1、Watts the plan?Pioneering profits with digital business models in the energy 2023 PwC.All rights reserved.PwC refers to the PwC network and/or one or more of its member firms,each of which is a separate legal entity.Please see for further details.Mentions of Strategy&refer to the global team of prac

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3、onal advisors.PwCThis publication has been developed in collaboration between Strategy&,PwCs global strategy consulting business,alongside PwC industry and function experts.Together,we transform organizations by developing actionable strategies that deliver results.At PwC,our purpose is to build tru

4、st in society and solve important problems.Were a network of firms in 156 countries with over 295,000 people who are committed to delivering quality in assurance,advisory and tax services.Find out more and tell us what matters to you by visiting us at .PwC refers to the PwC network and/or one or mor

5、e of its member firms,each of which is a separate legal entity.Please see for further details.Body textStrategy&|Watts the plan?3Key contactsDr.Marcus EulPartner,PwC Strategy&Germany+49-1515-112-2755 Christian von Tschirschky Partner,PwC Strategy&Germany+49-175-208-1327 christian.von.tschirschky Fol

6、ker TreptePartner,PwC Germany+49-160-9724-7316 Jeroen van HoofPartner,PwC Netherlands+31-88-792-Olesya HatopDirector,PwC Germany+49-69-9585-5555 Dr.Sebastian Hock Director,PwC Strategy&Germany+49-160-9243-2907 Territory contactsAsia-PacificAustraliaGuy Chandler+61-439-345-045 ChinaChong Heng Hon+86-

7、10-6533-IndonesiaSacha Winzenried+62-21-509-IndiaSambitosh Mohapatra+91-98990-02871 sambitosh.mohapatra JapanNorio Katayama+81-90-5408-South Korea Won-Seok Yoo+82-2-709-4718 won-Body textStrategy&|Watts the plan?4EuropeAustriaJohannes Schneider+43-664-8156-BelgiumMarc Daelman+32-477-50-00-38 Central

8、-and Eastern EuropeJason Wardell+36-70-657-2262 DenmarkClaus Dalager+45-89-32-57-72 FinlandKimmo Vilske+358-20-787-7938 IsraelEitan Glazer+972-3-795-Portugal Joao Ramos+351-21-359-France Pascale Jean+33-6-74-44-79-GermanyFolker Trepte+49-160-9724- ItalyGiorgio Biscardini+39-335-75-0550 NetherlandsPa

9、ul Nillesen+31-88-792-7237 SpainCarlos Fernandez Landa+34-639-136-076carlos.fernandez.landa GreeceVangellis Markopoulos+30-21-0687-IrelandKim McClenaghan+353-7920-NorwayOle Martinsen+47-952-61-Poland Dorota Debinska-Pokorska+48-5021-84883dorota.debinska-pokorska SwedenEva Carlsvi+46-10-212-67-Switze

10、rland Manuel Berger+41-58-792-23-TurkeyMurat Colakoglu+90-533-729-18-United Kingdom Drew Stevenson+44- Middle East and Africa Middle EastRaed Kombargi+971-56-687-8200 Francophone Africa Emmanuel Lebras+242-05-534-The Americas Argentina/Latin America Ezequiel Mirazon+54-11-3112-BrazilAdria

11、no Correia+55-11-3674-CanadaJames McLean+1-403-614-1470 MexicoEduardo Reyes Bravo+52-555-263-6000eduardo.reyes.bravo United States Danny Whigham+1-404-558-3502 Strategy&|Watts the plan?5ABOUT THE AUTHORSDr.Marcus Eul is a leading practitioner in the Germany,Switzerland,and Austria utilities sector f

12、or Strategy&,PwCs strategy consulting business.He is a partner with PwC Strategy&Germany,based in Dsseldorf,and has over 20 years of strategy consulting experience and 10 years of industry experience.Christian von Tschirschky isa partner with Strategy&Germany and advises clients in the energy,utilit

13、ies and chemicals industries onstrategic transformations,operating model change and digital enablement along the value chain.Based in Munich,he leads the European Strategy&EURconsulting practice.Folker Trepte advises clients in the energy and chemicals industries for PwC.He leads the firms energy,ut

14、ilities and resources sector practice in Germany,specializing in trading,risk management,accounting and sustainability.Based in Munich,he is a partner with PwC Germany.Dr.Sebastian Hock has been advising numerous clients in the energy,technology and process industries for more than 10 years.He focus

15、es on corporate and IT strategies as well as large transformations and digital enablement.Based in Dsseldorf,he is a director with Strategy&Germany and a member of the EUR consulting practice.Dr.Oliver Kalsbach and Jonas Bruns also contributed to thisreport.Strategy&|Watts the plan?6Utilities now fa

16、ce the digital reckoning that industries such as media and retail went through years ago.The experience of other sectors shows that there are only two options:transform your business to generate new value for customers by adding profitable digital business models or lose your market.In other words,c

17、hange or die.The good news for utilities is that,amid the clean energy transition,adding services that are an extension of their established business of generating,transmitting,or selling energy offer great opportunities.Companies that position themselves at the forefront of the transformation will

18、have the advantage.This study elaborates on the opportunity and challenge for digital business models(DBMs),where the greatest potential for synergies with the core business lies,and how to establish the necessary capabilities.We surveyed more than 300 industry experts across the utilities value cha

19、in,predominantly in Europe,about their expectations for digital transformation,their progress in adding new products and services,and the factors holding back change.The results show that since our last study of the digital business maturity in 20191,utilities have increased the share of their digit

20、al business as predicted from 17%in 2019 to 24%in 2023,yet still lag behind their own ambitions.As a result,they risk falling behind investors expectations and the competitive challenges facing the industry.Our survey,accompanied by interviews with leaders in the sector,also makes clear what the fac

21、tors holding back progress are,and how forward-looking companies are tackling them.1 Eul,M.,Trepte,F.,Jean,P.,Deboudt,D.,&Hhler,J.(2019).2019 Digital Operations study for energy:Power and utilities.Strategy&|PwC.https:/ INTRODUCTIONOther industries already leverage digital business models to underst

22、and their customers better and offer improved services.Energy companies must urgently digitalize their business models to meet customers higher expectations beyond just selling kWhs and stay competitive in the longrun.”Prof.Dr.Norbert Schwieters,World Energy Council board memberStrategy&|Watts the p

23、lan?7The key takeaways are:Utilities are focusing on integrating digitally-enhanced offerings into their core business instead of establishing fully digital new services.Digitally-enhanced products and services are expected to double to make up almost half of total revenue in ten years time.Survey r

24、espondents see Electric Vehicle(EV)charging and“smart”digital business models that facilitate demand-side and in-grid flexibility(such as smart metering,smart grid,and smart home)as most relevant to their businesses.The capabilities companies require to succeed are highly skilled staff with the righ

25、t tech expertise;enabling technologies including energy analytics,cloud computing and AI;and adequate funding provision to allow digital leaders to pursue their vision.Cost-efficient transformation also requires partnerships:the majority of respondents say collaboration with external partners is the

26、 most promising way to kick-start digital business models.Strategy&|Watts the plan?7What is a digital business model and how does it create value?Digital business models give value to private and commercial consumers and expand potential profit pools for companies through new technologies including

27、artificial intelligence(AI),the Internet of Things(IoT),cloud computing and energy analytics.The perceived value generated by the DBM determines a customers willingness to pay for a product or service,for reasons including quality,convenience,innovation,and experience.For companies,the benefits come

28、 down to the profit potential,looking not just at revenue streams,but also cost savings and optimization from offering a specific product or service.Digital technologies are the enabler of the value and profit pools,making them a necessary requirement but they are not sufficient on their own.It is t

29、hrough synergies with traditional business models that utilities will create the greatest advantage.A good example are smart meters:the devices measure energy consumption and enable live data tracking and direct communication between the consumers home and the utility.The two-way communication enabl

30、es flexibility and lets companies make use of dynamic pricing by showing consumers when prices are lowest,so they can adapt their electricity use to take advantage of lower prices.This keeps bills down for consumers and reduces the need for utilities to invest in expensive energy storage solutions t

31、o capture the energy generated by renewable sources.This is because demand can be better matched to the times when wind and solar power are being generated.EV ChargingProviders offer comprehensive electric vehicle charging solutions and services and generate revenue through pay-per-use or subscripti

32、on models.Digital technologies are used to provide customers with real-time charging information,reservation systems,and demand-response charging.Connecting EVs to the grid has the potential to disrupt the entire energy system.Firstly,the European car fleet electrification creates a vast shift from

33、gasoline to electricity demand yielding revenue opportunities for utilities.Secondly,utilizing the EVs battery capacity for grid stabilization,i.e.off-peak charging incentives,decreases the need for grid expansion and adds thus a unique value to the energy system.”Andreas Hoffknecht,COO DB Energie(s

34、ubsidiary of Deutsche Bahn AG)Strategy&|Watts the plan?8The value the service offers to electric vehicle users is convenience,through accessibility and fast charging.For utilities,it is also an opportunity to enhance grid stability by encouraging off-peak charging and reducing load during peak hours

35、.In Copenhagen,for example,the power company Enel has established a“vehicle to grid”hub in a partnership with Nissan and Nuvee,an EV charging company,in which the power stored in EV batteries can be fed back into the grid when the vehicles are not in use and demand for power is high.The profit pool

36、lies in the installation and operation of the EV charging infrastructure:Utilities can install and operate charging stations in public spaces,commercial properties,or private homes.EV owners are billed for charging,creating a recurring revenue stream.For instance,the US utility PG&E has programs to

37、help businesses install charging stations,and they earn revenue through the charging tariffs.Starting partnerships with EV charging networks like ChargePoint or Blink Charging denote one possibility to earn revenue from charging fees.Smart XSmart digital business models,whether it is smart meters,sm

38、art home or smart grid all make demand more flexible by enabling to shift electricity consumption into periods and/or locations where volatile renewable energy production is high.With smart metering,utilities accurately collect real-time energy data from homes and businesses,using applications for c

39、entralized reading and usage tracking.This creation of transparency is crucial to enable shifts in consumption in the first place.Smart meters are essential to enable a transparent,bi-directional communication between consumers and utilities.This helps utilities understand their customers better and

40、,more importantly,enables immediate customer responses,which has been historically one of the most serious market frictions in the energy system.”Constantin Eis,CEO at LichtBlick SE(major German energy supplier)Smart homes,which include smart buildings and elements of the smart city,use IoT to integ

41、rate energy management solutions.Digital twin technology is used to simulate and optimise energy usage scenarios in buildings,while AI and machine learning(ML)are used for automation and to prompt adaptations in user behaviour in systems such as lighting,heating and cooling.Strategy&|Watts the plan?

42、9Ison Energy:A smart home case study Ison Energy smart home energy management system monitors households energy consumption and production in real-time,improves inefficiencies by task automation and enables household to benefit financially by selling their energy back to the grid and participating i

43、n demand response programs.On top,Ison Energys technology can be integrated into other businesses products and services,offering customers more sophisticated energy management solutions.Ison Energys commitment to open source,community,and education is helping to create a more sustainable and efficie

44、nt energy future.As utilities continue to embrace digital transformation,companies like Ison Energy are leading the way in creating new value for customers and generating new revenue streams.The smart grid,meanwhile,leverages IoT,AI,and big data for efficient grid management.Smart grid provides real

45、-time monitoring,outage detection,and predictive maintenance to grid operators.The value is to facilitate the integration of renewable energy and distributed energy resources into overall power supply at minimal grid expansion investment costs.The profit pool for smart meters and smart home devices

46、is generated firstly by hardware sales or leasing.Utilities can sell or lease smart meters to their customers,billing them for the device or a recurring lease fee,while in smart homes,utilities can sell smart thermostats,smart lights,and other IoT devices,billing the end users.Profits from smart gri

47、d come from lower maintenance costs and grid stabilisation fees.Another profit stream is to monetize the benefits of providing flexibility to the energy system.The dutch platform GOPACS,for instance,offers actual payments for demand/production shifts that reduce congestions in the electricity grid.T

48、hirdly,data can also be monetized,yet monetization models are far from being deployed in a large-scale way,as data access and quality remain a major issue in many large utilities.The very first step in data monetization is data access and quality,which remains a major hurdle for large energy compani

49、es,making the process of monetization burdensome right from the start.”Flore de Durfort,CEO at Point Twelve(German SaaS platform to certify green production processes)and former head of data incubation&monetization at E.ON(major German energy supplier)Strategy&|Watts the plan?10Strategy&|Watts the p

50、lan?11Digital business models can unleash new value by complementing the core business In our 2019 study of digital business maturity among utilities,respondents forecasted that digital business models would account for 24 percent of revenue by 2024 an accurate prediction as DBMs have reached that p

51、roportion this year.Looking ahead five and ten years from now,DBMs are expected to account for 36 percent of revenue by 2028 and for 45 percent by 2033(see Exhibit 1).To double the share of revenue from digital products and services as expected over the next decade,power companies must transform urg

52、ently.That doesnt mean abandoning traditional products and services but rather digitalizing them to establish high-margin and scalable DBMs.EXHIBIT 1Expected share of business from DBMs in the future*2019 Digital Operations study for energy Power and utilities,PwC Strategy&Source:Strategy&analysisTr

53、aditional products and services2019Predicted in 2019 for 2024todayin 5 yearsin 10 yearsDigitally enhanced products and services plus purely digital content,services and solutionsStrong growth in the share of digitally enhanced and purely digital value streams expectedPrediciton of 2019 study*83%76%7

54、6%64%55%45%36%24%24%17%The urgency of digital transformation:Utilities as the next Blockbuster?In 2000,Netflix was a two-year old company mailing DVDs to people who ordered them online.The fledgling business was losing$57 million a year and approached Blockbuster,then a video rental giant with 9,000

55、 stores around the world,about a potential sale.The proposed deal included Netflixs founders setting up an online movie rental business for Blockbuster.Blockbusters CEO John Antioco turned the deal down.Ten years later,Blockbuster had declared bankruptcy because it never successfully kick-started a

56、digital business,while Netflix has gone on to become a media and entertainment giant.The survey looked at the relevance defined as the potential for revenue generation in future of a range of DBMs,and identified EV charging and smart DBMs such as smart metering and smart grid,as most relevant,becaus

57、e of the synergy potential with the core business.Some 56 percent of respondents rated such synergies as the primary driver of relevance.The energy companys core business is selling energy products and services.Digital business models may improve the firms cost efficiency or facilitate more energy s

58、ales,and thus provide synergies to the core business.It is,however,important to understand that no digital aspect will replace the core business of selling energy entirely.”Prof.Dr.Norbert Schwieters,World Energy Council board memberStrategy&|Watts the plan?12Strategy&|Watts the plan?13Body textThe

59、synergy potential of smart metersAn example of synergy potential between DBMs and the core business are smart meters that enable dynamic pricing.General Electric,for instance,offers a demand-side resource and response management solution with which energy companies can incentivize consumers to adapt

60、 their behaviour.The goal for the utilities is to achieve more efficient operations resulting in lower prices and cost savings for customers.Smarter demand management also means deferred capital expenditure in generation,transmission and distribution,and helps utilities to increase reliability,with

61、fewer outages and lower ancillary service costs related to renewable energy integration.Interestingly,the DBMs EV charging and smart DBMs are both located toward the consumer-facing end of the value chain(see Exhibit 2),i.e.,the DBMs must inherit a clear value add for consumers.The value add from EV

62、 charging is obvious EV charging is key for e-mobility.The consumers value add from smart DBM s are financial benefits:smart meters and smart home can deliver their full value add if and only if instant pricing provides financial incentives to which households adapt making them thus better off.Lastl

63、y,smart grid decreases the energy systems costs(lower redispatch and grid expansion costs)from which grid operators benefit financially and hence households in the longrun too.EXHIBIT 2Relevance of DBM along the value chainNote:While most DBMs touch on multiple value chain steps,in this case the cla

64、ssification by value chain step was done heuristically Source:Strategy&analysisSmart homeSmart gridEV chargingVirtual power plantEnergy-as-a-serviceSmart meteringValue chainPower/gasgenerationEnergy tradingDSOEnergy retailNew energysolutions0.00.32.12.42.73.03.33.6Strategy&|Watts the plan?14Explorin

65、g the implementation gap in digital business modelsAs Exhibit 3 below shows,there is currently a gap between the DBMs expected relevance and the current degree of implementation.The size of the gap between the two measures indicates how much companies still must do to build a business model with a p

66、rofitable income stream in the future.EXHIBIT 3The implementation gapSource:Strategy&analysisSmart XUrgent field of actionHighRelevanceImplementation gapLowHighLowEnergy-as-a-serviceVirtual power plantSmart homeEV chargingSmart meterSmart gridUndoubtedly,DBMs offer an attractive new investment optio

67、n for utilities,in particular those DBMs with a large implementation gap,which includes the smart DBMs described above(smart home,smart metering and smart grid)as well as EV charging.Using the data and flexibility that smart DBMs create to offer adaptable pricing can set up valuable business opportu

68、nities.One example is that renewable electricity production happens at irregular intervals when the sun shines,with no solar energy produced during the night.However,many EV drivers choose to charge their cars overnight,implying utilities need to buy expensive energy storage to hold and then supply

69、the power generated by solar at night,or invest in further production capacity.Consumers at present have no incentive to change their charging routine,but by offering adaptable electricity prices that are lower during times when renewable production is high(and electricity prices low),consumers can

70、be incentivized financially to charge their car at those times of the day instead.This type of flexibility makes consumers financially better off and helps energy companies win new consumers and save on their energy storage investment cost.Integrating renewable energy is inevitable in transitioning

71、our energy system.This requires a more flexible energy system,i.e.,remote control of energy production,transmission,distribution,storage and consumption.A widespread application of such a digital business model is,however,yet to be established in Germany.”Constantin Eis,CEO at LichtBlick SE(major Ge

72、rman energy supplier)Strategy&|Watts the plan?15Strategy&|Watts the plan?16So why do these implementation gaps exist?Our survey shows the reasons fall into two broad categories:1.Economic uncertainty makes financial payoffs unclear The world economy has been hit by several large and unforeseeable sh

73、ocks in recent years.This has hampered investment as establishing a novel DBM becomes much riskier in an uncertain and volatile environment of economic downturns(technical recession in Germany),rising geopolitical tensions(the war in Ukraine),disruptions in the regulatory landscape (the gap between

74、climate change pledges from different states versus actual regulations to tackle emissions),and technological disruption(battery EVs versus hydrogen fuel cell engines as long-term solution,for example).These risk factors make financial payoffs for digital business model investments more uncertain(51

75、 percent of survey respondents agreed),and companies timelines for digital transformation unclear(45 percent agreed).However,uncertainty is not going away,making business model resilience through adapting fast to significant shifts in the economy,essential.First,a portfolio of innovative services an

76、d products will be hit less strongly by economic shocks,and second,building an entrepreneurial and agile culture enable companies to adapt faster to the needs of a dynamic environment.2.Poor access to capital also contributes to the funding gapA difficult funding situation is the second factor drivi

77、ng the implementation gap.Some 55 percent of respondents attributed poor access to capital and 46 percent of respondents attributed a lack of internal understanding of DBMs as two major hurdles.We believe the time has come for companies to raise significant external funding to set up their DBMs if t

78、hey are serious about these products and services accounting for close to half of revenues in ten years time.The reality is that the funding requirements are enormous.On average,survey respondents estimated that the annual funding required to fully scale DBMs add up to 12 percent of annual sales.Tha

79、t compares with net margins in the energy industry that are on average well below 10 percent(without considering the recent price shock effects caused by the war in Ukraine)meaning that investments the size of companies entire annual profits are required for the successful implementation of digital

80、business models.Several levers exist to improve this funding situation.A changing economic and political environment has certainly contributed to the observed underinvestment in digital business models.To make the digital transformation a real success story,DBMs must be built to be resilient to such

81、 external shocks.”Dr.Marcus Eul,Managing director and partner at Strategy&55%attributed poor access to capital46%attributed a lack of internal understanding of DBMsFunding gap?Strategy&|Watts the plan?17Firstly,utilities can build a portfolio of minority investments to familiarize themselves with th

82、e opportunities and challenges related to the new DBM or technology they are considering building.They can then use what they learn to help leadership teams select better projects and focus on the right strategic areas.How the minority investment approach works at ShellShell Ventures,a subsidiary of

83、 Royal Dutch Shell,makes minority investments into new technologies and disruptive digital business models that accelerate the energy and mobility transition.This portfolio approach allows Shell to test various DBMs and technologies and identify the most promising.For instance,the company increased

84、its investment into Sonnen to 100%in 2019,expanding its offering of residential smart energy storage and energy services.Secondly,utilities can look to secure more funding from investors or government grants and subsidies.To win new investors it is key to make the investment opportunity more appeali

85、ng,i.e.,business cases will need to show a clearer route to profitability.Also,government grants are yet readily available,for instance,the EU has identified the lack of investment in digital business models and set up several funding programs in response,including the Digital Europe Programme,the C

86、onnecting Europe Facility,InvestEU,Horizon Europe and Creative Europe.Making government funding work for DBMsA prominent example of a company receiving low interest government loans is Tesla.Back in 2010,Tesla received a$465 million loan from the U.S.Department of Energy(DOE)as part of the Advanced

87、Technology Vehicles Manufacturing(ATVM)Loan Program.This funding played a significant role in the expansion of Teslas electric vehicle lineup and the development of its digital and autonomous driving technologies.Strategy&|Watts the plan?18Matching relevance with reality:How to bridge the implementa

88、tion gapWhen it comes to closing the implementation gap,the good news is that companies of all sizes and across the entire value chain identify partnerships as the most promising route (see Exhibit 4).Some 58 percent of respondents agree that only“jointly with external partners”can the full potentia

89、l of DBMs be reached.EXHIBIT 4Partnerships are seen as the most promising way to close the implementation gap1 Only n=1 and thus inadequate number of interview partners from a TSO company interviewed Source:Strategy&analysisJointly withexternal partners(i.e.consultancies)In-housePreferred approach t

90、o close the implementation gap by company revenue and value chain step29%58%7%6%Outsourced to external partnersNo establishment plannedWith its global and industry-overarching network,PwC Strategy&is the facilitator to weave networks among our clients58%54%61%45%72%63%0%53%55%58%90%71%200 MnAgreemen

91、t on Jointly with external partners by company revenueAgreement on Jointly with external partners by value chain step 500 Mn 1 Bn 5 Bn 5 BnPower/gas generationEnergy tradingTransmis-sion system operator1Distribution system operatorEnergy retail(incl.aftersales)New energy solutionsE.ON is just one of

92、 many good examples how to enable DBMs jointly with external partners.The utilities started a partnership in Germany with Googles parent company Alphabet and the technology company Tetraeder in 20182,offering its customers a digital assessment of the potential when adding solar panels to their homes

93、.The service considers various data points including weather data,the position of the sun in different seasons,the area and pitch of the roof as well as the shade of surrounding buildings or trees to calculate how much sunlight falls on the roof.E.ON then translates that number into energy and poten

94、tial cost savings from their solar panels offering.This example shows how partnerships with technology leaders can contribute to digitalizing existing business models.2 E.ON and Google are launching partnership to expand solar energy, the plan?19However,our survey suggests that closing the implement

95、ation gap to establish a successful DBM also requires companies to invest in the necessary internal capabilities and technology.Access to IT experts identified as first priority in capabilitiesAccording to our survey respondents,the most important capability to build is internal IT expertise,by hiri

96、ng the right skilled workers with state-of-the-art tech backgrounds.Other capabilities including customer understanding,regulatory knowledge or clear strategic focus and steering were viewed as less essential.Although the utilities sector has faced skills shortages in the past,this time is different

97、 because companies are competing with other industries for the same specialized talent.Unless power companies become more attractive as employers,winning the war for talent and implementing successful DBMs will remain a challenge.Enormous potential lies in leveraging the know-how of technology leade

98、rs and integrating it in an DBM.I believe that existing large players will not develop innovative and digital solutions on their own.They will rather orchestrate the different service providers and to align their unique technologies in new solution.”Kevin Br,VP global sales at E.ON One of E.ON Group

99、(German energy supplier)If relevant forecasts are correct,it can be assumed that the demand in practice for qualified business information technology talent will continue to grow as a result of the digitalization of business and administration.”Univ.-Prof.Dr.Armin Heinzl,Universitt MannheimStrategy&

100、|Watts the plan?20We suggest the following approaches to overcome the shortage of skilled workers with IT knowledge:Appoint a chief digital officer to lead digital transformation efforts.Target recruitment of IT experts specialized in digitalization and automation,exploring near-or offshore options

101、to attract top talent from international markets given shortages in western countries including Germany.Implement internal schooling and education programs for IT,data analysis and AI skills.Establish collaborative partnerships with universities and research labs to recruit talented individuals thro

102、ugh internships and research projects.The key technologies to enable digital business modelsThe right technologies are the key enablers for DBMs,offering the framework that facilitates the development of innovative ideas,finding new opportunities and exploring new ways of doing business.EXHIBIT 5Rel

103、evance and degree of implementation per key technology*IoT:Internet of Things;VR:Virtual reality;AR:Augmented Reality Source:Strategy&analysisHighRelevanceImplementation gapLowHighLowDigital twinVR/ARBlockchainMachine learningArtificial intelligence3D printingEnergy analyticsChatGPT as a gamer chang

104、er:Technologies expected to gain in relevanceCloud computingConnectivity/IoT*Our survey shows that utilities lack a thorough understanding of some of the most important technologies,with respondents indicating limited application within their organizations(see Exhibit 5,previous page).Specifically,e

105、nergy analytics(utilizing advanced analytical models to derive new insights from energy data)and cloud computing(providing faster innovation,flexible resources,and economies of scale through internet-based computing services)are deemed highly relevant and crucial for the success of DBMs.However,comp

106、anies struggle to effectively apply these two technologies in practice as shown by their low degree of implementation.This highlights the urgent need for improvement.The relevance and limited application to date were mentioned by subject matter experts in the interviews we carried out alongside the

107、survey:Energy analytics at work in the real world of smart gridsDutch grid operators run together the platform GOPACS,which aims to ensure grid stability in the most cost-effective manner.An increasing share of renewable energy generation and greater electricity demand requires the grid to be expand

108、ed,but that cannot happen overnight.To buy time,GOPACS applies technology to forecast potential grid congestion and makes use of flexibility provided by energy market participants to prevent the congestion from happening.The energy analytics technology used by GOPACS allows low rebalancing costs and

109、 reduces the pressure for grid expansion to happen immediately.Energy analytics and cloud computing are already among the most important and disruptive technologies in the energy sector.In addition,the recent success of ChatGPT has highlighted the potential of AI,i.e.,AI is likely to become the most

110、 important technology in the future.However,companies need to learn how to use these technologies in their daily work before they can develop into successful DBMs.”Jan-Wilm Buschkamp,Chief information officer at Mainova AG(German energy supplier)Strategy&|Watts the plan?21We further want to note tha

111、t our survey was conducted before ChatGPT started its triumphant march highlighting the potence of generative AI.Potentially,our respondents are thus likely to assess the relevance of AI as much higher today than observed.We see,among other,two main fields of application for generative AI in the ene

112、rgy sector.1.Forecasting analyticsGenerative AI is a form of artificial intelligence that focuses on creating new content by learning from existing data patterns.It is especially useful for the energy industry,which relies on complex data analysis,pattern recognition,and forecasting.With increasing

113、renewable energy usage and unpredictable weather,traditional forecasting methods are no longer practical.Generative AI becomes thus a valuable solution to tackle these challenges effectively.For example,Gridmatic,a California based company,has been founded on exact this basis in 2017.It is an AI-ena

114、bled power marketer that aims to increase profitability of renewable energy generators,optimize revenues from storage and lower costs of energy consumers.2.Personalized customer experienceEnergy companies are currently lagging behind in utilizing data to enhance customer service.However,with the pot

115、ential of generative AI,they can revolutionize the customer experience by tailoring content to individual needs.A few examples illustrate this:Firstly,by generating customized energy usage reports,energy companies can aid customers in reducing their consumption.Secondly,by implementing chatbots,they

116、 can efficiently address customer billing questions.Lastly,through analysing past purchases and browsing history,generative AI can offer personalized recommendations for products,services,and content.For instance,if a customer has recently purchased a smart thermostat,they might receive valuable rec

117、ommendations for a solar panel installation or a home energy audit.On a final note,it is however important to state that leading industry players have already recognized the necessity for this technological transition and,as a matter of fact,have initiated their transitional journey.Anna Jasper-Mart

118、ens from E.ON emphasizes this as follows:Strategy&|Watts the Plan?22Already now,we at E.ON embrace data analytics and sophisticated deep learning models to augment our core processes and establish new services at scale.The heat transition denotes only one prominent use case that will only be success

119、ful if energy companies and municipalities harness the power of digital technologies within the infrastructure planning process.”Anna Jasper-Martens,CEO E.ON Infrastructure Solutions GermanyStrategy&|Watts the plan?23ConclusionIn 10 years,digitally enhanced products and purely digital content are ex

120、pected to make up 45 percent of utilities revenue,close to double the 24 percent proportion today.DBM will provide a complementary value add to the existing core business instead of fully replacing it.The most promising DBMs include EV charging and smart DBMs such as smart homes,metering and grid,wh

121、ere the latter provides flexibility options to the energy system.In addition,smart DBMs are also among the least mature,holding considerable commercial potential for utilities in the future.Our survey respondents agree on the following actions as the most promising way to kick-start DBMs:First,impro

122、ve your access to external funding by identifying more lucrative investment opportunities through a better understanding of digital business models.Second,collaborate with external partners to leverage their technological knowledge.Third,built up internal IT knowhow to be able to tackle the challeng

123、es of the digital transformation.Fourth,put in place the necessary digital capabilities,including cloud computing,energy analytics and AI,that will enable their chosen digital business models to reach their full potential.Strategy&|Watts the plan?Stay up to date Sign up here to receive the latest St

124、rategy&thought leadership and industry trends 2023 PwC.All rights reserved.PwC refers to the PwC network and/or one or more of its member firms,each of which is a separate legal entity.Please see for further details.Mentions of Strategy&refer to the global team of practical strategists that is integ

125、rated withinthe PwC network of firms.For more about Strategy&,see .No reproduction is permitted in whole or part without written permission of PwC.Disclaimer:This content is for general purposes only,and should not be used as a substitute for consultation with professional advisors.Strategy&Strategy

126、&is a global strategy consulting business uniquely positioned to help deliver your bestfuture:one that is built on differentiation from the inside out and tailored exactly to you.Aspart of PwC,every day were building the winning systems that are at the heart of growth.We combine our powerful foresig

127、ht with this tangible know-how,technology,and scale to help you create a better,more transformative strategy from day one.As the only at-scale strategy business thats part of a global professional services network,we embed our strategy capabilities with frontline teams across PwC to show you where y

128、ou need to go,the choices youll need to make to get there,and how to get it right.The result is an authentic strategy process powerful enough to capture possibility,while pragmatic enough to ensure effective delivery.Its the strategy that gets an organization through the changes of today and drives results that redefine tomorrow.Its the strategy thatturns vision into reality.Its strategy,made real.