Moving ‘beyond the electron’: Three digital initiatives set to transform electricity
Through hyper-personalized, connected services, electricity supply can be transformed from a commodity into an experience.
Customers are now starting to develop ‘liquid expectations’, with the belief that a high-quality service in one industry should be connected and translated to the next. Technology is propelling this expectation, through sensor-rich objects, smarter devices, the decreasing cost of cloud computing and the increasingly seamless nature of connectivity.
Electricity companies can look beyond the electron by providing a hyper-personalized, connected service that adapts to the changing consumer, business and citizen. As the provision of electricity moves from being a commodity to becoming an experience, it will be managed not by a single utility but by cross-industry partners, the key differentiator of both this theme and integrated customer services.
Developing an ecosystem of partnerships will be a critical success factor for electricity companies in beyond the electron initiatives. Development of a seamless, cross-industry customer experience is only possible if electricity companies are prepared to be collaborative with peers and competitors, including sharing data, ideas and resources.
Initiatives that play “beyond the electron” could not be quantified and are excluded from the value at stake analysis. Nevertheless, big wins in customer value are expected for those that move quickly to market such services. In particular, we will discuss three “beyond the electron” initiatives below: living services, industrial services and municipal services.
Beyond the electron is one of four themes that we believe will be central to the digitization of the electricity industry over the next decade. The other themes we examine are asset life cycle management, grid optimization and aggregation, and integrated customer services.
Living services describe the cross-industry digital services that can be offered to consumers by combining sensors, the cloud, connected smart devices and real-time analytics to deliver a new layer of integrated consumer experience. The connected home is a key location for the provision of living services (see Figure 1).
Google and Nest
In 2014, Google acquired Nest, a leading company in the connected home market, for $3.2 billion.¹ It signaled a move by Google toward developing a more integrated experience in the home. Nest and Google have continued this process by establishing a number of partnerships with lifestyle and home-product brands that extend far beyond the original Nest thermostat. Examples include LIFX’s smart lightbulbs, primed to turn on at night to improve safety when a dwelling’s occupants are out; Jawbone wristbands that use motion-sensing technology to turn the heating on when the wearer wakes; and Mercedes-Benz cars that communicate with the connected house to turn on the heating when the vehicle and its occupants are 30 minutes from home.²
The Nest thermostat and carbon monoxide detector continue to be popular, with 100,000 thermostats reportedly being sold a month, generating estimated annual revenues of $300 million.³ Nest says that its thermostat pays for itself within two years, saving US customers 10 to 12% on their heating bills and around 15% on their cooling bills – a total of $131 to $145 per home, per year.⁴
Nest’s core value proposition is based on the continually learning algorithms that collect and interpret data from the expanding network of devices.⁵ Exploiting the growing infrastructure of sensors and connectivity will lead to a whole host of opportunities beyond the electron.
In this digital initiative, business customers will be offered a suite of engineering services, such as manufacturing and industrial processes, energy, power, data security, lighting and safety. All operate from a single platform and continually evolve using insights from data analytics.
GE has recently launched Predix, a platform for industrial-scale analytics, which will connect machines, sensors, control systems and devices to capture and interpret data from manufacturing and production systems. Aimed at a number of different industries, its application includes the following examples: Digital Power Plant and Digital Wind Farm for electricity, Rail Connect 360 Monitoring and Diagnostics for transportation, cloud imaging for healthcare, and nondestructive testing remote collaboration for oil and gas utilities.⁶ GE is encouraging innovation in the ecosystem, opening up the platform to third parties and developers for integrating new products and services.
A full integration of services for citizens is covered, such as providing those for transportation, emergencies, food, sanitation, waste management and electricity. Citizens will experience real-time interactions with service providers and receive tailored, individualized service.
Services that move beyond the electron, particularly when scaled to the city, will have a meaningful impact on consumers’ quality of life. Improved use of data and interoperable services will make transport options more intuitive, healthcare more tailored and the environment safer and more comfortable. In addition, municipal services have unexpected environmental benefits, not least of which is the ability to track carbon emissions across every stage of a service, spanning many traditional industries. Projects can be better measured and involve participants across the value chain – a very real barrier at present.
Singapore is a smart city, with the government planning to install thousands of sensors across the city in 2015 to monitor metrics such as water levels, traffic congestion, crowds and air quality.⁷ Across Singapore, connected heating, ventilation and air conditioning, and an abundance of sensors, allow for monitoring consumer movement and behavior in real time. In addition, most government services are available on a single online platform. Launched in 2003, SingPass is a gateway to hundreds of e-services that provides convenience and a more individualized service.⁸ Singapore continually ranks highly as one of the world’s safest, healthiest and digitally secure cities according to The Economist Intelligence Unit’s Safe Cities Index 2015. Ultimately, improved data will lead to safer and more efficient living spaces and transport options in the city, boosting economic growth and improving its citizens’ living standards.
1. Google to Acquire Nest”, January 13, 2014.
2. Living Services: The next wave in the digitization of everything, at Accenture.com.
3. Yarow, J., “Nest, Google’s New Thermostat Company, Is Generating A Stunning $300 Million In Annual Revenue”, Business Insider, January 14, 2014
4. Nest White Paper – Energy Savings from the Nest Learning Thermostat: Energy Bill Analysis Results, February 2015
5. Wohlsen, M., “What Google Really Gets Out of Buying Nest for $3.2 Billion”, Wired, January 14, 2014
6. King, R., “GE adds more predictive capabilities, partners to Industrial Internet cloud”, ZDNet, October 9, 2013
7. The Safe Cities Index 2015: Assessing urban security in the digital age, 2015.
8. Singapore Personal Access (SingPass), “About Us”, 2015
Electricity is one of six industries (along with automotive, consumer, healthcare, logistics and media) that have been the focus of the World Economic Forum’s Digital Transformation of Industries (DTI) 2016 project. An overview of the DTI program can be found here.
Our in-depth findings about the digital transformation of the electricity industry are available in a white paper, which can be downloaded here.
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