Globally, there has been a tremendous build-up of pressure within the utilities sector, and in fast-growing Asia, the landscape is being redefined entirely.
Changes in regulations resulting in newly opened markets, disruptive competitors and technologies, and the evolution of customers from passive consumers to active market participants have combined to spark a radically new energy ecosystem.
Across the region, there has been a drive towards market liberalisation, with long-held monopolies disrupted. Mature markets like Singapore have seen the entrance of new suppliers, a diversification of energy sources, and an uptick in retail competition, demanding new value propositions. Malaysia is heading down the same path.
The overall shift towards decarbonisation has also prompted the need for greener and smarter grids. Both state-backed and private utilities companies are rapidly turning to renewables, especially as costs drop significantly. Indonesia is tapping geo-thermal’s potential and solar power has gained prominence in Malaysia and Thailand, while Vietnam has been looking to wind and hydroelectricity.
Several markets are also making strides in harnessing connectivity to meet consumer expectations for more convenience, value and choice, and evolving customer relationships into long-term partnerships.
These forces have edged the sector out of its conservative safe-zone and necessitated a new way forward, especially as our analysis of more than 350 energy providers shows that the industry is now seeing an absolute revenue decline.
It has already prompted early adopters to evolve into intelligent utilities, harnessing new technologies and capabilities to increase agility, efficiency, productivity and creativity.
Accenture has identified three interlocking steps from generation to retail that can help the sector emerge on the right side of decentralisation, decarbonisation and digitisation. Based on our modelling1, these could, for an integrated energy provider with eight to 10 million customers, potentially unlock between $6.9 billion and $17.3 billion in additional net value within five years.
Transform the core business:
Transforming the core involves leveraging digital technologies to maximise the efficiencies of traditional business by reinventing various processes. Man, machine and intelligence come together to transform core operations and unlock trapped value, for instance, through the use of digital twins of assets and the use of drones for inspections. Connected worker initiatives, like real time notifications, could reduce maintenance service costs by up 15 to 20 per cent. Energy leaders are also using artificial intelligence (AI) and analytics, for example, virtual agents and machine learning, to improve customer service and improve the delivery of corporate functions.
Grow the core business
As results are realised from transforming the core, utility companies gain the operational flexibility and investment capacity to pursue growth. Where the focus should be is on redefining the generation mix, with a move towards renewables, and in expanding transmission and distribution. In maturing markets, this could mean expanding the grid, while in mature markets, it could mean modernising and reinforcing the grid. Accenture has also seen positive revenue growth from energy retailers investing in customer experience initiatives, including hyper-personalisation and performance marketing.
Scale the new
Players will have to embrace that change is not a one-off, and that a constant commitment to agility and innovation is required. Yet, the additional cash flows from transforming and growing the core can generate the required funds. This includes investing in new business models and building innovation capabilities, for example deploying new renewables technologies, and allowing customers to optimise how they consume energy.
Together, these three plays will see the sector reduce costs, grow revenues and pivot towards newer models that allow them to solidify digital operations, maximise both grid and customer value, and enable new energy experiences.
What is abundantly clear is that utilities businesses in the region can no longer avoid the reality of disruption, while recognising the opportunity it presents.
Both addressing and embracing it now will make for a sector that will be able to power a new future.