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This article originally appeared in the above issue of our bi-monthly print magazine. The digital version of the magazine can be read online or downloaded free of charge.
9 March 2017

Utilities at the heart of smart cities?

by David Socha

And there’s a real opportunity to do that in smart cities which are are full of businesses, initiatives, programmes… whatever… with high energy needs.

Until recently, utilities could consider themselves like undertakers: indispensable. When did you last see those guys go out of business?

But things have changed. Sticking with the slightly morbid theme (Note to self: why didn’t I write this for a Halloween release?), there’s been much talk in recent years of the utility death spiral. And even the “other utility death spiral”. Seriously. Apparently, there’s a lot of it going around.

So is there a way out of all this… death? I believe there is.

Utilities need to become indispensable all over again. And there’s a real opportunity to do that in smart cities. Smart cities are full of businesses, initiatives, programmes… whatever… with high energy needs.

Even once they’ve become super-efficient and entirely renewables-based. Think of integrated travel and transportation schemes. That’s potentially the biggest energy provision opportunity right there. Sure, I do believe we’re on the road to the autonomous vehicle (both driver and fuel independent) but what about the trams, the trains, and those hybrid bus-tram-things?

Then there’s local housing authorities. Again, a huge aggregated market that can be won (or lost) by the local utility. If it plays its cards right. And not just for straight energy provision.

Also, for the broad range of services still being defined in the promise of the future energy supply company (ESCO). Building energy management. Rooftop generation rollouts and management. Creation and operation of citizen energy profiles. Doesn’t sound like the remit of the traditional boring utility business? Well, that’s kinda the point.

Smart cities and large-scale users

I’ve written before about domestic customers and maybe even communities going off-grid completely. And it could just be that pursuing those guys is a (long-term) lost cause. Or not. But that’s not today’s discussion. Rather, as Google continues to do the corporate version of going off-grid, the traditional utility companies have to see the opportunity to still be the energy, infrastructure and services provider of choice to the majority of large-scale users. And there will be a concentration of that kind of user in smart cities.

Utilities need to become indispensable again. And there’s an opportunity to do that in smart cities.

Although regulators might have different ideas, why wouldn't the local utility be the obvious choice to roll out a comprehensive EV charging station network? Or an in-road induction charging infrastructure? OK, they might not get away with charging existing customers for it in the traditional way. But that’s where new business models come in.

Utility as smart city champion – what's missing?

For utilities to grasp such opportunities will mean huge disruption. The industry has the engineering knowledge and skilled people that can deliver the technological revolution. But it lacks three things:

• The business leaders that can transform an industry, create entire new revenue streams and business models and stand up to governments and regulators. Such leaders have a very different set of core skills from those who traditionally run a tight ship in a safe and steady infrastructure business.

• The branding, marketing and selling acumen of the world’s most recognised brands. Because now, you’re competing against Tesla. And Google. And who know who else tomorrow. Apple?

• The data and analytics infrastructure and skills to interpret, act on and extract the real value from the Internet of Things (IoT). It’s a connect world, my friends.

And if you are to succeed in this world, it’s time to understand how to deliver value from the data that’s all around. In your own assets and infrastructure. In customer communications. In publicly available data sources. In business partners’ systems. In your own systems, legacy and new. Are you ready for that?

On the bright side, I’ve certainly seen some (limited) progress in all three of these areas in recent times and at selected utilities. But I’ve also seen many with their head in the sand, sure that little incremental improvements in customer service and a slow creep up the Net Promoter Score rankings will save the day. It really won’t.

It might be too much to say there’s a bright future ahead for utilities. But it’s entirely reasonable to suggest that there’s a great future ahead for those that grasp the new opportunities in energy services. We are in a time of great transformation. Embrace it. And look to smart cities as the opportunity they are. We might just succeed at this yet. MI


David Socha is a regular contributor to the Metering & Smart Energy International website metering.com. You can read a selection of his contributions here 

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