Despite the many benefits of modern infrastructure and IT solutions, many Australian Utility companies are still clinging to outdated legacy operational infrastructure, holding them back from enjoying the advantages of the digital era. It’s often tempting to think “if it ain’t broke, don’t fix it”, but the reality is that in many cases legacy infrastructure is simply no longer fit for purpose.
Thanks to large scale renewable energy production, the growth of Distributed Energy Resources (DER) and the rise of “prosumers”, the Utility sector is undergoing rapid transformation. Because of the drastic changes on the horizon, it’s becoming imperative for Utility companies to upgrade and modernise their operational and IT infrastructure to avoid falling behind more agile competitors.
How recent developments in the sector have impacted legacy infrastructure
In recent years, rapid transformation in the Utility sector has been driven by increasing demand for renewable energy generation as part of the push to achieve net-zero carbon emissions. At the same time, renewable energy has opened the door for two new concepts within the Utility sector: DER and “prosumers”.
DER involves increasing the use of small-scale energy generation to serve a localised area, as opposed to traditional supplies where large-scale generation transmits energy across much larger regions.
Prosumers, meanwhile, are consumers who are also producers – in other words, individuals or businesses with small-scale energy generators such as solar panels who may at times draw energy from the NEM and at others provide their own excess energy to the market.
Some Utility providers have embraced this change, but for others, these new concepts pose significant challenges – partly due to the impact of cumbersome, outdated legacy infrastructure and IT systems.
For instance, certain legacy infrastructure isn’t designed with the two-way transmission required by DER and small-scale generation in mind. The unpredictable energy flow from these small-scale generators has the potential to cause overloads in legacy infrastructure without the capacity to manage them effectively, leading to inefficiency at best and potential outages at worst.
In addition, the Australian government recently changed the NEM’s settlement system from 30-minute settlements to 5-minute settlements. This has enabled providers to monitor and act upon demand in near-real-time – but on the other hand, it has also required Utility companies whose legacy IT systems cannot handle the increase in data volume to scramble for new solutions.
Since legacy systems aren’t necessarily equipped to handle data in such large volumes, the changes have caused major issues in terms of industry-preparedness. As such, Utility companies need to quickly implement new software solutions to handle the new influx of data.
One such solution is FlexiBill, created by Flux Federation. Flux’s CCO Jessica Venning-Bryan explains that: “As it stands, energy retailers who process and provide these new forms of energy to consumers struggle to manage and price them accurately, leaving these innovations languishing in the energy network.
“Having modern software solutions would enable these retailers to process and price properly, removing the bottleneck for consumers and enabling everyone to capitalise on cleaner and cheaper energy.”
According to Venning-Bryan, preparing for the future and upgrading legacy systems is a widespread problem for Australian Utility companies: “At present, many energy retailers know that their legacy platforms are not future-proofed to fit the growth of Australia’s renewable future. The conversation around Australia’s journey towards a ‘renewable future’ has always lacked the ‘how’ element.”
Why now is the time to evolve & move past legacy infrastructure
The progression of Australia’s energy landscape towards renewable energy, DER, and the spread of prosumers is unavoidable given their intimate connection to more efficient, eco-friendly energy generation. This means that Utility providers must act quickly to update their legacy IT systems and infrastructure so that they aren’t held back by inadequate technology as this change unfolds.
Legacy infrastructure and mindsets have the potential to hold Utility companies back due to the unreleased gains of modernising and upgrading. For example, if a smaller energy provider fails to roll out smart meters due to the high initial cost, in the long term they will suffer far greater losses through inefficient demand forecasting and budgeting due to a lack of reliable data.
Similarly, outdated energy management systems that are unable to deal with the influx of new small-scale renewable energy generation involved in DER models will lead to Utility companies losing out on a rapidly growing market segment. As such, it’s vital to embrace and invest in transformative upgrades to legacy infrastructure – even if the initial cost may be steep.
The upside: How the Utility sector can benefit from modernising
The upside to all of this is that through modernisation, Utility companies stand to gain significant benefits. The companies that move the fastest and most efficiently to modernise and embrace new markets such as DER and small-scale renewables have the ability to establish themselves as leaders in these markets.
Modernisation also means greater efficiency. Research by McKinsey shows that Utility companies that undergo digital transformation benefit from a reduction in operational costs of up to 25%, while also creating performance gains of 20-40% in areas like safety, reliability, customer satisfaction, and compliance.
By moving beyond legacy mindsets and ditching outdated legacy infrastructure, and introducing the new technology required to handle new markets, business models and services, Utility companies can capitalise on growing markets to boost their own growth.
How other industries have moved beyond legacy infrastructure to drive growth
Legacy technology isn’t a problem unique to the Utility sector – as new technology such as the cloud has expanded, other industries have also found themselves held back by legacy infrastructure. The finance sector provides a powerful example.
Older, more established companies have recently been shaken by the rapid growth of cloud-native market entrants. While bigger companies have struggled to modernise due to legacy infrastructure, digital challengers have thrived thanks to IT designed with optimal performance in mind from their very foundations.
Take the example of Judo Capital – a new-era financial institution whose rapid growth has been driven by a tech-centred approach that gave it the agility to provide more customised service to small-to-medium businesses. Doing so has allowed them to craft deeper relationships through a customer-centric approach.
Judo’s CEO and co-founder Alex Twigg explains that: ““The engine room of the Australian economy is its small and medium-sized business, which have been starved of the funding that they need to grow by the industrialisation of lending processes by the big banks.
“Consequently, these SME customers have lost the highly skilled banker relationship they so valued, and just haven’t had the support they need.”
Twigg claims that the main thing holding back more established financial institutions is their legacy infrastructure: “Being a new bank not anchored by legacy computer systems and processes, we can offer a completely different, highly trusted lending experience that is genuinely customer-centric.”
The lesson here is that the ability of newer, more agile technology to allow more personalised service is invaluable for success in the digital age. Promoting a customer-centric approach through new technology can similarly allow Utility companies to achieve huge growth in the expanding prosumer market.
How the Utility sector has modernised elsewhere
Utility companies in other nations can also provide an idea of the benefits that modernising legacy systems can provide. One example is Eandis – a Belgian energy distribution grid operator.
Eandis measures energy flows at several key points in their grid every 15 minutes, leading to nearly 10 million lines of measurements per year. All of this data needs careful analysis and monitoring, but doing so with their legacy systems took between 9 and 12 months.
The importance of monitoring this data only grew as local production increased. Analyzing patterns, monitoring active and reactive power, and planning investments accordingly all relied on gaining insights from this data.
Eandis’ solution was to implement a modern visual analytics system to replace their legacy analysis capabilities. This modernised solution enabled Eandis to produce visualisations and insights within hours instead of the months it had previously taken. This allowed Eandis to make much more informed business decisions through more accurate and timely analysis.
This kind of large-scale analysis will be vital in the coming era of DER and localised energy production in Australia. As the NEM and energy grid grow more complex with the introduction of large numbers of small-scale generators, legacy systems may not be able to keep up – so investing in modern, agile solutions will be imperative for success.
How Sigma Connected can help overcome legacy infrastructure challenges
Aging legacy systems and infrastructure no doubt pose significant challenges for the Utility industry – but fortunately, Sigma Connected is here to help. We offer flexible, agile business process solutions and outsourcing that can enable your business to modernise and increase its agility.
In doing so, we can help your business adapt to the changing needs of the Australian landscape, at the same time as giving you breathing room to upgrade your own legacy systems.
How Sigma Connected can help the utility sector deal with legacy infrastructure challenges
DER and the rise of the prosumer mean that Utility providers must take a more customer-centric approach if they are to succeed and grow in the market of tomorrow. Often, legacy systems aren’t up to this challenge due to their lack of agility and data analysis capabilities.
Sigma Connected can provide modernised, agile customer contact solutions alongside enhanced data capabilities to overcome the challenges of legacy infrastructure and improve your connection with consumers. By putting consumers at the heart of your business, you can more readily adapt to the consumer-centric service models of the future.
Conclusion: Embrace new solutions to succeed & grow
There is no doubt that the Australian Utility industry has major changes in store due to rapidly-evolving consumer expectations, growing renewable energy generation and the rise of DER. However, legacy systems are ill-equipped to handle the challenges of this new era.
To ensure that they are not left behind, it’s imperative that Utility companies adapt, modernise, and move beyond their legacy systems. In doing so, they can open up all manner of opportunities to grow in emerging markets and the consumer-centric industry of the future.
For further information or a wider discussion on how we can help your business, contact us below.
About the author
Jason Cowan is Sigma Connected’s Regional Managing Director, Australia.
You can contact Jason via email or connect with him on LinkedIn.