Gaia Gallotti
Gaia Gallotti (Associate Research Director)

IDC has just released its annual top 10 predictions for utilities worldwide. The predictions enable the IDC Energy Insights team to reflect on the current year and on what the future holds for the industry. This year, it’s fair to say, there was a lot to think about.

Following a very difficult 2022, characterized by spiraling energy prices from the ongoing Russia-Ukraine War negatively impacting businesses around the world, this year had a more positive note. With receding energy prices, which are still not back to pre-energy-crisis levels and possibly never will, focus returned to long-term initiatives and planning related to the energy transition. According to IDC’s Worldwide Energy Transition Survey (December 2022), almost 60% of organizations globally indicated they were steaming ahead with their energy transition plans, either proceeding at the same pace as before the energy crisis or even accelerating their plans (more than 1 in 10 in the latter case).

Additionally, the extreme weather events of 2023 — including the flooding in Libya and Eastern Africa, the blazing wildfires in Canada and Hawaii, the ice storm in Texas (U.S.), and severe heat waves that once again broke records all around the world — forced the spotlight back on mitigating climate change through decarbonization, electrification, and energy efficiency. Globally, 84% of companies still plan to become carbon neutral by 2040, and just under one-third plan to get there by the end of this decade. However, they admittedly need help as 60% consider their decarbonization plans challenging.

This is a tremendous opportunity for utilities — which have decades-long expertise around electrification, decarbonization, and energy efficiency — to drive the energy transition while growing their own businesses. Additionally, the energy transition, climate disruptions, and social sustainability have demonstrated that utilities are at the heart of economic resilience. Utilities are the only ones with experience managing the critical infrastructure the economy relies on to thrive, and they understand the implications of new disruptive technologies.

By using technology as a lever, electricity, gas, and water companies across the value chain will continuously optimize their operations, processes, and resources, offloading more and more non-core burdensome work, enabling utilities to focus on their core business and pursue new business opportunities. In the year of artificial intelligence (AI) everywhere, utilities have the power to advance further, helping to solve issues around procurement of flexibility, prioritizing connection queues and grid planning, addressing issues around integrated resource planning, and helping to crack more active customer participation, just to name a few.

Given all this, here are the top 10 predictions for utilities:

  1. In 2024, 45% of frontrunner energy suppliers will leverage generative AI (GenAI) technologies, especially chatbots, to improve customers’ digital journeys, cutting fallback calls to contact centers by over 60%.
  2. In 2025, 55% of utilities will prioritize supporting customer engagement with personalized energy efficiency and demand response programs, helping customers save 15% on utility bills’ energy component.
  3. By 2027, 50% of utilities will implement digital twins, improving asset optimization of power grids, decreasing unplanned outages by 30%, and supporting simulations for network expansion.
  4. By 2025, 60% of electric utilities will have integrated non-wire alternatives in standard planning, deferring up to $7 in system capex for every $1 spent on procuring distributed energy resources (DERs).
  5. By 2026, 40% of utilities will implement GenAI, improving asset and equipment restoration times by 30% and establishing a knowledge management platform for the next generation of field technicians.
  6. By 2026, 50% of utilities in advanced markets will invest in advanced distribution management system (ADMS) or distributed energy resources management system (DERMS) to optimize the influx of renewables and DERs coming online, decreasing their carbon footprints by 30% in the long run.
  7. By 2026, 25% of water distribution companies will have operationalized multispectral satellite imaging and AI-powered computer vision, improving the efficacy of leak detection by a factor of seven.
  8. By 2028, 35% of integrated electric utilities will offer integrated infrastructure, technology, and energy services for electric vehicle (EV) fleets, helping to accelerate public transport decarbonization.
  9. In light of escalating hacking incidents, by 2027, 25% of utilities will turn to managed security service providers (MSSPs) for outcome-based services that align security performance with business outcomes.
  10. Due to shifting regulations requiring greater supply chain transparency and due diligence, by 2026, 60% utilities will invest in environmental, social, and governance (ESG) data platforms to build sustainable supply chains and manage risks.

For each of these predictions, the IDC Energy Insights team has developed a detailed analysis, with associate drivers and IT impact and guidance for utilities (published here).

To complement the top 10 predictions, the IDC Energy Insights analyst team also develops a series of recommendations for utilities that have embarked on the energy transition journey. This year’s recommendations are:

  • Deliver on your purpose. Now that immediate issues around security of supply and consumer protection have subsided, it is time for utilities to revamp momentum on long-term net-zero goals. Sustainability, decarbonization, and electrification offer endless opportunities, so focus resources and efforts on energy-transition use cases and initiatives that will support and enrich your company’s future business portfolio.
  • Execute and communicate. The utilities industry must grasp the opportunity presented by the energy transition to make a positive impact on the fight against climate change and be recognized for it. Communication and drawing attention to related initiatives is as important as execution to support a change in perception of the utilities industry for the future.
  • Prioritize your people. More than ever, companies must prioritize making the most of their workforces, which have an abundance of company and industry knowledge that cannot be lost. With less resources available, companies will need to support their workforces in leveraging the most advanced technologies to optimize operations and drive efficiencies.
  • Harness GenAI. Cautiously go beyond the hype to understand how this technology can really support your organization. Liaise with industry peers regarding GenAI use cases, the benefits it brings, and the challenges that emerge. GenAI has the potential to help solve many deep underlying issues the utilities industry has been facing, and it can help utilities move into a new era.

IDC Energy Insights analysts Gaia Gallotti and Daniele Arenga will be onsite in Paris for Enlit 2023. They look forward to meeting you and discussing their predictions and more.

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