Sustainability


Creating More Opportunities for Diverse Suppliers as the Energy Industry Looks for New Approaches to Sustainability

The energy industry is being disrupted by technology across operations and infrastructure. The reality is that the industry is playing some catch-up, and that creates supplier opportunities.
— By Donna Benjamin

Getting ahead of the curve when new challenges appear for creating business solutions presents innovative suppliers with opportunities for growth. On the radar is the energy industry which realizes it must reinvent itself if it is to be prepared for the future.

The catalyst for change is technology which is disrupting energy businesses across operations and infrastructures, and in some cases business models.

The technology-based opportunity is best summed up this way: Utilities must go digital or risk obsolescence. In this short statement are remarkable opportunities for new and existing suppliers to step up with products and services to support a smooth transition to digital.

Digital Technology in the Energy Industry
In August 2015, BP hosted a supplier diversity forum at Offshore Technology Conference in Houston. The event was designed for exchange of information and not just presentations. According to Debra Jennings-Johnson, the senior director of supplier diversity at BP America, the forum was an opportunity for diverse suppliers and the energy giant to share insights on industry trends. BP turned to MWBEs to ask for help cutting costs and improving efficiency, and how technology can play a role toward meeting both goals.

Digital technologies are taking root in the energy industry to serve a lot of needs that include enhanced customer service, more efficient and cost-effective delivery of energy to consumers and businesses, improved energy management, stronger competitive positioning in a volatile global industry, better ability to respond to increasing regulations, and meeting alternative energy preferences.

Though all industries are undergoing technology-initiated disruptions, the energy industry is dealing with a host of issues that impact everything from how it sources products to the kind of products offered to R&D in disruptive products like solar, wind and geothermal.

The use of digital technologies in the energy industry is nascent, so suppliers have a virtually unlimited set of opportunities. To date, most MWBEs and small supplier participation in energy production and delivery has been mostly at the levels of plant maintenance and supplies.

Digital technologies can impact products and services offered to the market, operations, communications between the primary business site and remote sites, access to data and metrics, and customer-focused processes.

The Power of Data
Since information is competitive power, the first area of opportunity is the generation of critical data and metrics that supply insights into energy demand and supply. Utilities outages and service interruptions cost the U.S. approximately $150 billion annually per the Department of Energy. Data collection and data analysis are useful across the spectrum.

The extracted information can be used to improve current operations, but equally important is its ability to give energy companies insights that can lead to innovation. Just collecting data is not enough.

For example, energy companies are using new sensing and communication digital technologies for better energy management, but the real value of the data is found when the data guides the utility company toward developing more efficient energy delivery systems that reduce costs and lower the use of non-renewable energy sources.

Data and analytics can help energy companies better manage the regulatory landscape, too. As smart grid innovations become standard, the amount of data generated is expected to increase by 900 percent according to Lux Research. Energy companies need suppliers who can offer solutions for extracting deep information buried in the data.

It is obvious that energy companies cannot fill all customer wants and needs, and will have to form new alliances.
Changing Customer Expectations
Digital technologies are changing the way energy companies communicate and engage with customers, too. Utility companies have gone online and mobile, giving customers better access to service and energy usage information. Social, Web access, and mobile generate data that enables energy companies to develop and deliver new capabilities like customized rate plan.

Technology is changing customer expectations of what utility companies should deliver through customer service processes in metering, invoicing, payments and outages. As customers gain more control of information on their side, the importance of customer engagement grows on the business side.

Suppliers have opportunities to produce digital solutions that meet growing customer expectations. This is not simply a matter of developing a new billing system. Energy companies need to make operational changes that change them from energy producers to customer-focused organizations in which information, communication, responsiveness, agility, and energy delivery are transformed.

Customers now have greater options for storing and managing energy, and they want more in the way of digital automation, monitoring and controls.

Focusing on the Customer
Customers want energy companies to develop customer experiences and that will require operational changes. Energy companies have been mostly inward-facing and the new customer-centered paradigm requires some significant changes.

One is the convergence of utility equipment producers and control market as energy services companies emerge (ESCOs) which are digital-enabled. ESCOs are energy savings companies that retrofit homes and businesses with state-of-the-art equipment and energy savings pay for the project. Digital technologies enable the monitoring and verifying of energy savings and financial savings generated through lower maintenance costs. The projects are “green,” lowering CO2 emissions and reliance on non-renewable fuels.

The new business models that will emerge from the digital-triggered transformation will be formed through new alliances with ESCOs, and technology and telecom companies entering the energy retail market. The connected home is the newest trend, one aspect of the Internet of Things.

It is obvious that energy companies cannot fill all customer wants and needs, and will have to form new alliances. Suppliers can become digital partners that provide energy companies with the products and services their customers want.

As utility companies accelerate their transformation into digital, customer-focused organizations, suppliers will find exciting opportunities. They include products enabling customer personalization, data collection and analyzation services, green energy products, operational assistance through new technologies, customer engagement tools like mobile software, new platforms allowing multiple organizations and consumers access (similar to eBay and Airbnb), market research, and digital technologies yet to be imagined.