December 06, 2017
TCS study reveals how European utilities are adopting new revenue models to succeed in Business 4.0
- Research commissioned by TCS highlights distributed generation is the key to new revenue streams for more than three quarters of all companies surveyed
- Low-carbon producers will be central to the utilities industry by 2020, with new products and services contributing more than 10 percent of utilities’ revenue
- Innovations from the Fourth Industrial Revolution, as well as regulatory changes and more agile business models are driving the industry’s transformation
- Report is the first of three insights being commissioned by TCS into the utilities sector
Europe | Mumbai: Tata Consultancy Services (TCS), (BSE: 532540, NSE: TCS) a leading global IT services, consulting and business solutions organisation today unveiled the first phase of results from a study, published by IDC Energy Insights and commissioned by TCS**, which found the majority of European utility businesses see digital technology as a crucial driver of new revenue streams.
This is especially timely with the European utilities market undergoing significant transformation in recent years, driven by innovation as part of the Fourth Industrial Revolution, new regulatory pressures and a steady shift away from traditional utilities businesses to more agile and dynamic models. The survey was conducted across 13 European countries, including the UK, and is the first phase of a new study into the evolving priorities of the European utilities industry.
Sudheer Warrier, VP and global head, utilities business unit, TCS, commented, “Our research clearly highlights the major changes that the utilities industry is undergoing as a result of new digital technologies and their ability to transform businesses. Concurrently, digital is changing the industry outside-in, and 'power' is literally shifting to the consumer. There is now a new energy value ecosystem where 'data' is the currency and 'experience' is the valuation of every transaction, and utility companies have to navigate this disruption.”
The first report has uncovered the views of industry executives on changing revenue drivers, with the three-quarters (79 percent) of respondents claiming that distributed generation will be the key to new revenues channels for their business. Other important revenue channels highlighted were EVs and demand-side management, new energy storage technology, as well as the introduction of microgrids. The report also found that:
- New products and services will contribute to more than 10 percent of company revenue, according to more than a third (36 percent) of those surveyed.
- Regulated businesses are looking to expand internationally beyond their core markets - 42 percent of the DSOs are expecting more than 10 percent of the revenue from the new energy sales and services.
The future business role of utilities is changing:
- The value of conventional power generation continues to decline, as low carbon producers will be central to the utilities industry by 2020, according to 77 percent of respondents. Big investments are being made in wind power generation, particularly based in the North Sea, demonstrating the importance in renewal energy to the industry.
- The capacity provider role is set to become increasingly vital for European utilities amid the larger impact of distributed, renewable and intermittent energy sources. European utilities will have the opportunity to position themselves as a security of supply guarantors.
Roberta Bigliani, VP, IDC Energy Insights, said, “The appetite for change in the European utilities sector has been driven by the forces of regulatory change and evolving consumer expectations, all of which is underpinned by a driving catalyst of digital technology. While there are some notable success stories, many utility companies are only now waking up to the true potential for digital innovation to help transform their businesses and add value to their operations. Our study identifies the big trends at play. But it also highlights that for large complex organisations, and with the speed of change demanded by the market, they must collaborate with the energy ecosystem in new ways.”
For more information on the report, please visit TCS’s dedicated microsite.
**Sources: IDC White Paper, sponsored by Tata Consultancy Services, Grounding Utilities’ Dreams of New Revenue Streams, July 2017