According to the International Energy Agency, grid companies will need to invest $300 billion in modernization efforts through 2030.
Electricity networks around the world are being squeezed by a set of challenges: plateauing or falling demand, the need to invest in building and replacing assets, regulatory pressure to reduce costs, and the growth of distributed energy resources. Any one of these challenges would be cause to review business models and cost positions. Combined, they create an urgent need for energy networks worldwide to transform their strategy and operations.
Greater operational complexity arises from emerging power generation and digital technologies, changing consumption patterns, and new market opportunities. There are eight key disruptors influencing the grid business—and presenting key opportunities for transformation:
The speed of disruption and regulatory change—which will determine the future shape of the centralized grid infrastructure—will vary among markets, creating risk and uncertainty for companies.
These uncertainties make the task of defining a strategy a difficult one for grid companies, but luckily they can refine their plans over time. By answering the following questions, they can start to set a course for modernization:
From reality simulators for field workers, to drone-enabled maintenance, to AI support functions, operations of the future may look dramatically different. A digitally connected workforce and “self healing” technologies—enabling grids to automatically detect and isolate problems and minimize their impact on customers—are certain to be part of grid infrastructure regardless of the dynamics of individual markets.
Digital transformation isn’t just about capex and technological change, however. It’s also about changing organization structures and the way people work. The integrated grid plan will need to factor in faster and more agile decision-making processes built around data analytics.
Transmission and distribution companies have already deployed traditional cost-saving measures and implemented lean processes. The next wave of improvements will be aimed at revitalizing organization structures and operating procedures—with the biggest value creation coming from a close link between operational technology and processes.
Transforming a power and gas network company requires the following components:
To extract maximum value, companies need a structured approach to future planning. Once the vision is clear, teams need to develop and document a detailed transformation plan. Transformation delivery executed against the plan can deliver long-lasting value to the company.
According to the International Energy Agency, grid companies will need to invest $300 billion in modernization efforts through 2030.
Applying best practices in networks delivers a 15% to 20% reduction in total costs.
By digitizing workforce procedures, companies can increase worker availability in the field by 50% and reduce the time needed to complete jobs by 25%. Increased quality of execution can reduce repeat trips by 30%.
By optimizing maintenance through advanced analytics and developing fault prediction models for individual assets, Operators can reduce operating expenses by as much as 25%.
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BCG’s global leaders have experience supporting hundreds of transformations. Their direct work with leading global utility companies gives them a detailed understanding of what it takes to succeed in this challenging business environment.
Managing Director & Senior Partner
Sydney
Managing Director & Senior Partner
Budapest
Managing Director & Senior Partner
Madrid
Managing Director & Partner
Madrid
Managing Director & Partner
Washington, DC
