In a previous post, I talked about the six utility industry truths. Much like the ‘canary in the coal mine’ concept, awareness of these six industry truths can act as an early warning system and can be used to help us navigate the following eight utility industry challenges. I expand on each of the challenges below in my book, The Digital Utility.
Industry challenge 1: Regulatory uncertainty
Regulatory uncertainty comes about as policymakers struggle to design markets that deliver on what the United Nation’s World Energy Council calls the World Energy Trilemma: energy security, energy equity, and energy sustainability.
Industry challenge 2: Market deregulation
Regulators are continually exploring options to introduce competition in some shape or form; this injects uncertainty into the market, impacting the need for Utilities making long-term investments.
Industry challenge 3: Diminished return on investment.
Utilities know they must play a more significant role on the demand side of the equation. The problem is, most Utilities still enjoy higher returns by focusing on the supply side. Utilities know the traditional model will deliver diminishing returns, but they do not know when the right time will be to make the switch at scale.
Industry challenge 4: Restrictions on innovation
A Utility ‘plays around’ with a myriad of pilot programs; however, in the majority of cases, sufficient incentives are not in place to encourage them to scale out.
Industry challenge 5: Consumer adoption of new energy technologies
Whether it’s to reduce environmental impact or cost or just through frustration with their utility, more and more consumers are looking towards alternative solutions to meet their energy needs.
Industry challenge 6: Competition from established organisations in other industries
Other Industry verticals such as telcos and consumer electronic giants see the energy sector as an opportunity to grow their relationship with their customer and introduce new revenue streams.
Industry challenge 7: Competition from start-ups
There is a growing array of start-ups, all vying for a piece of the Utility-pie. These start-ups fall into three categories: The nimble start-up, the alternative start-up and the disruptive start-up.
Industry challenge 8: Making poor investment decisions
With finite resources, there are only so many initiatives that can be invested in at any one time if they are to succeed. More often than not, those initiatives with a clear and immediate return on investment will be approved, leaving investments in future opportunities to fall by the wayside.
Utility executives must successfully navigate these 8 industry challenges if they are to deliver long term growth. How does your Digital Utility roadmap navigate these challenges?
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