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Top technology trends impacting the utility sector

Top technology trends impacting the utility sector
12 Jul, 2022
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Technology plays an ever more critical role in enabling energy and utility agility, sustainability and resilience as the energy transition unfolds. Energy and utility company operations and business models are evolving as energy provisioning transforms.

Almost every critical aspect of energy and utility companies’ business and operations will change in the coming decade. Replacing fossil fuels as the dominant source of primary energy across the world is a huge undertaking and will involve fundamental redesign of energy systems. Scaling up alternative energy sources involves addressing major technical and economic challenges.

As the utility industry undergoes a redesign to address sustainability concerns, five technology trends that will shape the utility sector in the coming months.

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 IoT Enables Improved Operational Performance 

Utilities can use Internet of Things (IoT) data provisioning, ingestion and dissemination for transparency and convergence to create information flow across edge, platform and enterprise analytics assets and systems. This information, in turn, can be utilized for digital twins and across monitoring, modelling, decision support, control and automation use cases, such as in intelligent operations.

Dynamic capabilities supported by IoT will aid utility organizations in maintaining productivity and efficiency as they are adapting to the new realities. Those capabilities will also create new digital business opportunities.

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Utility CIOs need to develop a strategy, approach, model and roadmap to connect to external digital ecosystem IoT partners. They need to identify tools that connect IoT edge, platform and the enterprise – and then link these together at scale. Lastly, they need to segment IoT projects by their focus complexity and capability to support business objective.

Composable Architecture Provides Resilience and Agility During Energy Transition 

Energy transition is driving a search for environmentally sustainable and economically viable energy provisioning business and operating models, requiring utilities to improve agility and quickly shift shape to address sector restructuring. Gartner predicts that by 2026, 30% of Tier 1 utilities will use composable architecture to reposition their IT applications from “built to last” to “built for change.”

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Utilities that are agile in embracing and adopting new technologies and new business architectures can quickly pursue opportunities they introduce, will position themselves for growth during challenging times ahead.

Track developments in new technologies and enable agile deployment of new products and services created by grid edge disruption. Focus on composable thinking as a tool for growth and resilience during turbulent times. Identify business capabilities required for different energy provisioning business models and adopt composable enterprise architecture to address all of them as needed by the appropriate custom composed assembly of packaged business capabilities.

Green Hydrogen Can Help Displace Fossil Fuels and Stabilize Energy Markets 

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Decarbonization creates opportunities for hydrogen as a solution that can address multiple challenges introduced by the energy transition. Hydrogen is now getting a significant boost from a growing number of government policy measures and numerous large-scale commercial projects initiated by incumbent energy providers.

For example, Saudi Arabia’s $5 billion investment in a green hydrogen facility, BP’s and Orsted’s joint investment in a 50-MW electrolyser facility and EU Hydrogen Strategy for a climate-neutral Europe to name a few. Gartner predicts that by 2025, utility investment in hydrogen storage will exceed the investments in every other power system management technology.

Add hydrogen to your strategic disruptors list by monitoring developments in hydrogen markets, regulation policies and production and storage technologies, and setting scenario flags. Focus on use cases where hydrogen can address long- and short-term energy unbalances.

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Mastering Advanced Analytics Is an Energy Transition Imperative 

Gartner predicts that by 2025, utility spending on advanced analytics (AA) will double from 2020 levels as organizations adopt intelligent operations. Over the next decade, utilities that invest in AA and apply it across the enterprise will master the energy transition.

AA has moved beyond reporting and diagnostics into predictive and prescriptive models that leverage persistent models and digital twins. This opens opportunities for utilities to apply AA across the critical process life cycles of customer, revenue, commodity and asset. According to the 2022 Gartner CIO and Technology Executive Survey, 60% of utilities plan to increase investments in analytics. However, to scale AA, utilities must systematize analytics, which requires deep collaboration across technology groups and the business.

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AA requires new technical competency and innovation. Some technical challenges hinder the deployment of AA with sufficient portability and agility to be relevant across the enterprise. Technology leaders and analytics teams need to become well-versed in analytics infrastructure containerization and adept at expanding configuration management and orchestration capabilities.

AI Provides Benefits to Organizations That Operationalize and Scale It 

The challenges of the energy transition is forcing utilities to assess through a decade of deep redesign on how they must adapt business and operating models, and significantly advance operations capabilities with digital innovations. AI plays a vital role in digital and physical augmentation and automation. AI enables opportunities across situational awareness and analysis systems, autonomous robotics systems and software-defined capabilities applied to asset management, network operations and optimization.

According to the 2022 CIO and Technology Executive Agenda Survey, 35% of utility CIOs expect to increase their spending on AI in 2022. A significant amount of this forecast spending is focused on modern business intelligence (BI) platforms, AI, data science platforms and graph databases, suggesting that utilities are still assembling the foundations of technical capability and are not yet providing business use-case enablement and self-service.

Without AI, most enterprises will not be able to obtain the talent or retain and build on the advanced skills that will be needed to systematize and enable and take advantage of digital business ecosystems. AI will also play a critical part in utility field service, customer service and most other business operations.AI will be increasingly sought across the entire utility value chain — supply, transmission, distribution, retail and end use — and across all utility commodities, including electricity, natural gas, water and district thermal.

Zarko Sumic

Zarko Sumic


Zarko Sumic is a Distinguished VP Analyst at Gartner.