Distribution Utility Transformation Strategies

Few people in the utilities industry have escaped the buzz surrounding the energy transformation. There is not a day that goes by without a new announcement about how the decentralization of energy will transform utility business models or which technology vendors are offering new disruptive products and services. All indicators suggest that transformation will occur; yet, it will happen at different speeds around the world, and the dynamics of the transformation are equally different.

The transition to renewable energy is gathering pace, causing transformation in the way distribution networks are managed. However, if everything written on the subject is to be believed, the entire industry is on the fast track to transformation. This is not the case; while a minority of companies are blazing a trail, for the majority, the train has not quite left the station. And for these organizations, the hype is little more than noise, making it difficult to work out fact from fiction. No two markets are the same, and no two companies operating in the same market are the same. Consequently, each utility’s transformation will be different.

This Navigant Research report highlights some of the leading examples of business model transformation specifically within distribution networks. The study also discusses some of the factors creating the conditions that have forced change on distribution utilities. It aims to be a practical introduction to industry transformation for the majority that have yet to make significant changes to their businesses.

Key Questions Addressed:
  • Why are different utilities undergoing significant transformation?
  • What are the primary drivers for the energy transformation?
  • Where is this transformation happening?
  • Which utilities are transforming?
  • What are the major differences between different companies’ transformations?
  • Why do different utilities have different approaches and attitudes toward transformation?
Who needs this report?
  • Utilities
  • Distributed energy resources (DER) manufacturers
  • IT vendors
  • Systems integrators
  • Regulators
  • Government agencies
  • Investor community

Table of Contents

1. Executive Summary

2. Market Update

2.1   Increasing Penetration of DER Is a Powerful Driver for Transformation

2.1.1   California and New York Have Similar Goals but Adopted Different Paths

2.1.2   Shareholders of British DNOs Have Different Attitudes about Transformational Risk

2.1.3   Danish Energy Policy Directly Influenced DONG’s Early Digital Transformation

2.1.4   Australia Is Leading the Charge into Transactive Energy

2.2   Pressure to Increase Operational Efficiency is Driving Change

2.2.1   Exelon Shows the Way Forward for Cloud-Based Predictive Maintenance

2.2.2   Customer-Focused Regulations Forced a Different Transformation in Italy

3. Conclusions and Recommendations

3.1   Recommendations for Utilities

3.1.1   Create an Actionable Roadmap

3.1.2   Gain C-Level Backing

3.1.3   Set Out a Clear Vision, Then Develop Subprojects

3.1.4   Engage with the Workforce

3.1.5   Be Flexible

3.1.6   Take a Pragmatic Approach to Project Finance

3.1.7   Select Partners Wisely

3.2   Recommendations for Vendors

3.2.1   Show Vendor Credentials

3.2.2   Show Willingness to Partner

3.2.3   Align Vendor Strategy with Customer’s Strategy

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