Why aren’t we lifting and shifting from other sectors?

Perhaps the lag is unsurprising if you consider utilities arguably still have a lot to learn from other consumer-facing industries. “I think we all just have to put our hands up and say that we are 25 years behind everybody else.” That’s the view of one digital expert. She reels off the companies that are doing data much, much better than energy: Tesco, DHL, Amazon. “The chief executive of Tesco has 40,000 different products coming from 130 countries, all with different food standards and different logistics and challenges, and they can see every half pint of semi-skimmed milk. It’s a barcoded digital spine and everybody within the supply chain has this visibility.

“Ofgem designs systems around six customer archetypes. How can you divide 60 million people into six archetypes? Amazon has 150,000 archetypes.” The frustration is that energy and water haven’t capitalised on the experience of these types of business. “What I don’t understand is why we don’t lift and shift. This is something DHL did 30 years ago.”

A system operation expert concurs. “I massively agree we should lift and shift from every other organisation on this planet and learn. But people have got to lose their fear that the data is going to be used for something nefarious.”

Smart energy systems: Your fridge is doing stuff behind your back

The system operation expert says it’s time to accept that flexibility will be done to people, as well as the other way around. “Your washing machine is going to have to be smart. Your fridge is going to have to be smart. You are going to have a home energy management system. We are going to have to gamify it, so people don’t know it’s being done to them. Because it is going to be done to them. In the future, we are going to turn your fridge off for 10 minutes every hour, and you are not even going to know.”

The innovation lead at an energy retailer is already working on his own home energy management systems. “Smart metering data is old news; it doesn’t give you the granularity you want or need,” he believes. “You can’t steer assets from a smart meter, but you can steer them from a home energy management system.” The customer can choose whether to get involved. “The customer can say to us, ‘you deal with that’. And the automation and algorithms do just that.”

The system operation expert acknowledges there is a challenge here when it comes to the water sector. “For example, you might want to say, ‘you can’t water your garden between the hours of 12 and five: it’s a waste of time because it’s bloody hot and the water just dissipates off the ground, but we will allow you to water it between six and seven if it’s rained for the last three days’.” He confesses: “I don’t know how you even get there with water.”

“I had a lovely conversation with a gentleman on the way here who didn’t want a water smart meter because he didn’t want to be spied on,” points out the water transformation chief.

Have you mined the ‘datawarelake’? Would you know where to start?

Perhaps reflecting the complexity of today’s digital environment, ‘datawarelake’ is now the unwieldy portmanteau used at the water utility to describe its data sources. Artificial intelligence will be essential for interpreting the reams of data available, our delegates agree.

“AI has come a long way, and we are now seeing the real benefits of AI enterprise-wide,” explains Bhagwandas Jakhotia, partner at roundtable sponsor Wipro. “Governance around AI is extremely important, because AI can also lead you astray. Course correction is needed.”

The system operation specialist agrees. “Guidelines, governance and rules do need to be in place because otherwise you get a proliferation that’s too quick.” The industry digital expert argues: “We need transparency around the AI being used. And we need to be able to cut it off, so you don’t get contagion. And I don’t think Ofgem has really thought that through, or the sector.”

Just one more factor to exercise the minds of the great and the good when it comes to data and digitalisation. Consumers must be protected, as well as engaged and served more effectively and cheaply. One lesson the system operation expert says he’s taken from the session is a sanguine one, however. “Nobody is as far ahead of you as you think they are. Don’t ever think you are 100 years behind everyone else.”

Take heart, too, from the fact we’re all arguably ahead of one of the top scientific bods advising DESNZ, who allegedly put their hand up at a recent event at the Houses of Parliament attended by one of our delegates, to say they had visited “some amazing companies that have got some fabulous AI”, before adding:

“Why do we need to worry so much about the data and digitalisation side?

“Should we not just be going straight to artificial intelligence?”

Similarly technologically challenged? You can learn more about AI with Wipro in our report from the most recent Digital Utilities Think Tank.

Six steps companies should take: Wipro’s view

This roundtable provided invaluable insights into the current challenges surrounding data collection and use in the utilities sector, and highlighted key considerations for the future. From Wipro’s perspective, it is crucial companies prioritise the following in their strategic planning:

1. Engaging customers:

Companies need to engage customers to change their consumption habits and cut costs. Data will play a key role in translating into new tariffs, prompts, messaging, and support that impact how customers interact with their suppliers and behave in their homes.

2. Creative use of data:

The creative use of data to shape and deliver new customer propositions and experiences is essential. For example, energy retailers are using smart meter data to incentivise customers to move usage outside peak hours. This approach has evolved over time to include tiered layers of incentives and reduced peak durations to ensure customer engagement and satisfaction.

3. Innovating for customers:

In the water sector, innovating for customers within the constraints of a regulated monopoly is challenging. Data can play a significant role in addressing issues such as leakage and improving customer experience. Increasing online contact with customers is seen as a means of reducing cost to serve.

4. Data quality and consistency:

Companies need to address challenges related to data quality and consistency. Data is often siloed in operational systems, making it difficult to access and utilise effectively. The water sector, in particular, lags behind energy and telecoms in data usage.

5. Learning from other industries:

Utilities can learn valuable insights from other consumer-facing industries, such as Tesco and Amazon, which are leveraging data much better than the energy sector. The need for transparency and governance around AI and data usage is also crucial to ensure ethical and effective implementation.

6. Smart energy systems:

The future will involve smart energy systems where flexibility will be done to people, as well as the other way around. Home energy management systems will play a significant role in steering assets and automating processes.

These considerations highlight the importance of leveraging data effectively to create innovative and impactful customer propositions while addressing challenges related to data quality, consistency, and governance. By learning from other industries and embracing smart energy systems, companies can drive meaningful change and enhance customer experiences.

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