Navigant Research Blog

Utilities Face Impending Talent Drain

Brett Feldman — May 5, 2014

I worked for an investor-owned utility for 3 years about 10 years ago.  After 2 months on the job, my boss pulled me aside and actually told me to slow down my work effort because other people felt I was making them look bad.  I realized that most people working there were lifers just waiting to reach retirement age.  There was no innovation and no motivation for change unless the regulators forced it.  It was very similar to working for the government.

Now, a confluence of events has transpired to change that mindset.  There is a lot of hype about the utility death spiral based on external market forces, but there is an internal issue to address, as well.  According to Deloitte, the average age of an employee in the power and utility sector is 50 and 48% of engineers in the industry are eligible to retire in 2014.  This situation is cause enough for concern just to replace the existing employees to maintain the status quo in utility operations.  There may not be enough young people going to school for the types of skills that these position require, particularly in areas like nuclear engineering (should the nuclear fleet continue to operate for the next 20 years or so).  However, at the same time, the business model for utilities is changing, which holds an opportunity to bring in new people with fresh perspectives who will start with blank, unbiased slates.

New Demands, New Skills

The utility’s role now is not simply to maintain the poles, wires, and central power plants – the hard physical assets of the grid.  Although those responsibilities will remain important jobs necessary for maintaining reliability, new skill sets are required to meet new focuses on IT, distributed resources, and customer interaction.

The IT world is combining with the operational technology (OT) side that utilities are experts in.  This flows from the transmission and distribution side in the form of sensors, to big data analytics, to smart meters, to social media, to end-user communication and control networks.  There are plenty of students looking to work in the IT field, and these challenges will be appealing to those who do not want to build gaming and photo apps for the Internet.

The days of needing hundreds of engineers to staff a huge power plant will slowly fade away as more roles become automated and development shifts to smaller, more flexible distributed energy sources like solar, combined heat and power, energy efficiency, demand response, electric vehicles, and microgrids.  There is a ton of entrepreneurial effort being put into these areas, as business schools place a bigger focus on sustainability and venture capital pours money into clean technology.  Utilities will need to have the brainpower to deal with these resources interconnecting with their systems or even manage them in-house where markets allow.

So Long, Who’s Next?

Utilities are starting to look at end users as customers rather than ratepayers.  This transition entails thinking about what kind of services customers want and delivering products and solutions to meet those desires.  These skills are far from the core competencies of the utility, so new blood that understands how to create customer-centric rate structures, energy management tools, and mobile communication and control applications will be essential.

The retirement wave may be approaching utilities, but it can be an opportunistic time to bring in fresh minds to lead down the new path of the strategic energy model.

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