The Utility of the Future is in the Cloud

In our post at the beginning of August, we explored the idea that utility companies might be in “digital denial” – that the systems and processes traditionally employed by utilities to meet energy consumers’ needs while protecting their own interests are rapidly becoming outdated. Today, we’ll look at one digital solution in detail: the world of cloud applications and services.

With the advent of smart meters and smart thermostats, solar panels, and renewable energy, keeping pace with the digital technology that goes hand-in-hand with these innovations is a daunting task. This is compounded by the fact that the utilities industry seems reticent to buck the status quo, preferring the existing model of implementing complex, internally-managed software applications and upgrades.

In a recent GreenBiz.com article about cloud solutions and renewable energy, contributor Lauren Callaway argues that traditionally, utilities use a "capital versus operating model of utility financing," and that "Investing in cloud-based or Software-as-a-Service IT services are considered operational expense in most cases." In addition, utility companies face regulatory challenges that differ from most businesses, as well as a variety of security concerns around transmitting sensitive data over the internet.  

A recent study published by ETS for Oracle , however, suggests that the tide may be turning against the conventional utility industry business model, and that utility companies – willingly or not – are increasingly being pushed towards new technology solutions. In fact, 97% of utility executives polled in Oracle’s study indicated that they were already using cloud-based applications, or plan to do so in the future. According to Accenture, from the years 2012 to 2020, the use of cloud services will grow from $267 million to $1.17 billion in North America alone.

These numbers suggest that cloud services are a growth market, and one that utilities would do best to position themselves for so they don’t get left behind. Indeed, a quick internet search for “cloud services” and “utilities industry” yields a variety of lists for how to prepare for the future in the cloud, including Brillio’s Ways a CIO of a Utility Company Can Take a Realistic Approach to the Cloud.  The most consistent themes across these recommendations are to get ahead of the cloud curve by proactively reimagining the organization’s cloud future, preparing for regulatory challenges, and focusing on customer needs and security.

While it might seem that “cloud” is the new buzzword within the industry, in fact, SAP has been developing new cloud solutions for utilities for years, and Utegration recently became a cloud partner and has added ClearInsight and Mobius to its solution offerings. Clearly, the idea of shifting industry services to the cloud isn’t going away – if anything, it’s gaining more traction. As the move to smart grid technologies becomes more and more mainstream, so does the need for operational and technological transformation. If the utility of the future is in the cloud, industry leaders should embrace the idea that the future is now, and that cloud computing is here to stay.