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The blackout in Texas earlier this year and the devastation caused by hurricane Ida in Louisiana in late August, left millions without power for several days, highlighting the unpreparedness of US power utilities to thwart future climate-related events. These were only the latest instances of the steady stream of weather-related blackouts in the US over the past two decades (see below). Analysis of the US Department of Energy’s data shows that there has been a 67% surge in weather-related power outages since 2000.

The impact on customers and the long-term economic fallout reveals that power utilities with aging grids need an all-around transformation to become utilities of the future by deploying technology that drives data-driven decisions and adapts to ongoing cultural change. To achieve this, power utilities need a multi-pronged strategy aimed at building top-down resilience, sustainability and adaptability to mitigate future climate-related risks.

The pandemic’s disruptive impact pushed digital to the top of the agenda for every industry, and utilities are no different. Data and artificial intelligence (AI) will be the keys to unlocking growth in a post-pandemic world. As machines take up more work, human skill sets are evolving to suit the future workplace. Similarly, as more customers turn into energy producers by using renewable energy and distributed energy resources (DERs), they’re forcing an industry rethink of engagement strategies.

The path for modern power utilities is challenging

The need to modernize power utilities arises from the growing impact of climate change, but also from factors such as new-age digital competitors, high levels of inefficiencies and the need to meet the projected growth in demand for electricity, especially from renewables.

Transition from fossil fuels

As of 2019, more than 60% of US utility-scale electricity generation came through fossil fuels, but this is changing quickly. The share of renewables — especially solar and wind — in the US electricity generation mix is expected to increase from 21% in 2020 to 42% in 2050. As renewables have grown in prominence, competition has flourished. The renewables-driven giant, NextEra, recently became the US’s largest utility by market capitalization — valued at $54 billion more than the next largest utility.

Inefficiencies and regulations

Inefficiencies, especially in transmission and distribution, have persistently plagued the US power grid. As a result, as much as 5% of the electricity transmitted and distributed between 2015 and 2019 was lost. Emerging technologies such as energy storage and electric cars, and increasingly self-reliant customers, are heralding a push for democratizing the energy system via DERs, especially in states that have adopted aggressive energy goals.

Meanwhile, the Biden administration has announced ambitious plans to bring the power industry to net-zero emissions by 2035. Utilities also face growing regulatory pressures as states create laws around performance-based incentives, DERs, transparency in energy usage data, decarbonization, and storage.

Evolving role and needs of customers

The traditional power utility model, due to its monopolistic nature, didn’t necessitate deep customer engagement. Yet, utilities have historically scored high on customer satisfaction. But this relationship is threatened by blackout events and lack of preparedness. Residential power usage has surged, with almost all industries enacting work-from-home policies that may extend beyond the pandemic, resulting in growing concerns about power usage and bills.

With digitization, customers seek greater visibility over their energy usage, creating a need for personalization (i.e., real-time tracking of power usage). Aged, limited and siloed, incumbent technologies are incapable of supporting such needs.

Rise of digital-first competitors

Retail power marketers that provide billing services and connect customers to renewable power have upped the ante regarding customer experience. Over the past decade, these insurgents have increased their share of retail electricity sales, impacting investor-owned utilities. These digital-first providers enjoy advantages such as longer face time with customers, allowing them to collect more data and provide better user experience. Utilities need to accelerate their data modernization efforts to better under customer needs and deliver more meaningful experiences.


Cyber attacks present the biggest threat to power utilities’ ability to ensure availability, reliability and safety of electricity delivery. In recent years, cybersecurity threats have increased globally, with 56% reporting shutdowns or operational data loss due to attacks. US utilities, however, face greater risk as ransomware attacks from foreign actors become more frequent and sophisticated.

Keys to creating modern, resilient power utilities

Given the multiple challenges facing traditional utilities, the transformation into a utility of the future will require them to make the best use of every resource available, whether it be data, infrastructure, or employees. We believe that digital maturity goes hand-in-hand with a utility’s ability to stay always online.

Grid modernization

The utility of the future needs to be responsive, adaptable and resilient. While the specifics might vary with regions and regulatory jurisdictions, it is clear that digital technologies such as drones, IoT and analytics enable transition into a utility of the future (UoF), grid-modernization, and market-transformation initiatives (See “Quick Take” below).

In our experience, investment in advanced distributed-system automation and smart-grid technologies alone make the grid more responsive and resilient by improving turnaround times and using data to enhance operational visibility. Grid-modernization investments lower operating costs by providing a cost take-out opportunity.

Value through data

Digitalization allows utilities to keep tabs on what’s happening across the grid. Advances in metering technologies and smart sensors are helping utilities gather data at an unprecedented level, creating a need to leverage the data to create efficiencies and improve revenues. Data and analytics/models do just that.

By keeping data and analytics/models fresh, utilities can help power utilities make operational enhancements, through better prediction of peak loads, and mitigate the damage caused by weather-related outages, and unlock potential innovation.

We believe a top-down, business-driven analytics approach centered around the utility's operations and strategic investments works best. Using key performance indicators (KPIs) and automated dashboards, utilities can transform culturally and become metrics-driven, which can inform greater operational resilience, efficiency and business capabilities.

Delivering on the customer promise

As the pandemic and changing customer behavior redefine energy usage, improved customer engagement is paramount. One survey found that 70% of residential utility customers want to receive notifications of an impending high bill, and 80% want advice on how to save energy. Traditional utilities can quickly modernize customer engagement by creating a customer data platform (CDP) that integrates data from disparate sources to enable a comprehensive view of customer activity, including marketing, communications and field services. (Read our white paper "Utilities Can Ramp Up CX With a Customer Data Platform" for more.)

The flexibility of this approach allows customer data to be integrated with related applications, such as work orders, outage information, and efficiency and load-management programs.

Fostering talent and productivity

Even before the pandemic, power utilities all over the world were experiencing talent shortages with skills gaps in areas such as problem solving, leadership and process management. This problem has only been exacerbated by the pandemic as process augmentation through automation alters the human-machine relationship.

As utilities automate manual tasks, they need to modernize the organization and reporting structures, and reduce rework by moving tasks to a self-service model. We also believe that lean approaches can help utilities realize productivity gains by improving tools and processes, identifying and eliminating waste, and discovering value through connected process flows.

Securing IT/OT systems and data

Escalating cyber risks mean that cybersecurity is not just a technology issue; it's also about survival. We believe that top-quality defenses are grounded in business process improvements. By aligning security efforts with business objectives, utilities can mitigate risks and continuously improve their security posture. Like the best digital journeys, this also requires a collective effort to address the threats. Rather than deploying a few engineers to shore up accumulated weaknesses, cybersecurity should be embedded in the organization.

Integrating distributed energy resources

While utilities are accommodating the fast growth of DERs, they are not keeping pace with customers and regulatory demands. Without utility participation, the full range of benefits available through a more distributed energy system cannot be realized. We believe that utilities should proactively plan for and invest in the digital systems (such as distribution automation), the workforce of the future, and business processes required to accommodate a large amount of new DERs. This will ultimately improve the utility’s ability to mitigate the risks posed by climate change.

Digital tools for the modern utility

  • Drone insights: Real-time drone telepresence can improve inspection turnaround by analyzing scanning images to generate insights.

  • Smarter AMI execution: Advanced metering infrastructure (AMI) is more than just about deploying smart meters. Utilities can generate actionable insights from the data generated by these meters.

  • Optimizing enterprise asset management: Asset management models need to evolve along with the assets overcoming challenges such as disparate data, process gaps, and existing patchwork solutions.

  • Smarter program execution: Managing complex, cross-functional, multi-year programs means that power utilities need the right skill sets and frameworks for managing risks and regulatory obligations.

  • Data modernization and analytics: Power utilities need to move beyond mere dashboarding and reporting of data to using the data analytics to drive better decisions. This begins with data modernization and intelligent decision-making.

For more, read our white paper “Crafting the Utility of the Future”, check out our report, “The Work Ahead in Utilities: Powering a Sustainable Future with Digital,” or visit the Digital Utility section of our website. Contact us for more insights.