Last month, I headed to the Future of Utilities Summit in Amsterdam to discuss the latest trends in the sector and attend speeches from key industry leaders.

Among these discussions, a major talking point was around the drive to reach Net Zero. On most people’s lips was the question of whether the 2050 Net Zero targets are manageable, or even possible. As well as how to better engage consumers in a market that is constantly changing. Whilst the future is definitely bright, there are a number of challenges this sector is having to face head on.

Key takeaways: The challenges in the utilities sector

As energy demand rises and grid congestion intensifies, the utilities sector is experiencing many challenges. Between managing consumer demand, supporting an energy transition, and creating efficiencies within the sector, preparing for the future of utilities requires immediate attention.

Utilising latest technology

In the sector, there have been some substantial technological advancements in the form of domestic energy generation, energy management and innovative tariffs. However, the sector is facing significant barriers to implementing them.

These technological advances could prove vastly beneficial for the sector and for consumers. However, utility and energy companies are reluctant to roll out and push for greater use of these technologies due to high costs and marginal profits.

Engaging consumers

Getting consumers to participate in the latest energy and utility schemes effectively is a major hurdle within the industry. Funding schemes around home energy generation (such as solar panels etc) have been around for years but are carried out with limited success. Despite these being very beneficial to the sector and to consumers, the sector has not been able to engage consumers enough to buy into these changes.

The issues the sector have in effectively engaging consumers can be seen as evident through smart meters where we have seen an inconsistent roll out and adoption. Despite the government’s plans to make 80% of homes installed with a smart meter by 2025, this target will not be met. Currently 66% of homes have been fitted with a smart meter and around 90% of those installed are still working, with millions out of date, not on the right systems and limited plans to replace them. Whilst there has been a considerable effort from companies to encourage smart meter usage, there hasn’t been enough done to make this happen.

Currently, there are too many barriers and not enough education around the benefits of smart meters, home generation and other tech, limiting innovation and opportunities of growth in the sector.

Changing consumer relationship

The relationship between utility and energy companies and the individual consumer household has changed significantly over the last 10 years.

Two main reasons behind this shifting relationship include:

• The rise in home energy generation (such as solar panels etc) means that domestic customers are selling back electricity to the grid, transforming the traditional relationship between utility provider and consumer
• Smart meter installations that are automating a lot of the tasks utility providers would carry out and bringing greater digitalisation into the utilities sector

This changing relationship means that utility companies need to adapt and ensure that their services are easily accessible for the rising number of consumers who are taking more of an active role in the sector.

Leveraging shared data

Companies within the industry are capturing more data through the use of smart meters, appliances and more. Through this, it is possible to track and predict in real time individual houses energy consumption and habits.

However, a major issue within the sector is lack of communication between all providers and companies, which is causing barriers to effectively utilising this data. The need for greater collaboration in the sector is key. Whilst companies are talking to each other and sharing data, this process needs to be streamlined.

By ensuring communication and data is fully accessible throughout the sector, the sector will be able to work together to drive change and make larger scale strategic decisions to improve services and reach national goals.

Reaching Net Zero?

Whilst the industry is fully committed to embracing and increasing our reliance on renewable energy sources over fossil fuels, there are concerns about whether the UK will be able to meet the drive to Net Zero in 2050.

Most leaders in the sector agree that for the foreseeable future, instead of focusing on full Net Zero, the sector should be setting a goal for increasing the proportion of renewable energy within our energy mix, as renewable energy sources can be unpredictable and there is limited battery storage to ensure surplus energy is stored. Additionally, even if we were able to rely on renewable energy sources for a continuous supply of energy, with congestions increasing at the grid, there are long delays to connect renewable energy sites to our current infrastructure.

In order to move towards a full reliance on renewable energy, the sector needs to do this at a manageable rate so that it remains cost effective for the user. If we were to move too quickly it can rapidly raise costs, causing significant problems to energy intensive industries such as manufacturing, as well as raise prices beyond reasonable for individual households. Whilst the future of utilities is Net Zero, the sector needs to focus on making this transition well, rather than quickly.

Overall, there are many challenges that the utilities sector is currently facing, but also lots of opportunity. Leveraging data, technology and working in greater collaboration as a sector, will help to meet national goals and targets and move towards a manageable progression to Net Zero.

If you are searching for excellent utilities talent to support the growth and transition in your organisation, please click here to talk to our team.