Digital transformation has immense potential to unlock $1.3 trillion of value for the electricity sector; the industry must now embrace digitization. The electricity sector is ripe for realizing value from rapid digital transformation; we estimate that there is $1.3 trillion of value to be captured globally from 2016-2025. Five initiatives are worth more than $100 billion over the next 10 years and should be prioritized for investment. By leveraging the building blocks of digitization, such as service platforms, smart devices, the ‘cloud’ and advanced analytics, companies in the industry have the opportunity to increase the asset life cycle of infrastructure, optimize electricity network flows and innovate with customer-centric products. New pools of value could also be tapped ‘beyond the electron’ by harnessing big data across sectors. Yet the maturity of digital initiatives in the industry is varied – from projects using advanced analytics to optimize assets and the widespread implementation of smart meters, to early moves by some utilities to manage and integrate distributed generation resources. Industry players agree on the need to make deeper customer engagement a priority and the pivotal role of digital technologies in making this a reality. Energy technology providers are playing a key role in digitizing the industry, releasing a suite of smart turbines and panels, and sensors for commercial infrastructure. They are also developing connectivity platforms for industrial, commercial and retail customers. Established players and startups alike are experimenting on the fringes of the industry. The burgeoning home energy market is a case in point, with more than 100 (non-utility) actors capturing value.For a list of these actors, see CleanTechnica¹. With higher potential business value, smart industry and smart city markets are following suit in the business-to-business (B2B) and B2B-to-consumer spaces. As the sector continues to adapt to the various transformations taking place, digitization must be a key priority, and, indeed, can support development of new business models to respond to these industry shifts. Digital technologies have tremendous potential to contribute to growth in the sector and help deliver exceptional shareholder, customer and environmental value. Four themes – asset life cycle management, grid optimization and aggregation, integrated customer services and beyond the electron – emerge for creating value (see graphic below). Within each theme, a number of digital initiatives can be pursued, each with our estimated ‘value at stake’ to enable prioritization. These digital themes have the potential to create significant value for industry and society:
Figure 1 below maps digital initiatives to the part of the electricity value chain that they relate to, from generation to consumption. Each initiative clearly illustrates how these digital themes are relevant to the electricity industry as it evolves over the next few years. No matter what shape the electricity company of the future takes, digital is likely to be a fundamental part of it. This report offers an estimate of the value pools and a series of pragmatic recommendations that enterprises can take to digitally transform their operations and business model, and ultimately become a digital champion. Leadership and policymaker discussion topics
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