The Lines Between Smart Cities and Utilities are Blurring. Will that Make Things Clearer?
The foundational technology of a smart city includes connectivity and power. In the U.S., the connectivity conversation over the past few years has been dominated by network upgrades to 5G and digital equity. The utility side has been focused on grid modernization, distribution automation, smart lighting upgrades and smart metering.
However, at the Distributech International 2020 Conference in San Antonio in April, it was evident that a new narrative is beginning to emerge. Utilities are evolving into providers of smart solutions and services.
Why is this conversion taking place?
There are several reasons ranging from market realities to interrelated trends.
1 – Breaking the Business Model
Traditionally, utilities have been incentivized by investors to build big infrastructure and then monetize that asset by selling power back to customers. But with most of the infrastructure already built, the business model is challenged. In short, the old profit margins just don’t work. New products, services and offerings will be created to leverage the existing infrastructure.
2 – Going Green and Getting Rid of Gas
As climate change concerns reach alarming levels, commercial, residential and public sector consumers are motivated to reduce their energy usage. New eco-friendly devices and systems have been designed to nudge down consumption. At the same here is a deliberate move away from oil and gas and towards electrification as a cleaner, more eco-friendly power alternative. The integration of renewables (solar and wind farms) also places new demands on the grid. So, while it may seem that individual energy consumption is decreasing, overall demand for electric power is actually increasing.
3 – Digitally Savvy Consumers
Access to technology and data means that consumers are more informed and, therefore, more demanding of the public sector. They are calling for greater transparency about their energy usage and the ability to interact with their utility providers via a digital interface. For many utilities, the ambition to respond to their customers’ needs is outpacing their ability to innovate. But for others, leadership is ensuring that their organizations shift quickly and learn how to listen to the voice of the consumer and respond by developing and delivering new products, services and solutions.
4 – Device Demands
With more than 50 billion connected devices worldwide, the Internet of Things (IoT) is exploding. All of that connectivity demands power. From smartphones to cameras to sensors to electric vehicles, the demand for constant, uninterrupted power is surging while the tolerance for outages is decreasing. The ability to control power generation becomes a new challenge as well as an opportunity.