Distributed energy resources – the risk and opportunity for Australian Utility Companies of leveraging technology and delivering “service experiences”

Introduction

Technology is changing the way businesses and companies operate and connect with customers. The energy sector is no different. The energy giants have also adopted newer technology and digitalisation in production, deployment, grid management and customer engagement. However, the pressing demand for service experiences has led the shift to distributed energy resources (DERs) and alternative sources – all which requires a major operational restructuring within Utility companies.

As Utility companies navigate the evolving competitive landscape in the coming years, several opportunities and risks lie ahead. In this resource, we explore these opportunities and challenges, namely when it comes to emerging technologies such as DERs.

But first, let’s look at what DERs are.

Overview on Distributed Energy Resources (DERs)

Digital technologies have brought new possibilities to the world of energy supply and deployment systems, one of which is the DER. DERs are consumer-owned devices that can generate and store electricity. These smart systems are equipped to identify and manage energy demand.

Traditionally, energy companies provided power supply through the grids to customers. Today, DER equipped customers can not only generate electricity but also feed excess generated energy back to the main grid. If and when managed well, this will potentially revolutionise the way energy providers work today.

DER systems often use renewable sources of energy such as wind and solar power. This makes them environmentally friendly, contributing to reduced carbon emissions, an initiative the Australian government has been quite vocal about of recent.

DER devices include Solar photovoltaic (PV) units, wind generating units such as turbines, smart appliances, electric vehicles, etc. DERs can be installed in residential and commercial properties.

Opportunities to build better service experiences

Technology has accelerated the pace of change in the world, and the pandemic has further pushed the adoption of technology and digital tools.

Customers today, millennials and Gen Z, have been brought up with technology and are quite digital-savvy. More importantly, they demand a better service across any business they interact with or buy from, and Utility services are no exception. As a result, Utility companies should evolve their offering and customer service to encompass a wider digital engagement and offer instant support to their users.

On the other hand, consumer expectations for better customer experiences and better service offerings are starting to marry up to what technology has made possible.

Australia has a sizable penetration of Solar photovoltaic (PV) units already. According to the Clean Energy Council, solar PV units generated around 10% of the country’s electricity in 2020-21. At the time of writing, circa 30% of Australian households have generated electricity using solar power. The total contribution of electricity from renewable sources was 27.7% in 2020, indicating a rising trend of renewable energy generation. The Australian Energy Market Operator (AEMO) has partnered with Solar Analytics and UNSW to launch a research project studying how rooftop solar PV units and other DER systems pose threats and offer opportunities for the national grids. The project aims to identify and optimise the grid planning system to reap the benefits of the DER systems as well as eliminate contingencies and risks.

AEMO chief member services officer Violette Mouchaileh commented that ‘the project will also ensure we’ve got the tools in place and can support the decisions that consumers are making to invest in these kinds of resources.’ The findings will help Australian Utility companies better identify their role in the services they’ll be offering to consumers participating in the electricity generation process.

These Utility companies will have to shift focus on updated infrastructure and grid systems, and support systems of CRM to effectively enable the integration of DERs and new microgrids.

The future for the energy sector looks like a decentralised and digitised model with increased use of technology as illustrated Power Generation Industry Leader, Tom McDonnell.

Data analytics and IoT will be the systems in place to manage the various power sources the companies will have to seamlessly integrate. The development of further DER devices such as newer and innovative models of EVs will require early adoption of new technology by the utility companies.

So where does the opportunity lie?

Utility companies that provide integrated energy supply solutions that offer flexibility in offering and pricing model, customer-first experiences, are going to set themselves apart.

Some of the challenges and risks ahead

The installation and integration of DERs are promising. DERs help add value to both the end-user and the grid, as explained by Jeffrey Cook, a renewable energy market and policy analyst at the National Renewable Energy Laboratory (NREL).

But the transition from their traditional models to newer digitised business models requires significant change and investment.

Whilst the role of Utility companies may reduce as electricity generators, their role in managing the grids, integrating power and providing world-class customer experiences will increase. The current grids may require upgrades and expansions without which the integration may be too complex and inefficient. Sizeable infrastructure investments will have to be made to support the new and more effective DER systems.

The mass scale integration of DERs will also require leveraging different technologies for the system to work. Stand-alone systems will not serve to be sustainable and reliable, demanding the installation of Distributed Energy Resources Management systems (DERMs). Automation and data-driven decision-making apps will become more vital than ever to manage and control power generation and distribution to create a more resilient and smart distribution of electricity.

The increased digitisation will require structural and cultural changes too especially for companies that for the longest time have stood as unchanging giants.

But a more digital and technology-based product offering is no walk in the park. A digital world means more vulnerability to cyber-security threats. Cyber threats are real and significant threats. For instance, a few years ago, cyber-attacks left a quarter of a million Ukrainians without electricity. Hacked systems would mean disruption of power supply leaving customers vulnerable to an unstable power supply and the disruption of everyday activities. Utility companies will always need to invest in security systems and solutions.

In addition, increased reliance on DERs brings another level of challenges. Solar PV units can be impacted by adverse weather conditions such as thunderstorms. Naomi Stringer, from the UNSW’s School of Photovoltaic and Renewable Energy Engineering, states that minor disruptions are frequent occurrences in the grid and the key is to ensure that the grid recovers. But “the impacts of rooftop solar can be particularly acute during disturbance events when the grid is already strained, posing new risks to power system security.” This is where Utility companies will have an extensive role in helping customers to overcome their DER challenges as well as minimising disruptions in the main grid.

Customer expectations are increasing drastically. With customers generating their electricity, they will require different services and experiences from energy providers. Device installation and maintenance services, responsive customer service, training and education regarding DER systems will be what many customers expect in the near future.

How Sigma Connected can help

The future of the Utility sector lies in digitisation, automation and better customer experience.

Facilitating the integration of DERs, smart metering, microgrids amongst other technologies, often requires revamping and upgrading several business functions including the customer-facing teams.

One of the key areas Sigma Connected focuses on is creating and driving world-class customer support capabilities for and within Utility companies.

We help uplift and streamline support and outsourced functions to ensure your customers get the maximum value and best service experience they can get whilst your leadership focuses on building your product suite.

As Utility companies transform their digital capabilities, they need a partner they can trust to facilitate that transitioning process and provide coaching, training and guide the entire process. Sigma Connected can help bootstrap your digital capabilities and help you establish an agile forward-thinking operation to pave the way for the digital transformation your organisation needs.

Last but not least, we have extensive experience in vulnerable customer management, an area many Utility companies can leverage as a key competitive advantage and use to maximise brand loyalty and customer base.

A sneak peek on our credentials & approach

In the UK energy suppliers are required to offer all customers Smart Meters by December 2021. Longer term, they are also expected to have Smart Meters physically installed by mid-2025. Our client needed help to meet these targets.

In order to support our client meet this target, Smart Meters are being promoted to customers (where eligible) during the course of every customer conversation that the Sigma team have on behalf of the client. Where an appointment is gained, these can be booked directly onto the client’s system.

Sigma delivered a detailed training programme to all its advisers to ensure they have the skills and understanding to promote the benefits of Smart Meters to the client’s customers. All experience gained during the calls was fed back into training programmes to ensure there was a continuous uplift of skills, knowledge and confidence. This improved the conversation between the client and the customer and ultimately led to more appointments being booked.

As well as promoting smart meters in all customer interactions we ran a series of outbound campaigns to pro-actively off smart meters.  The most successful of which was part of a ‘ring for reads’ campaign whilst at the same time as contacting the customer to obtain and up to date reading we also promoted the benefits of smart meters meaning that would avoid future calls like this and always receive an accurate bill.  The take up on this campaign was much higher as a result of the connection between the need for a reading and the benefits of smart meters.

The benefits of the campaign have been significant, with measurable improvements across the board.

Sigma’s approach has resulted in a 20% of service calls achieving an installation appointment.

Sigma also outperformed the competition when offering smart meter appointments during a service call being a whole 7 percentage points better than another outsource partner who were doing the same activity.

On our bespoke campaign ‘Ring for Reads’ where we were contacting the customer specifically to obtain a meter reading we had a 90% conversion rate in booking a smart meter appointment.

Additionally, by offshoring the work to our operation in South Africa, the cost of the programme has been halved.

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For further information or a wider discussion on how we can help your business, contact us below.