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May 2015 - Perspective - Doc # EIOS53X

Redesigning Utilities for the "New Normal": Highlights from the 2015 IDC Pan–European Utilities Executive Summit

Authors: Roberta Bigliani, Jane Doorly, Gaia Gallotti, Milan Kalal, Robert Parker, Jean-François Segalotto

This IDC Energy Insights Perspective summarizes the key themes and discussion points from the third annual IDC Pan–European Utilities Executive Summit hosted by IDC Energy Insights on March 23 and 24, 2015, at the Landgoed Duin & Kruidberg in the vicinity of Haarlem, the Netherlands. At the event, around 40 utility executives from 13 European countries, alongside IDC analysts and sponsors — C3 Energy, NTT DATA, Opower, Infosys, OMNETRIC Group (A Siemens & Accenture Company), and isMobile — tackled some of the biggest issues facing the utility sector through presentations, panel discussions, and workshops.

IDC Energy Insights finds that:

  • As European utilities live the "perfect storm" of energy transition, finding profitability and easing the crunch on margins remain an overarching objective of their strategy agendas. Energy management services (particularly for commercial and industrial customers), electric vehicle charging services, and distribution grid services other than commodity delivery are among the most promising new revenue generators.
  • Utilities need real customer centricity if they want to improve on consumer satisfaction and trust. They should provide more personalized information and better services during key moments along the customer's life cycle, while positioning themselves as trusted energy advisors.
  • Non-utility companies — including Internet companies (Google, Amazon), consumer electronics manufacturers, and telcos — are perceived as the most serious contenders to the utilities' businesses. Many brands in these industries have better consumer appeal, stronger ability in extracting value from data, and deeper relationships with their customers. In addition, they enjoy better customer trust and are digitally more mature.
  • Playing as market facilitators will be the single most important role for distribution system operators (DSOs) in the future. This involves the DSO becoming a data handler and an enabler of flexibility in a market in which increasing constraints are placed on the network. However, regulation is holding innovation back.
  • Digital transformation is bound to produce the biggest benefits for utilities around assets, workforce management, and consumer engagement and interaction. With data representing the industry's most precious asset for championing digital transformation, utilities should make sure their IT organizations are up to speed with new opportunities and envisage an orchestrator of the digital business transformation.

New market models are being tested, including local flexibility markets (a market for alleviating local distribution constraints) and flexibility contracts with aggregators. In France, for example, a draft bill encourages local authorities to experiment local flexibility markets in coordination with the DSO. In addition, an investigation into market models for flexibility has been launched under the Smart Grid Vendée project in the west of the country. This is a 2,600 square mile five-year demonstrator testing market designs, active management of the medium voltage grid, increases in grid hosting capacity, and new demand response mechanisms.

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