usage on a national scale, supporting intelligent decision making and identifying cost savings in a way that humans would not be able to achieve.

In addition, these technologies can be leveraged to provide internal efficiencies, overcome legacy technology challenges and provide highly personalised and optimised digital experiences for internal and external customers.

5. The sector can shape its own future

In order to be effective now and for decades to come, energy companies need to settle on an iterative format for the exchange of data that will allow them to maintain the standards set by the regulator while serving both the needs of their own businesses and their customers.

Other sectors have progressed quickly and found ways to digitalise using existing networks and technology – there’s no reason to assume that the utility companies can’t do the same.

An opportunity for change

Digitalisation will by no means be an easy feat for the UK's energy sector to achieve. But, spurred on by new Ofgem regulation, network operators can now take this opportunity to embrace change, and build better, more efficient operations. This will not only make them more resilient in the future, it will also help the UK to achieve its environmental goals, and provide more value for customers. Seen through a long term lens, this is only a positive thing.

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Digitalising the energy sector

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Jon holt
Jon Holt
MD Cloud & Data
Foundry4
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