Arnaud Philibert - Sales & Marketing development SmartGrid/Utilities

Energy suppliers, consumers and public services are looking for tools to help them produce and consume energy better and at optimal cost. Telecoms operators' turnkey services are the answer.

Energy company margins eroding

The ARPU of energy companies is declining sharply. The sale of kilowatt hours no longer provides a solid base for their aging business model based on long-term recurrent profitability. Customers want managed, personalized turnkey services and convergent offers. Regulators are calling for more competition and more players along the whole value chain. In short, legacy energy utilities must now adapt to competition, segmenting their market then customizing their services portfolio. In future they must treat their former "users" as "customers" and accept the reality of customer churn. This is exactly the same paradigm shift which has impacted incumbent telecom. Energy utilities are also hit by cost inflation: to comply with regulatory and market constraints, their aging production units will have to be upgraded (or scrapped), concentrating investments on low-carbon systems. All these factors will oblige them to better control their grids and pay closer attention to consumer aspirations.

Powerful ICT systems are essential

Highly flexible wireline or wireless telecommunication networks and computer systems are needed to cope with the massive deployment of smart energy meters (an estimated 145 million units in Europe by the year 2020) and the multitude of sensors needed to manage bi-directional energy flows at the end of distribution grids. The scaling of the ICT architecture must include a savvy measure of redundancy (a network whose power supply comes from the grid it is supporting is exposed to breakdowns of the latter) while optimizing capex and opex.
Telcos can create value for energy companies
Telecoms equipment vendors and operators have unrivaled expertise in the engineering, commissioning and operation of nationwide networks. Who can better guarantee the highest possible level of performance than companies that have proven their ability to innovate unceasingly to adapt and modernize their own core business? The ICT ecosystem now boasts an arsenal of tools to measure performance and quality of service and solutions to combat fraud and cybercrime. Energy utilities need to durably modernize and strengthen their ICT infrastructures, so why not turn to the top experts: integrators and telcos?

A vast portfolio of billing, CRM and data services

Competition on the energy market is new but already intense. Telecoms specialists can assist energy suppliers in their customer prospecting, loyalty building and service personalization. Their long experience of real-time billing and prepaid services could be leveraged to develop new and potentially lucrative business for energy utilities. Utilities could emulate telcos, copying their successful business models and partnerships, m-commerce apps, real-time sales and distribution management and micro-financing offers, to achieve customer satisfaction and position themselves differently on their changing market. The kilowatt-hour unit price now fluctuates over time and is usage-dependent, making billing more complex, so telcos' rich Business Support System (BSS) catalogs can prove invaluable. Telcos could even open their ICT infrastructures and position as billing and CRM providers. Energy utilities will see the advantages of outsourcing these tasks to experts rather than going for costly investments and internal training schemes.
Big Data processing is another service that energy companies could delegate to ICT service providers who have data centers and data processing solutions. By choosing such systems, which assure the very best cybernetic protection available today and comply with local regulations, energy companies can demonstrate that they are assuming their new responsibilities.
From analog to digital: a global structural and behavioral transformation
The way in which energy is produced is undergoing irreversible changes. The first and biggest change lies in consumption modes:
– "Smart" technologies facilitate rationalized consumption. Connected objects in the home and even in vehicles enable real-time control of consumption, which will obviously upset energy suppliers' predictive models.
– Innovative technologies and new regulations have spurred the emergence of decentralized production. Micro production units, such as photovoltaic panels on residential rooftops, inject electricity into the electricity grid. Grid balancing must take this technical constraint into account, and powerful IT systems will be needed to manage flows. Such trends shorten the value chain, obliging utilities to optimize their activities and explore alternative growth paths.

Telecom operators as natural partners for utility companies

ICT players appear as natural partners in view of their experience and repeated success in adapting their business models to disruptive changes in their ecosystems and to fast-evolving market needs. Network operators have not only kept pace with technological progress, they have driven the convergence of different services, starting with the traditional telephone and ending with quadruple-play offers. They can provide consulting services, technical and business assistance and master plans and will have no difficulty an answering utility companies' questions such as "How can we best serve our existing market as it radically restructures?" and "How can we penetrate new markets?".