Electricity and utilities

The electricity industry is currently going through a period of change. This gives many opportunities for analytics to provide an advantage, and also many areas that require insight in order to control risk.

The last few years have witnessed a slowing of growth for electricity consumption. There are many possible drivers of this, including the global financial crisis, unusual weather patterns, changing customer attitudes to electricity, increased engagement due to publicity, the effect of high prices and large price increases, incentives from government policy, and many others. It is not yet clear whether these changes are a short term blip or a fundamental change of trend, but assumptions on these factors can make huge differences to forecasts, and therefore revenue recovery.

In addition, there are changes in technology that are also driving changes in attitude and behaviour. The take-up of photo-voltaic (PV) cells by consumers has been much larger than expected, partially due to very attractive incentives, and this has caused challenges both for network management, and also revenue. The introduction of electric vehicles is likely to cause a disruption as big, or bigger, and modelling of scenarios related to this is essential to understand the risk involved.

From a data perspective, the introduction of smart meters in some states has caused both a challenge in data management and an unprecedented opportunity to understand customer consumption. Customers no longer need to be grouped together, with an "average" profile, but can be segmented based on their individual consumption patterns. This provides many opportunities for innovative tariff designs that are tailored to particular segments. It not only aids retailers in targeting their acquisition and retention activities, but lets distributors understand the risk involved with various tariff structures, which under uncertain regulatory conditions is imperative.