[Top 10] Challenges Facing Utility Companies in 2014
As competition increases and technology advances, more companies are adding services to their rep...
10. Evolving Business Models
As competition increases and technology advances, more companies are adding services to their repertoire. Smaller utilities cannot easily invest in every dimension of the system. Utilities will need to consider whether their future success requires expansion or partnering with other firms in order to become a full-service provider.
9. Transactive Energy
Transactive Energy is a two-way transaction system in which electricity can be directed to where it is needed and priced accordingly. The process isn’t anything new, but as distributed resources increase, utilities will need to ensure balance and that a reliable grid is maintained.
8. Energy Storage
Increased energy storage options lead the customer to believe that they have a level of independence from the utility, and in some cases, they do. Access to constant and reliable storage such as rooftop solar would mean that traditional systems would become the backup. This could—and already does—occur with large industrial companies, which is where a substantial amount of revenue usually stems from.
7. Distributed Energy Resources
Experts forecast that by 2020, utilities will reach a tipping point where power from rooftop solar PV will become cheaper than power from the electric grid in most parts of the United States. Some foresee a future cliff for traditional generation when distributed energy resources are combined with affordable energy storage technologies.
6. Capital Investments
Over the next 18 years, utilities are likely to spend $100 billion per year on capital investments to replace power plants, implement new technologies and meet new regulatory requirements. The return on investment is not always immediate and could range anywhere between one and 50 years. This has the utilities worried, as the lengthy wait coincides with a time of industry contraction.
5. Regulatory Uncertainty
Global concern for global warming and fuel supply continues to lead to uncertainty among utilities. Regulators are instituting stricter policies with tighter deadlines, and some utilities are struggling to keep up. Utility rate cases in a strained economy are likely to be more contentious, leading to apprehension and challenging capital investment.
4. Dynamic Pricing
The concept is good in theory, but dynamic pricing is only successful when customers are committed to working with the system. Utilities need to provide customers with the right tools and enough education in order for them to consciously alter their usage. The system won’t work if behavior doesn’t change. If customers can’t be flexible, utilities can’t afford to be, either.
3. Demand Response
Utilities spend millions each year on demand response programs. But in areas of the United States where demand response programs are in effect, only an average of 5 percent of the population actually participates. Consumption and production must balance, and if customers are not on board to decrease usage during peak demand, outages are inevitable. Thanks to the recession, improved efficiency and distributed generation, electricity demand outside of peak times has waned.
2. Customer Expectations
Today’s customers covet the most cutting-edge technology available. They want the option of personalization, but they don’t want to pay for the energy required to power the systems. Additionally, customers are not aware of the costly technology required to give them customization control, nor are the majority of them familiar with how smart grid sensors work.
Cyberattacks have become so common that some utilities claim to encounter them on a daily basis. A cyberattack on a utility could potentially result in blackouts from overloaded transformers or substations, and replacing equipment could take a substantial amount of both time and capital. Power grids, as well as water and gas utilities, have added more and more electronic elements to their operations systems, increasing their exposure to cyberattacks.
Top 10 ways to prepare for COVID-19
Energy Digital sets out Gartner’s Top 10 ways organisations can prepare for a pandemic, via effective operational risk management.
As the spread of the Coronavirus (COVID-19) continues to develop, many businesses are left uncertain as to whether their risk mitigation plan is sufficient.
In a recent webinar conducted by the research and advisory firm just 12% of 1,500 people believe that their business is highly prepared for the impact of COVID-19, while 56% believed themselves to be somewhat prepared, and 11% believed themselves to be very unprepared.
“Most organizations have done some pandemic planning but still have many unanswered questions about whether they have done everything they can to manage risks,” says Jim Mello, Senior Director, Advisory, Gartner.
Establish a preparedness framework
Establish a team that represents all critical business functions. These people will report directly to executive management and are responsible for prioritising the importance of business activities and organise them in tiers for response and recovery.
Monitor the situation
It is important to ensure that organisations monitor the rate in which the infection is spreading and its severity. Many rely on the World Health Organisation for information.
Be sure to revise revenue forecasts and communicate with investors, as well as suppliers in regards to any potential finance issues. It is important to ensure that the business has the working capital to ride it out.
Ways to ensure this include: working capital checks, seeking loans or government-sponsored financial relief.
Extend personal hygiene and cleaning protocols
It is important to comply with any changes to workplace regulations. In addition, it is important to establish protocols for staff returning from infected areas, as well as extending existing hygiene activities.
Ensure close monitoring of absenteeism rates for signs of problems. It is important to identify critical staff in order to make sure the company can continue to function in their absence and be prepared for up to 40% absentee rates.
In addition to reviewing HR policies and procedures, it is important to maintain a level of sensitivity when it comes to engaging with employees and workplace preferences.
Establish a communication programme
People can feel out of the loop quickly. Establish a spokesperson appropriate for the situation who can maintain lines of communication. In addition, organisations should establish pre-approved messages and scripts for various stakeholders.
Review the impact on the operation
Although this may seem overwhelming, the team established to represent all critical business functions should identify key areas to consider. It is important to maintain a connection with the reality on the ground in countries affected.
Key questions to consider: is transport functioning? Have holidays been extended? Where can operation continue and where do they need to stop?
IT business functions tend to be relatively well-prepared for business continuity. However, it is important to assess the supply chain for critical equipment and keep extra inventory if required.
In addition, organisations should keep in mind remote data centre management and cloud options for critical systems as well as enabling remote working programs and rescheduling any non-essential IT work prioritising key applications.
Review pandemic plans to identify any gaps in response
Conduct a preparedness exercise by validating roles and responsibilities as well as recovery requirements and procedures, in order to identify any gaps in the recover capabilities and resource needs.
Following the establishment of a pandemic plan, identify three lessons learned, key observations or improvements for the exercise. After establishing these organisations should priorities the short and long term follow up actions.