Five key challenges pushing utilities to seek new asset management solutions


Deloitte has released a new report highlighting challenges that are prompting many electric power providers to seek new tools and processes for asset management.

The five key challenges include:

  • Increasing severity of storms and disasters:

The US alone saw twice as many billion-dollar disasters (14) from 2015 to 2019 as in the 40-year period from 1980 to 2019.

  • Aging infrastructure:

The majority of infrastructure within the US energy transmission and distribution networks is 70 to 80 years old, yet their original expected life span was 50 years. The infrastructure is outdated and no longer fit for emerging business cases.

The severity of natural disasters and the aging infrastructure coupled have caused prolonged outages in the US.

  • Mounting public health and demand challenges:

COVID-19 has highlighted the need for more agile decision-making capabilities.

Utilities need new strategies to service new and shifting energy demand patterns as workers and students increasingly stayed home. Social distancing required new remote asset maintenance protocols, supply chain disruptions prompted new supply sources and revenue constraints triggered renewed capital programme reviews.

  • Rising cyber and physical threats:

Power infrastructure is increasingly threatened with more attacks aimed at damaging assets and disrupting grid operations in the cyber and physical sphere.

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A successful attack on the US power grid would cost between $243 billion and $1 trillion hence utilities are seeking new measures to improve their asset management.

  • Increasing regulatory scrutiny and mandates:

With increasing shift to performance-based regulation, utilities are required to track the benefits of their investments, which may need more sophisticated monitoring and analysis.

The industry must also comply with evolving cybersecurity mandates and sometimes confusing rules through which expenditures may qualify for capital asset treatment.

The report, Digital utility asset management: Building the backbone of the energy transition, provides a framework that lays out utilities’ digital asset management journey through nine stages of evolution.

Cybersecurity and data governance have been identified as the core of the evolution.

The energy transition has also forced utilities to seek new ways they can optimise their asset management.

For instance, the expanding number of assets: With the growth of renewables and distributed energy resources (DER), utilities are managing 10 times more assets than they were managing 20 years ago, and assets will likely continue to grow. US DER capacity is projected to reach 387GW by 2025, driven by $110.3 billion in cumulative investment between 2020 and 2025.

Increasing complexity of assets: Utility asset life cycles are becoming increasingly complex with the addition of renewables and the infrastructure required to integrate them smoothly into the grid. This is prompting companies into leveraging information technology and operational technology to improve the management of assets.