What utilities need to know and do about digitization — right now

Steve Bolze, President and CEO of GE Power, likes to talk about his company as “a 125-year-old startup“ — one that has had to constantly evolve and innovate.

According to Bolze, 30 percent of the world’s electricity now comes from GE technology, and the company services 40 percent of the world’s electricity — which means they may be working on equipment that is not their own.

So when Bolze starts talking about the digitization of the electric power sector — as he did at the Edison Foundation’s recent Powering the People 2017 Forum —  he is speaking from first-hand and very global experience.

Digital is, he said, “the single biggest area of the most disruption” in the industry and will continue to be for the next 10 or 20 years.

“That’s not only the products, the control systems and such,” he said. “But it’s mating that with the software and the analytics capability that is available today.”

“Digital is real,” Bolze said. “It’s happening right now, and it is accelerating.”

What that means is that, as with other emerging technology trends in the industry — solar, storage and other distributed energy resources (DERs) — no one can afford to stay on the sidelines and wait to see how things work for the early adopters.

His presentation at Powering the People highlighted a number of key trends and takeaways for utilities now navigating the U.S. energy transition and the increasing amounts of data it is producing.

It starts from the top

The Smart Electric Power Alliance (SEPA) has seen this C-suite commitment in action time and again as an increasing number of utilities add chief data or analytics officers to their executive teams.

At Baltimore Gas and Electric (BG&E) CEO Calvin Butler Jr. has challenged his team to think differently about how digital technology and customers now interact.

“I like to think of the utility business as really being a technology company that happens to deliver electricity and gas,” Butler said in an interview with Accenture Consulting. “We are using technology across our entire system to make us more efficient, to make our system more reliable, and to engage with our customers in a different way.

Data allows BG&E’s residential and small business customers to become “smart energy users,” he said. “Utilities are really looking into how we can meet their needs and meet them where they are going, rather than just keeping the power on. . . . That is really where the opportunity is for our industry.”

One example is BG&E’s use of customer data to empower customer choice. Their PeakRewards Programs provide customers the ability to control their involvement in demand response events to earn bill credits. Additionally, customers are able to understand more clearly what is happening in their home and join with BG&E to meet Maryland’s environmental goals.

It requires you to accelerate your business, fail fast and “pivot”

Bolze defines “pivoting” as understanding that “where you start is not necessarily where you end.”

As utilities develop DER pilot programs, they are having to adapt to steep learning curves to respond quickly to customer interests and desires to promote specific technology adaptation and program enrollment. Successful residential demand response programs increasingly rely on messaging customers based on individual communications preferences — voicemail, email or text.

In the emerging electric vehicle market, a recent report from SEPA noted, successful managed charging programs had to allow customers the possibility of real-time opt-outs of utility control of chargers, to allow for emergency situations.

Products must be purpose-built for the digital world

Detroit utility, DTE Energy, has recently rolled out a pilot of their DTE Insight mobile phone app to allow it to automate some elements of customer’s homes. This app, in conjunction with their joint venture partner Powerley, will connect to the utility’s advanced metering infrastructure and allow customers to monitor and manage their power through remote control of their thermostat. This home automation requires additional utility-supplied hardware, but should eventually allow customers to take even more control of their energy usage.

Sell outcomes versus products

This is the traditional approach for selling energy efficiency. Few customers get excited about paying for additional insulation in the attic or caulking around doors, but when offered lower bills and a more comfortable home, many are motivated to enroll in the programs.

ComEd used that same focus on outcomes when they launched their online ComEd Marketplace. The website offers “energy-related products that save [customers] time and money.” The goal is to serve “as a platform to connect its customers with valuable products and services that can increase their comfort, convenience, and control.” Notice the focus on saving time and money, rather than reducing energy usage.

Additionally, they’ve automated the rebate process, making the transaction easier for the customer and lowering administrative costs for the utility. With a simple validation process that involves no paperwork and no wait, customers determine their rebate eligibility at the same time that they add products to their cart.

New metrics must be developed. It includes the basics, like financial, quality, reliability, but also asset management, product cycle times and the role “lighthouse customers.”

Lighthouse customers, Bolze said, are the high-profile adopters who set the tone and examples that become a draw for others.

The Sacramento Municipal Utility District (SMUD) has gathered information on its own early adopters as part of an initiative aimed at incentivizing customer adoption of DERs in locations where these technologies can benefit both the customers and the grid. As part of a major study, the utility worked with consultant Black & Veatch to build a comprehensive customer database combining information from different departments across the organization. Based on this data, the utility has produced maps that show at a very granular level where customers are most likely to adopt certain distributed technologies and how such changes will affect the grid.

A full report on SMUD’s planning exercise is forthcoming from SEPA. Email [email protected] if you’d like to be notified when it is published.