This blog is co-authored with Roberta Bigliani and Jean-François Segalotto.
Last month, Roberta Bigliani, Jean-François Segalotto, Loren Drennan, Gile Downes and I traveled to Barcelona for our annual hectic European Utility Week adventure. This year, #EUW16 attracted 12,000 international visitors, 450 conference speakers and 600 exhibitors to debate the utility industry's transformation and to discuss how it is embracing digital transformation to innovate in every way. After three full days of meetings with utilities, digital disrupters and technology partners on and off the rich exhibition floor, here are a few key takeaways from the IDC Energy Insights' EMEA analyst team on #EUW16:
- Searching for a new identity. Over the past few years, the utility value chain has been strongly impacted. There is widespread consensus that traditional utilities' business models no longer work. For instance, in the electricity business the value of conventional power generation continues to decline. Utilities are looking for new business roles to rebalance their profit pools and more effectively satisfy the need of more demanding customers. Emerging roles are related to distribution platform optimizers, flexibility providers, aggregators and convenience services companies, even beyond the energy services domain.
- Data as new revenue streams. The value of data to improve operational excellence and customer experience, harnessing the power of big data, analytics and cognitive systems was a major topic of discussion among many speakers, panelists and exhibitors. Specifically, IDC Energy Insights chaired a session focused on how the value of data can go beyond the creation of efficiency to explore the value of data as new revenue stream. Finally, utilities have understood that mastering data is an art they need to practice and improve to foster also innovation and generate new business. Virtual Power Plants are just one of the many examples of this. Use data to disrupt, we often recommend!
- Lines are certainly blurred. Over the last several years we have seen more and more people from utilities trickle over from European Utility Week's designated conference area to the actual exhibition floor – not just as visitors, but as actual exhibitors. The likes of Alliander, EDP, Endesa, Eneco, Enedis, Enel, Engie, Enexis, Red Electrica, and Stedin were all exhibiting this year, aiming to draw attention and awareness to their value-add capabilities, ranging from connected home apps and platforms, to smart lighting offering, to electric vehicle charging infrastructure, etc. These companies are actively making a technology play to tap into new revenues streams. Another example of how lines are being blurred is companies that in previous EUW editions attended more as utility-type of organization, such as flexibility providers, that have evolved to become also technology providers actively selling to utility companies, like REstore. The days in which it was easy to clearly separate end-users from their technology providers are definitely over. We envision fluid and flexible ecosystems of partners where coopetition is the norm, and rules of engagement will need to be defined and redefined over time.
- Hands-on digital transformation. Most major energy retailers have taken their digital transformation game up by a notch, and smart homes is the poster child of this "awakening". Virtually every major solution vendor supporting utilities' front office has dedicated functionalities to engage customers in the home. All top-tier IT service providers have built expertise and a technology ecosystem, and have ongoing projects in this domain. This reflects the fact that the era of utilities piloting their smart home propositions is finally coming to an end. Utilities realize this once-in-a-lifetime opportunity has to be seized now and they need to get it right or someone else will – someone with a big digital brand who knows how to how to build services leveraging customers' data. Good luck utilities!
We firmly believe, and hence continue to restate, that the utility industry is at a pivotal moment. Utilities need to carve out a new space and identity for themselves. Those that succeed will mark the "Utilities Renaissance," in which utilities are reborn decentralized, divergent and digital. Those that do not succeed, we expect will disappear – as utilities of today will be unrecognizable in a not so distant future.
We look forward to seeing how the utility industry has evolved next year in Amsterdam for #EUW17. See you there!