Smart Meter Data Analytics Trumps Other IT Investments for Power Utilities
The US power utility sector has been an exciting vertical for IT systems integrators over the past decade. Smart meter deployments, billions of dollars of smart grid funding, as well as the continuation of Business Process Outsourcing trends has driven some monster-sized IT contracts. There has also been an impressive roster of deal wins - Accenture won 570 engagements with North American power utilities over the past two years, and Capgemini clocked in 400 deals.
How does the future power utility IT services market shape up? Going forward there are lots of trends for IT systems integrators to get excited about – like decentralized generation models, IT/OT convergence, as well as smarter power grids pushing out more data. But a deeper analysis finds in the short term most utilities are still focused on improving operational efficiency and making better use of smart meter data. Becoming a ’utility of the future’ is a much more distant ambition.
To get a clearer picture of investment drivers over the next two years we interviewed a panel of budget holders at 14 power utilities across North America (see Figure 1). We heard that smart meter data, customer requirements, and the desire to improve operational efficiency are the most significant factors driving investment. Utilities are looking to use smart meter data analytics to monetize their earlier investments. They are also keen to improve operational efficiency by consolidating the spaghetti of legacy IT systems that exist across the enterprise.
Renewable energy was rated as the weakest investment driver. This initially seems surprising given the recent noise about a solar revolution forcing power utilities into a so-called ‘death spiral’. Over half (57%) of the utilities we interviewed rate the impact of renewable generation as neutral in driving IT investments , while 36% rate this as significant. This reflects the fact that outside of regions with strong cleantech agendas (like Arizona, California and Hawaii) most utilities are still unsure as about the timeframe over which distributed generation models will significantly impact their business.
For granular data on the size and growth of the US power utility IT services market across eight segments - refer to our recently published report: US Power Utility IT Services: Market Forecast 2015-2020.