Analytics for Utilities: Deriving customer satisfaction and better profits from Big Data
As smart meters are rolled out in more and more households and businesses in different countries, there has been an explosion in the volume of data that’s being generated in the utilities sector and businesses and consumers alike can benefit from this. OpenGov had a conversation with Mr. Niall Gallacher, Director, Industry Solutions – Communications, Energy and Utilities at Qlik, a leader in the data analytics market, to learn how utilities can derive the maximum potential benefits from this deluge of data.
Traditionally, it has always been a challenge to deal with exponentially rising volumes of data. But with the exponential rise in computing power, the ability of technology now to cope with the volume has improved. At the same time, millennials coming into the workforce are adept at using apps to find data and information instantaneously, and they don’t expect any less from the companies they join.
These two factors, from the technology and the people perspective is what is affecting the way utilities companies can transform their businesses.
Mr. Gallacher explained, “Instead of purely having data pointing backwards at what might have happened in the past, they are using data to start helping predict the future, to drive digital transformation and identify what might happen in the future. We see organisations moving from a focus on historical performance to key performance predictors about what might happen in the future. This is about the ability to discover and simulate, rather than purely slicing and dicing numbers.”
Looking forward to smart meters
It all starts with data collection, and smart meters are a win-win for both businesses and consumers. Let’s start with energy retailers. As they sign up for contracts to buy energy, they have to estimate energy consumption for their customer base to ensure that they buy a sufficient amount to support their needs. Before smart meters, it was challenging to predict exactly how much energy consumers were going to use. If the energy retailer didn’t procure sufficient energy they might end up with brownouts (drop in voltage in an electrical power supply system) or even a major blackout (power outage).
So, retailers ended up buying more energy than they need. Going upstream, this also meant that most electricity generators are often generating more electricity than what would be used. It was costly, wasteful and damaging from an environmental perspective.
With smart metering data coming in every 5-15 minutes, retailers can now be significantly more accurate in their ability to forecast usage. They no longer have to over-invest and buy additional energy. Similarly, generators don’t have to over-generate to the same extent.
On a macro-level, if the generators could cut the amount of over generated energy by even a few percentage points over a year, this can lead to vast savings and the analytics involved generates immediate business value. As organisations get better and more adept at predicting the amount of energy they need to generate for the retailers, the fossil fuel footprint of the power stations can also be diminished.
How analytics is powering the utilities industry, today
Niall shared the example of how in the UK, the government aims to have smart meters installed in a majority of households by 2020. To encourage this, companies like British Gas (Centrica Plc) are taking the lead. British Gas is UK's leading energy supplier, serving around 11 million homes. They now offer a HomeEnergy FreeTime tariff which provides consumers with free electricity every Saturday or Sunday if they install a smart meter and keep their consumption within certain thresholds for specific periods.
From a business perspective, British Gas benefits from the ability to view usage trends more regularly. Customers too benefit from the transparency. British Gas’ line of Hive smart home products enables consumers to better control their energy usage.
Through their smartphone, consumers can not only access their electricity usage and bills, but they can also remotely switch on or switch off high energy consuming devices such as air-conditioning units or heating systems.
Hive products also allow remote control over light bulbs and sockets. Through Hive, consumers can get a close to real-time picture of their consumption from the smart meters and change their consumption habits.
Niall provided a behind-the-scenes account of how British Gas is now reaping these benefits. British Gas Smart Metering (BGSM) was set up in 2010 to roll out smart meters with the goal to install 16 million smart meters by 2020. To do this, it invested in business intelligence and data management technologies, including from Qlik.
Initially, BGSM’s data analysis and management information functions were spread across a variety of inherited systems generating “multiple versions of the truth”. British Gas managers were finding that service levels were not matching up to standards and promises were not being met. To counter this, BGSM decided to go for data consolidation. After three months' proof of concept, it chose Qlik for self-service analysis on top of a Hadoop “data lake”. At the time, the data lake contained more than nine billion records and took in data from sources including over 150 SAP tables.
On average, the Qlik dashboards processed files with more than four billion records and fetched about 45 million records each day. The management team could not only access business information, but could also drill into it. This single version of the truth made collaboration easier and it also made it easier to spot “what the company isn’t doing well and what it can change”.
Benefitting from Qlik’s associative technology
Qlik’s data analytics platform also has the ability to help organisations that have the problem of persistent data silos – this may occur when each department or office has its own business systems and each business system generates its own report. Mr. Gallacher said, “Instead of joining all that data together, we can streamline the modelling, and start associating. Our Associative Engine allows for that simplification.”
The Qlik Associative Engine combines large numbers of data sources and indexes them to find the possible associations, without leaving any data behind. It offers powerful on-the-fly calculation and aggregation that instantly updates the analysis and highlights associations in the data, exposing both related and unrelated values after each click. This means users are free to search, explore, and pivot based on what they see, without limitations and without having to go back to data analytics teams and wait.
Power in the hands of the users
Mr. Gallacher shared the example of Horizon Power, a State Government-owned power company responsible for generating, distributing and retailing electricity in Western Australia. It provides power to about 100,000 residents and 10,000 businesses across regional and remote Western Australia.
Horizon Power buys power from independent power providers and provides it to customers. With such a huge customer base, the company generates a significant amount of data both internally and externally.
The company originally used a dedicated analytics team with reports being sourced from the IT department. It often took weeks to generate a report, which would then require additional edits from the business team. Horizon Power’s first phase of Qlik implementation was designed to visualise corporate KPIs and targets and contractor reports to ensure accountability from external parties.
As a direct result of the deployment, they saw a 45 percent cost reduction in report production and 60 percent reduction in delivery time. Data is aggregated into a single, accessible platform to ensure users can see the whole story in their data and make better strategic decisions. Horizon Power can now create much of their reporting in near real-time since data digitisation that used to take weeks to complete now takes only hours. Users can leverage multiple data streams, many of which are derived from Horizon’s ERP system. They are able to correct data inaccuracies or address issues in real-time, often without the need for IT intervention.
Mr. Gallacher said that at its heart, that’s what Qlik is all about, enabling people to make better business decisions to start driving profitability and improved competitiveness.