What are power and utility companies overlooking?
Big data is here and it’s changing the way we do business and live our lives – or so we are told. But what exactly is it and how is it impacting the power and utility (P&U) sector?
Big data describes the anticipated massive increase in the volume and complexity of data under management. Within utilities, it is directly associated with major changes to business models or operations.
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For further information about the survey referred to in this article, visit www.ey.com/powerandutilities/business-pulse.
The deluge of big data will touch on every aspect of a utility’s business model. But despite its far-reaching impact, the issue came a surprising 15th on our list of risks.* It appears many utilities are struggling to grasp the implications of big data, as they underestimate its impact both as an opportunity, and as a potential risk.
It may help to understand the main reasons behind the swell of big data in the P&U sector. The rollout of smart metering is a big driver, escalating meter readings from once a month or once a quarter to, for example, every six seconds. Each reading generates data for time and demand management processes. The potential opportunities are immense – from the ability to better manage supply to tailoring products and services to specific customer needs – but only if this mountain of complex data is adequately captured, analyzed and exploited.
Another driver is today’s customer, empowered with the information from smart meters and other technology and wanting more and better services, as well as the power to engage with their energy providers when and how it suits them.
But undoubtedly the biggest driver of big data in the P&U sector is the rise of decentralized generation, which, while not replacing centralized generation, is increasingly seen as complementing it.
This article considers the implications of both big data and decentralized generation for the P&U sector. In summary, it is important to remember that all parts of the industry are facing these issues and that solutions are still being developed as the issue evolves. There will be no quick fixes. Acting now and taking a holistic approach that acknowledges that the challenge of big data extends beyond IT and that decentralization is about more than engineering, is the best way forward. The utilities that are already working with us to master big data are the ones creating a competitive advantage in a tight market. Their early action is turning what could be considered risks into giant opportunities that bring new customers, reduce costs and puts them at the forefront of the industry’s transformation.
* Business Pulse: exploring the dual perspectives on the top 10 risks and opportunities in 2013 and beyond, power and utilities report, EY, 2013.
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