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The market value of many utilities is based on investors’ expectations of their ability to grow future earnings.
Yet delivering against these expectations is ever more challenging. This pressure on revenue generation is set to continue to intensify in the future, given shifts including the increasing focus on energy efficiency, demand-response programs and distributed generation.
Amid these changes, the key question is how utilities can improve their performance in the future. They are already making major gains by applying advanced technologies, not just to improve existing processes through innovations like advanced metering, but also to transform how entire processes work, such as outage detection and response. In driving further benefits, utilities can learn valuable lessons from the experiences of other industries.
All of these advances share a common characteristic: smart, committed use of data analytics to turn information into valuable, actionable intelligence. Explore how the use of advanced analytics can potentially enhance operating results and help your utilty company decide where to focus efforts and become information-driven organizations.
Utilities face significant challenges to meet their commitments to shareholders and regulators, while safely managing the health and reliability of the network. Utility executives continue to make important promises to shareholders to deliver earnings growth, yet these growth goals have become significantly more difficult to achieve due to lack of load growth, rising operating costs and the volatility of energy supply markets.
Over the next five years, disruptive changes are expected to put additional pressure on utilities’ economic models, including increasing focus on energy efficiency, the growth of demand-response programs and the impacts from increasing adoption of distributed generation.
In response, many utilities are deploying smart technologies to enable new capabilities and extract greater value from their assets. Utilities have learned from their own experience and lessons from other industries that delivering value from these new capabilities requires fundamental changes to the business and operating practices. Many of these changes can only be achieved by deriving critical insights from the voluminous data captured by smart devices and correlating with data in current operational systems and with external sources.
Considering the potential value of this data, using advanced analytics to help drive operational changes has become a critical imperative for most utility executives. Accenture believes that the potential for value is compelling leaders in all markets to take steps to industrialize the discipline of driving operating change through analytics to an organization-wide scale, including integrating enterprise analytics with operational analytics. Successful companies will achieve a cultural shift to foster an information-driven organization that uses data-driven decision making to achieve high performance.
Respondents to Accenture’s executive survey among utilities executives worldwide responsible for smart grid-related matters in their company note that there is broad support for analytics across all areas. While the application of analytics is not yet mainstream, estimates of planned investments show that utilities clearly recognize the potential of analytics.
Accenture’s analysis suggests the potential value of using smart grid analytics to transform operating results, at a conservative estimate, could approach $40 to $70 per electric meter, per year. While value estimates vary geographically, we believe that the potential for value is compelling leaders in all markets to take steps to industrialize the discipline of driving operating change through analytics to an organization-wide scale—including integrating enterprise analytics with operational analytics.
Of note is that the majority of executives point to the importance of analytics related to better management of the network itself. But the great opportunity now is for utilities to position themselves to become information-driven and able to use analytics to derive insights that can fundamentally change decision models, performance insights and process changes to drive ever greater value.
Using analytics is one of the most important ways utilities can achieve new results to support strategic imperatives and improve shareholder returns. High-performance businesses make analytics an integral part of their daily business process, and this should be a high priority for the utilities industry.
The most important action is to find value propositions and use cases that are aligned with a utility’s strategic objectives and begin the journey.
In Accenture’s view, there are six insights that demonstrate how analytics can be used to transform operating practices and help achieve more fundamental improvements in results.
Read the full report to learn about each of these insights in more detail.
[PDF, 993 KB]
October 30, 2013
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