As Simon Beresford-Wylie roamed around DistribuTECH last month, he wondered how many of the companies represented at the conference would still be around next year. The current CEO of Elster Group even mulled the fate of his former company, Nokia-Siemens, where he was also the CEO. “It’s quite remarkable that Nokia could be at risk to disappear in the next five years,” he mused to a room full of utility customers at the Elster EnergyAxis User Conference in Bonita Springs, Fla. this week.
Although Beresford-Wylie did not go the next step and question whether any utilities may disappear in the coming years, he did offer some insight into lessons from the telecom industry. Utilities are no stranger to the telecom industry comparison -- in fact, you can’t attend a conference about the grid without hearing the hypothetical comparison between Alexander Graham Bell waking up from the grave and not recognizing an iPhone versus Thomas Edison readily recognizing a light bulb and the virtually unchanged electrical system. Beresford-Wylie, however, concentrated on some of his own experience in telecoms in the past few decades to try to help his current utility customers avoid some of the same pitfalls.
· Change can be a long time coming, but once it gets here, it moves quickly. He pointed to a few key areas, namely distribution automation, voltage conservation, communications and advanced metering. Like telecoms, there has been a long period of stability, but the utilities that embrace a flexible platform for change will come out ahead in coming years.
· Technology is exciting, but it’s not enough. Beresford-Wylie acknowledged that there is a lack of political will to build a vision of what power utilities will look like 10 years from now, but he also said that companies cannot sit back and wait. It is not enough just to deploy the latest technology -- the change must come with a new paradigm in how the business case is made, how the operations are run and how customers are engaged.
· Fifty years ago, you could take a really long-term view; you can’t anymore. The long paybacks, the molasses-like deployment of new technology -- both regulatory bodies and utilities are going to have to move faster than they ever have before.
· Telecoms were monopolistic by nature. “These are our customers, we’ll decide if we’re going to share our revenue,” Beresford-Wylie recalled telecoms saying back in the old days. It doesn’t pay to be that guy, he warned. Various executives at this conference frowned on some large utilities that have taken the stance of not wanting to share data or their relationship with the customer. Stop lying. The average customer most likely hates his or her utility, and even if that ultimately changes, there are far more business opportunities to be had by allowing in some customer-centric businesses that can help bring about change faster.
· There’s an element of irony in the debate about who owns the customer. See above.
· Telecoms underestimated the need for personalization, said Beresford-Wylie. Everyone uses broadband differently. There must be differentiated customer offerings. This is a hurdle for regulated utilities, but it’s no secret that customers are different. Give customers a little bit of empowerment through choices, and it will deliver a lot in terms of returns.
· If we look forward 20 to 30 years, smart grid will impact customers in ways they can’t imagine today. He noted roaming tariffs for phones as a lesson as to how roaming tariffs might work for electric vehicles, if a tariff model emerges. “In telecoms, we underestimated the need for simplicity in fees,” he said. “They were so complicated they were a barrier,” so K.I.S.S.
· Investments have to be anchored in the business case. This sounds like a no-brainer, but start with the business case of what you’re trying to achieve, and not the technology implementation, and the returns will come.
· Don’t try to guess how people will use smart grid. Beresford-Wylie remembered the days where his colleagues thought the internet would be used for video telephony and online shopping malls. Eventually, video chat and conferencing, not to mention Amazon and eBay, did take off -- but not in any way that was even close to how most industry observers had first envisioned them. He noted that the people who swear by Skype and online retail are a newer generation, whereas his wife still shuns the idea of video chat.
· You need to take a long-term view of the investment. Ah, some contradiction. See the item above where you’re instructed to throw your 50-year viewpoint out the window. The point Beresford-Wylie seemed to be making was that there’s a middle ground. There are some investments that you won’t fully realize their value until sometime down the road -- but that doesn’t mean that you shouldn’t adopt them today. In fact, it’s important to get started today -- or maybe even yesterday. Smart grid, like the internet, is not a start or finish point. And if the value proposition isn’t clear? “It takes a leap of faith,” said Beresford-Wylie.