Working at the intersection of technology and the utility industry for over a decade has taught me two things:
No industry is as glacial as the utility industry in adopting innovative technology.
Despite its reluctance, the industry inevitably adopts the technology it resists. Especially if consumers can be served and shareholder value can be created.
For an industry that is critical to our day to day functioning (you are reading this from a device powered by the grid) I stay amazed at how little attention is paid to this industry. Regardless, it is on the cusp of a world of change (otherwise known as 'hurt') in the three broad sectors of the i) grid (the wires and lines that get power to your home), ii) operations (the people and equipment that keeps your lights on) and iii) consumers services (billing/payments and customer services).
In futurecasting for this industry one does not need to take too much of a leap of imagination to determine what's about to happen because the industry borrows from other asset heavy (but technology friendly) industries, a key one being telecommunications. Investors and professionals interested in this space will do well to watch for the following trends that have consumer impact. I leave trends affecting the asset side of the industry (generation, transmission and distribution) for a subsequent post.
- Portfolio management software for distributed energy resources (DER): As solar panel prices continue to drop, as installations of Tesla Powerwalls start in markets where the kWh/price make the battery pack competitive and car manufacturers promise electric cars for the masses, the utility has to manage the variability in sources and demand for electricity. The utility will require software to manage these microsecond decisions on what you need and where your electricity should/is coming from. The corollary is the high frequency trading (HFT) software used in flash trading; it enables traders buy and trade stock in microseconds. Similar software, that enables the management of the grid to ensure quick responses and optimal grid performance, will start to make its way into the utilities arsenal for delivering electricity to you and I.
- Virtual Reality for Workforce efficiency: VR and AR for training and simulations will enable knowledge transfer and retention to curb the problem of an aging workforce (55% of the utility workforce will be eligible to retire in the next 5 years) before it becomes a catastrophic issue for the industry. A few months ago I attended a conference on the Future of Work and experienced the demo of an Augmented Reality product. The product wasn't for the utility industry but I quickly shared with them how perfect of a use case they have in the utility industry and how well suited their product is to the utility industry.
- Self Driving Cars and plummeting LiDAR costs: Unbeknownst to most, a big problem for utilities is outages caused by fallen trees/vegetation. Yes, vegetation. A single tree limb coming in contact with a power line causes circuit breakers to shut off your power. Not ideal as it inconveniences you and costs the utility money. Those self-driving cars you see roaming your streets (for those of us in Austin and San Francisco that is) and the plummeting cost of LIDAR* equipment (from tens of thousands of Dollars to250) will enable utilities capture 3D data of vegetation close to wires and lines and plan ahead and make decisions about what to trim, when and how before unexpected outages occur. This will cut cost and improve the linesman efficiency who now have a plan to work with instead of driving around all day in search of stray tree limbs.
- Customer service, billing and payment user experience improvements: I met with a passionate entrepreneur here in Austin a few weeks ago who's applying an experience ubiquitous to digital natives who do use Venmo and do everything with a few clicks on their mobile phone; share payments. George Koutitas through his company Gridmates is enabling any consumer to share energy with people in need in the same way we transfer money to friends/family through mobile phone banking apps. It's a simple premise but one that is truly disruptive to the current payment and billing technology stack of the power industry (which I've spoken about before). Gridmates and similar consumer facing products that borrow from user experiences that we are now used to from other industries will make a push into interactions between you and the utility. Also here in Austin is a Machine Learning company that is helping utilities move away from the currently ineffective method of nudging you and I to reduce our usage because our neighbors are (in dissimilar suburban homes this falls short) instead showing you behaviours and tips to reduce usage based on deeper insights about you and customers that are actually similar to you. This company is called Grid4C.
As is obvious from the list above, these technologies aren't new (even AR is not new) but they are new to the utility industry. These technologies are mature in their applications in other industries and, for those in the utility industry, this is an indication of their reliability. The utility requires robust, tried and tested products that will enable secure and stable delivery of power to you and I. That's always been the case and, regardless of how cool or trendy an applicable technology is, the utility is not about to change its criteria...
Any other trends or products you expect to make its way into the industry in 2016?
* LIDAR: is a portmanteau of 'light' and 'radar' which explains the means by which the equipment captures data and converts into 3D imagery.