December 19, 2017
Politically, technologically, environmentally and socially, the utilities sector is facing unprecedented change.
When our Vallum Associates consult or coach clients in the water and energy industries, they’re often there to guide teams through change projects. Turning things on their head is never easy, and there’s a brewing recruitment crisis when it comes to putting the right expertise in place to steer firms through choppy waters. So, where’s the current taking us at the moment? Here are my observations on the top four biggest challenges facing firms:
Despite stalling plans on how to meet targets set by the Government last year, the ambition remains: a 57% reduction in greenhouse gas emissions by 2030 (from a 1990 baseline). There are signs of progress. Between April and June this year, almost a third of the UK’s electricity came from renewable sources – a new record. The number of solar panels alone is expected to rise five-fold over the next five years.
For water, around 1,249 Olympic swimming pools of water leak every day from UK piping. Thames Water hit the news earlier this year when they were handed record fines for significant water and sewage leaks, showing Ofwat’s appetite for penalising firms who do not meet their commitments.
In tandem with the rise of renewables has been increasing investment in battery storage solutions, which could hold the key to turning intermittent solar and wind power into reliable, all-weather sources. For the water and waste industry, automation and robotics are making monitoring and maintenance more efficient.
All utilities firms are also facing increasing technological change for their customers, putting more power in their hands. They are also moving their customers to digital self-serve channels so they can reduce their human workforce requirements. Of course, increasing connectivity and Big Data ignites the need for cyber security expertise to keep pace with the risks.
Labour have vowed to put renationalisation back on the table if they get into power. Together with uncertainty over EU regulations passing over after Brexit, the energy and water sectors must be prepared to take action should things shift.
Since the Government’s pledge to give Ofgem the power to bring in a price cap on standard variable tariffs, British Gas, E.on and Scottish Power have declared that they will end their costly SVTs in a move that could protect customers who fail to switch.
- The customer
Both the water and energy industries want to get closer to their end customers, but are challenged by the fact that most people do not want to interact with their providers. Customers expect things to ‘just work’ and for any problems to be rectified quickly.
Energy providers are, however, making small inroads on engaging their customers to become more energy efficient – no doubt helped by the smart meter rollout. It’s by no means straightforward: despite national marketing campaigns, more than half of customers are unsure about getting a smart meter.
Are suppliers resilient enough?
The utilities sector is finding recruitment more and more challenging, as smaller firms compete for limited expertise and fresh talent struggles to climb the ladder amid increasing regulation – something I wrote about in October. The regulations may be different, but there are definite parallels between the skillsets needed to equip the water and energy industries to cope with the raft of changes.
At Vallum, we specialise in finding the right solution for the utilities firms we work with: whether that’s recruiting the right team member, consulting to temporarily fill a skills gap, or coaching to bring a leader or their team to the next level. We regularly go into firms to help them to achieve transformation – not just change.