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Cloud adoption in the Energy Sector: Stepping up to IT Transformation

Cloud adoption in the Energy Sector: Stepping up to IT Transformation
Sweta Chauhan - Associate Manager | October 19, 2015

Utility companies face several operational challenges - from aging infrastructure and grid security concerns to disruptive technologies, economic competitiveness, environmental concerns, and new regulations. It is imperative that they not only embrace newer technologies but also reinvent their business models to include customer engagement at their core, in order to survive.

In a digitally connected world, customers are increasingly aware, vocal, and demanding about the level of services being offered. This holds true even for electricity utilities. Customers expect undisrupted, reliable and predictable supply, quick service restoration in case of outage instances, hassle-free billing and payment cycles, and more. They expect to be heard and engaged.

Many energy companies are adopting information technology to transform their businesses by improving operational efficiencies and workforce management, and reducing costs to ensure higher customer satisfaction. These companies are pressured to modernize their infrastructure while remaining profitable. The modernization of electric-grids and automated meter infrastructure have now opened new possibilities for utilities, giving them access to real-time data and helping them manage the demand-supply gap, monitor customer usage patterns, and also offer incentives for promoting energy efficiencies. However, these smart meters and grids also pose challenges such as how to store, process, and manage the huge volumes of data being churned out in real-time.

Cloud Computing can be a landscape-altering technology that can solve such problems for utilities. A cloud not only offers external storage to electricity utilities, but also scalable, on-demand solutions with unlimited data access. Cloud computing can also significantly improve a utility’s  computing and analytics capabilities by allowing it to collate, segregate, process, and analyze huge volumes of data.

Further, cloud can help electricity utilities manage the assets being used for grid operations - advanced metering infrastructure, demand management systems, outage management systems, workforce management systems, and customer billing and accounting systems.  Moving the existing infrastructure to the cloud helps reduce the need for data storage and server configuration, which in turn, lowers costs. The advantages of cloud computing does not end here. When combined with an online interface, cloud computing can help both utilities and their customers with easy access to real-time and accurate consumption data. This information can be easily accessed through their own devices such as smart phones, tablets, desktops, and laptops.

Since most cloud service providers allow the “pay-as-you-go” option, utilities can benefit by collaborating with the cloud partner for interoperable, customized cloud solutions. This helps utilities manage their CAPEX / OPEX costs as they only pay for what they use. Shifting to the cloud will free up their assets, resources, and capital from “run-the-business” to “change-the-business” activities, impacting their overall profitability in the long-run.

De-regulation and privatization of the electricity sector has also increased competitiveness. Pressured to increase their customer base and market share, these companies are deploying technology to help them gain operational efficiency and offer services that increase customer satisfaction. They use billing and CRM platforms to help them engage better with their customers. If they host these platforms on the cloud, they will be able to leverage them better without incurring extra costs in creating infrastructure or integrating them with various applications.

Despite the benefits that the cloud offers, some utilities are still apprehensive in adopting it for critical operations such as grid management, outage management, and for storing customer data.  They cite data privacy and cyber security as the major roadblocks in cloud adoption.

They also have concerns regarding the maturity of the technology with respect to the energy and utilities sector. A cloud may be limited by way of its server configurations and network capabilities and given its “no-scope-of-error” business activities, utilities can’t bear the risk of a server failure while dealing with critical real-time inputs to manage the grid, or process real-time readings from field sensors or compile and process customers’ meter data for demand management.  

However, as cloud technology matures, it will instil confidence in utilities especially when the pros start to outweigh the cons.  Industry stalwarts and experts agree that utilities will soon start considering shifting to the cloud to be able to benefit from the IT–OT convergence in the long term. Going forward, energy and utility companies will start pushing for the transition and embrace a mature cloud approach to move forward in the sector’s transformational journey. 

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