One thing that will not change in the new year for the utilities industry in the new year is rising costs. This includes not just the higher bills customers have been seeing, but the costs the industry as a whole is incurring. It is becoming more expensive to distribute energy, and that isn’t something that is going to change any time soon.
Some of the reasons for the increased costs are meant to be beneficial in the long run, as the industry works to become more sustainable. Here are some of those reasons, and how analytics can play a role in helping companies make sure they are staying on top of those costs.
Breaking down the costs
Over the past two decades, annual spending by major utilities to produce and deliver electricity increased 12%, according to the United States Energy Information Administration (EIA). Capital investment in electric infrastructure more than doubled in that period as the industry modernized. The EIA cites among those projects:
- The replacement or upgrading of older generation and delivery infrastructure to be more fire- and storm-resistant.
- The installation of natural gas-fired, wind and solar, and battery power generation.
- New power lines that connect to renewable resources
- The addition of technology such as smart meters and automated controls.
It costs less to produce energy now, as companies rely less on older plants that are more expensive to maintain, according to the EIA, but spending on transmission has nearly tripled over the past 20 years.
Usage increases
The other part of this equation is an increasing demand for energy. The continuing effort to expand the uses of artificial intelligence (AI) is a big part of that increasing demand. According to Deloitte, electricity demand from data centers, which was roughly between 180-290 terrawatt-hours (TWh) in 2024, is projected to reach about 515 to 720 TWh by 2030.
It’s not just advanced technology. There is a shift to electricity reliance in many areas of day-to-day life. Both homes and businesses are looking for more efficient heating and cooling solutions, and heat pumps are an energy-efficient option that use electricity. The increasing popularity of electric vehicles has resulted in steadily rising electricity use rates.
Utility companies need to make sure people can reliably access the electricity they need for all of this, and that’s where the spending on transmission comes in. People are not only spending more for electricity to power their cars – utilities companies have increased their rates to cover the costs of installing new power lines, for example.
The importance of analytics
That’s where analytics comes in. Utilities organizations need the best possible analytics solution to make sure their business is operating at peak efficiency. Customers can’t be expected to constantly pay higher rates, and some organizations are actively working to cut costs for customers. Analytics can help utilities companies track important performance indicators such as:
- Operational cost and management
- Overall financial performance
- Customer service quality
- Energy efficiency and demand side management
- Workforce
- Sustainability
With all of the changes in the industry and the different sources of electricity, there are different compliance requirements that utility companies are expected to meet. An analytics solution can help provide all of the necessary reporting to meets those standards as well.
It is a complicated time for the utilities industry. While they are working to meet their own standards for energy efficiency and sustainability, everyone else is relying on the industry to provide them with the ability to meet their goals. Analytics can help organizations in the utilities industry make sure they are doing what’s best for them while also helping them meet the needs of an increasingly demanding consumer base.
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