‘Show me the Carbon (…and the Money)’

Jerry Maguire said back in 1996, we live in a cynical world… a cynical world, and we work in a business of tough competitors. As Jerry found out in the Hollywood movie, our jobs and our lives are about personal relationships, trust, and sincerity.

So fast forward to 2022 and the global sustainability promises of carbon reduction, financial affordability and personalised services in Energy and Water.

In the absence of great examples, I might argue that we are still in a cynical world.

The challenges we are facing from financial cost of living pressures, rapidly rising energy costs, our concerns for the environment and widespread evidence of political insincerity, tends to leave us feeling cynical and perhaps questioning whether the key policy makers and leaders are primarily motivated by self-interest or preservation, or personal gain and shareholder return.

Or perhaps there are some major organizations and influential leaders that really do believe in helping address climate change and transitioning to a carbon-free future that offers affordable energy and water services for citizens of our planet.

Let me share a real example of leadership and sincerity…

As an eternal optimist, I always like to see good in people and be a good listener, so when I come across examples of real progress, real passion, and extraordinary commitment with very tangible results, it is a pleasure to share it, especially when it moves me emotionally – that is the subject of this blog.

I recently had the opportunity to have a fireside chat with someone of great integrity who is leading a major energy provider that has existed for over 100 years in a country facing a range of significant societal, financial and environmental challenges.

Without going into the specifics of who it was, I wanted to focus on why this conversation hit such an emotional chord with me, what was it that felt different, what was so inspiring and how have they delivered such fantastic results at the pace required.

For me, the big difference came down to identifying two primary traits – ‘Inspiring and Courageous Leadership’ and ‘Personal Credibility, Integrity and Sincerity’. There is also a clear focus on the greater good, the need for wider economic and social benefits, and an obligation by the leaders of this significant utility to make it personal and deliver change with unwavering passion, commitment, and the drive to see it through.

So, what was it that struck such a chord with me?

This utility company was different from the norm.

When I reflect personally on some of the utilities and large energy consumers I come into contact with, it is fair to say that I have observed a fair share of companies that appear to be saying the right things, but don’t seem to be acting upon them with the right level of sincerity or at the right kind of pace – some might suggest that these companies are simply paying lip service to a current hot topic but still operating and focusing on the primary goals of shareholder return and regulatory compliance.

When it comes to sustainability and ESG (Environmental, Social and Governance), many of us are starting to act like global citizens, we are starting to hold our utilities to account, we are wanting to see clear environmental actions, and we are seeking personal engagement that is relevant to each and every one of our unique customer circumstances.

From a potentially cynical base, many of us can be excused for having a healthy level of skepticism when it comes to communications from our utilities regarding their progress on circular economies and renewable energy transition, the ongoing strive for financial affordability, and the strategies they have in place that will deliver results for our future generations. All of this is good, we want them to get the basics right in terms of service resilience and reliable supply, but we are also expecting them to address sustainability with integrity and passion for the environment. We want to trust them, but we have to earn that trust to overcome our cynical perspectives if we have them.

As customers we have hearts as well as minds that need to be considered, and we have families that span multiple generations, and we belong to communities where we want to be engaged, educated, and empowered to make a difference and play our part.

For clarity, on a personal level I tend to see customers existing within a hierarchy that helps to differentiate where they are coming from:

• Consumers – those of us that focus primarily on service resilience when we flick a switch for energy, or we turn a tap / flush a toilet for water
• Customers – those consumers who also see and pay the relevant bill, we care about affordability and usage as well as a resilient and reliable service
• Citizens – those of us who take a broader view and also care about environmental and sustainability factors, and ensuring security of supply for future generations
• Communities – the groups of people with whom we share a common interest or ambition to bring about change, those that want to act as a community with an amplified voice

There are a lot of generalisms here of course, but it is useful to differentiate between consumers who really just want a reliable service with those that also care about the cost, and those that are heavily focused on ESG related concerns – all of these are now expecting a personal touch from their utilities in some way when it comes to their tailored insights, choices and communications.

Enough scene setting, let’s get more specific about this…

Many utilities, energy and industry analysts have adopted a structure for the future utility strategy that is based around 4 key pillars:

• Digitalization – the adoption of digital platforms and technologies to drive services and insights
• Decarbonization – reduction in greenhouse gas emissions, adoption of renewable energy sources
• Decentralization – the facilitation of distributed energy and water sources away from major plants
• Democratization – the increasing engagement and choices that customers and citizens have today

These four pillars are a convenient way for a utility business to share its strategy, shape its investments and roadmap plans, especially to investors and stakeholders through annual reports, provide web site communications and regulatory business plans and many other facets, however whilst it resonates clearly with certain stakeholders, it could have less relevance with consumers, customers, citizens, and communities.

There is value in this approach when we are being factual and talking to our minds, but it does not so readily address the needs of our hearts. To do that, the corporate language would need to be more personal, more specific, more tailored to unique and different circumstances.

That’s where a second structure comes in useful, a structure that is more specific and relevant to each and every one of us. This is based on 3 core threads:

• Engagement – the approach to connecting us as customers to our preferred channels of choice
• Education – the way in which personal insights are generated and delivered to us as customers
• Empowerment – the effectiveness with which we as customers can act upon those insights

For this blog, I am going to share more about how this particular company has focused on Digitalization and Decarbonization in the first instance, and sharing the impact they have made, and continue to make, through engagement, education, and empowerment across their customer base.

At a later date we can explore what this means in terms of decentralization and democratization, something equally inspiring and transformational.

Digitalization

During my recent interaction with the leader of this organization, we talked extensively about the strides they had made in adopting digital technologies to engage with their customers. Technologies that were heavily integrated to their key data sources such as smart meters, IoT devices, smart grid technology and data analytics – as well as their systems of record for billing and customer data, and their grid management systems including telemetry and IoT devices.

These are all very normal and commonplace, but there were aspects mentioned that showed a high level of regulatory support, aligned with an openly stated corporate strategy, regarding the pace with which the utility is engaging with their customers through their channels of choice.

But what was really clear when we discussed this was that this company also has visible and committed backing from their federal and state governments to deploy these key technologies as part of this strategy. They had the clear backing of their regulators who advocated for a business plan that was ambitious and well defined, and very importantly they had the backing of their customers through effective engagement and education that had been successful in showing the value of digital insights that could provide usage and consumption analytics in a unique and tailored manner.

In all aspects of their digitalization strategy, they had addressed the hearts as well as the minds of all key stakeholders.

For me, it was not just a good digitalization strategy and plan, it was the cumulative effect of all these things that had created a complete digitalization roadmap and landscape. It was so much more than applying specific digital solutions to specific ideas, problems or issues, it was more than using data to provide ad hoc insights that were useful in a specific circumstance, and it was more than a set of specific business cases that showed enough ROI to pass through internal justification criteria.

It was very clear to me that this was a full and complete philosophy, a commitment from all key stakeholders, a set of values that spanned through the company and across the stakeholder landscape including regulators, shareholders, federal and state government, and also importantly across the employees and customers of this company.

What really struck me is that the strategy to digitalize for customers was sincere and real, and it had that ‘X Factor’ that makes a strategy like this successful – that magic ingredient based around committed leadership and engaged staff, that sincerity and integrity in their actions, plus a culture and belief across the organization that ensured a successful outcome.

It is hard to put this into words, but anyone that has been involved in digitalization strategies will understand the difference between ticking all the approval and compliance boxes and then being given permission to proceed, with the environment here where the leadership and workforce are all pulling together with a belief that this is the right thing to do.

Creating the right environment…

I have to give credit to the leader of this organization in creating this environment, for showing sincerity and for being very well versed on all things digital, despite their very senior role as President – this wasn’t the CIO talking about innovative technologies, he was the President, telling the story of the journey they are on together and where it is heading.

The value of storytelling in this instance is very powerful, it is a ‘heart based’ method of communication that is so powerful when done well and done with passion.

Getting down to more specifics, there were some key aspects that really struck me when it came to digitalization, these were as follows:

• Providing Unique (not generic) Customer Experiences – it wasn’t about ‘one size fits all’ drive customer satisfaction and lower the cost to serve, it was about providing unique customer experiences that were tailored and personal to customers.
• Managing (not just supplying) Customer Energy – it wasn’t about just providing energy, it was all about managing customer energy, providing the service is key of course, but managing that service on behalf of the customer and generating insights about how to use energy better or save energy as part of their own sustainability goals was a key aspect.
• Becoming a Truly Data Driven Business – clearly, data and analytics are hot topics in all utility businesses, however the ways in which this data was now being treated as a primary corporate asset was very exciting. It was clear that the corporation had placed a huge value on the data it was acquiring from smart meters, IoT devices, smart grid assets and of course all aspects of customer interaction. The organization was becoming a truly data driven business, driving actions, strategies, services, and investments around what the data was telling them rather than what historical practices were adopted.
• The Criticality of the Smart Metering Program – one of the most significant strategies that has delivered value here is the widespread adoption of smart meters. Using the data from the smart meters, the company is now able to generate insights for customers on how their energy is being consumed and, in some cases, apply disaggregation algorithms to identify key appliances. These are contributing to the provision of unique, personal insights that are delivered through the digital platform technology direct to the customers. This type of value has further amplified the widespread regulatory and government support for funding further rollouts, plus it has generated a great deal of customer advocacy to help affordability challenges and proactive alerts.
• Avoiding Innovation Theatre – this company has observed attempts by many utility businesses around the world to try and be innovative through large, orchestrated events that bring together different stakeholders and partners to drive innovation alongside singing and dancing. The issue faced by many utilities with delivering real innovation is finding a way to remove the paraphernalia and business governance aspects and making a normal everyday process to promote and drive new thinking and new paradigms. My own experience is that some utilities tend to put innovation on a pedestal and create large events to create ‘all thrust and no vector’ when in fact it is ‘applied vector’ or ‘disruption’ that really drives change. I was thrilled to hear that despite all that this company has achieved, they do not make a big play on innovation, they just get on with things that matter, the things that align with their strategy and create real value for customers. They have nurtured a culture of innovation without theatre.
• Enabling a ‘One Stop’ Customer Engagement Platform – proving a single platform for all customer interactions, a platform where customers can address all their needs and where they can get all the relevant information they need, through their channels of choice is proving to be a remarkable success. This is in strong contrast to multiple (or piecemeal) applications or portals that perform different tasks.
• Promoting Utility as a Service (UaaS) – ultimately the organization is promoting and pursuing the idea of becoming a utility of the future, where it is all about offering utility services through a UaaS approach. This is a truly progressive and forward-thinking paradigm shift from being asset centric to becoming truly customer centric.

These are just a few of the digitalization aspects which in their own right are interesting and very progressive, however our conversation moved quickly into decarbonization which is where there was a significant external impact.

Decarbonization

Being a digital, data driven, utility is a fantastic strategy and way forward, but it does not directly address the need to understand and deliver upon your obligations to drive sustainability and help address the needs of customers who want to pursue their own sustainability goals.

So, although the digitalization strategy has clearly had a major impact, it is really the decarbonization strategy that is showing the true colors of where this organization is going and what is driving it forward.

Although there are many aspects of supply side decarbonization that this company is doing that is totally right in terms of sourcing energy from renewable sources, removing coal and thermal generation as fast as it can, as well as pursuing ways in which it can reduce the carbon footprint in their operations, asset management and service delivery processes, it is really the linkage between digitalization and decarbonization, and the demand side thinking that makes this so interesting.

When I spoke to the leadership of this organization, it was hard to differentiate between pure digitalization and pure decarbonization strategies – they were intimately connected and integrated to each other which is where the real change is happening.

There were multiple examples of decarbonization (many primarily enabled by digitalization) that are very worthy of highlighting, these include the following:

• Upstream Trading and Circular Economies – utility operating models tend to be defined as linear systems from generation, transmission, distribution, operations, and serving customers – all perfectly normal. However, what struck me here was that this was now being viewed as a truly circular economy with a ‘trading’ component added at the cycle and a circular link that represents energy recycling and micro-generation being incorporated alongside the use of distributed energy being used in other business sectors including agriculture.
• Embracing and Enabling ‘Prosumers’ – adding the circular link for distributed energy resources has provided a platform for ‘prosumers’ to generate and manage their own energy. This has truly joined up the process into a circular cycle rather than a linear process. The reason this is significant is that this would not be possible without the digital platform working to enable it.
• Focusing on Demand Side Management – one of the big paradigm shifts here as mentioned as part of digitalization, was that the utility sees itself as moving from a primary supplier of energy or a utility that also manages the use of energy (the demand side) especially on behalf of large industrial and commercial consumers. This shift is important because it changes the culture of the organization from being about asset management to being truly customer and consumer centric, in fact it is fast becoming citizen and community centric as the various energy management programs help consumers shift towards renewable energy sources and electrification of transport etc.
• Extending into Energy Marketplace Services – As the organization gets closer to customers it is possible to extend the range of services provided to include marketplace services linked to some of the key insights being generated for customers to save energy. Examples include the marketplace for more energy efficient appliances if a particular appliance has been identified as being energy efficient, or perhaps the adoption of an electric vehicle linked directly to the customer’s energy account.
• Validated and Audited Carbon Accounting – as part of the renewable energy shift, new services and insights are being developed that help a large industrial and commercial consumer account for its own net-zero accounting and sustainability goals. This is especially so when the utility can validate and audit the energy accounts for a large consumer of energy, something akin to auditing financial accounts, and something that will become more prevalent as we move forward in a reduced carbon society where consumers are being held to account and need to ‘show them the carbon’.
• EV Infrastructure Deployment – this is a major strategy for this utility, there is a clear view that as they deploy smart meters and EV charging infrastructure, this becomes part of the utility’s ‘assets under management’ strategy. In other words, the deployment of IoT devices, smart metering technology and EV charging infrastructure have become an extension to the more traditional assets related to generation, transmission and distribution – an extended service infrastructure in many ways and an extension to the range of assets under management.
• Accelerating Adoption of eMobility Solutions – perhaps one of the most significant impacts of decarbonization enabled by digitalization is the rapidly evolving adoption of electric vehicles, these include 2, 3 and 4 wheeled vehicles that contribute to existing greenhouse gas carbon emissions today. Using energy for electric vehicles is a key future service that needs to be efficient, reliable, and green, and the way in which consumers interact with their energy provider in a seamless and integrated way will largely determine the adoption rates and environmental improvements that come with this.

The final points around decarbonization are very profound, not only are there numerous solutions and initiatives that address sustainability, but there is also another factor which is a public statement about the sustainability goals, and a very clear alignment with the United Nations Sustainability Development Goals (SDG’s).

This alignment stretches well beyond statements made on their public facing websites and their promotions of specific carbon initiatives, this has extended to become a shaping factor for their personal and professional values, their operating and environmental culture and is a philosophy that extends through the organization – almost as though the primary purpose and mission of the company has now evolved and is not just to produce and distribute clean energy, it is to improve the country’s overall society and environment, and to help the largest consumers right to the smallest consumers to reduce their carbon loading and play their part.

For me, the special part of this whole discission with the leadership of this company was the sincerity and integrity that flowed out regarding the adoption of digitalization, and the way in which that was contributing to decarbonization. This was amplified by the spirit and passion with which it has shaped the overall mission and culture of the corporation – it was truly inspiring for me on a personal level.

So, to round this out and come back to the analogy with Jerry Maguire, we still live a world of tough competitors, but I feel we might be able to reduce the level of cynicism. I also feel that as a customer I can be more than a number, I can be a unique business partner who now has the tools to play my part in reducing my carbon footprint. But overall, if I was a customer of this company, I would feel that my energy supplier is acting with high integrity and sincerity when it comes to evolving rapidly to fit around my needs of today and my concerns for tomorrow.

I still feel the need, the need for speed, in accelerating this transition to clean energy, and if we are going to accomplish this seemingly impossible mission, I would advocate that we need to follow the lead of courageous and bold organizations who aren’t afraid of the truth when it comes to their future.

In conclusion, when we are asking our energy providers to ‘Show me the carbon (and the money)’, the response we get will largely help us decide if we are dealing with a utility that is truly committed to climate change and environmental protection, or one that is still finding their way in a changing world.

Footnote

Engaging, Empowering and Educating citizens are the first steps towards energy and water conservation. SEW’s innovative digital platforms are proven enablers that are empowering providers for charting the course of digital transition and decarbonization right across the globe – and are on a mission to help contribute to addressing the global sustainability goals at pace. To learn more, reach us at [email protected]