A New Normal for Power Distribution Companies: Less Face-to-Face with Customers but More Digital Engagement

In my previous blog entries, I have talked about Utilities of the 21st century, discussing how competition among energy players should flourish and how we should move to distributed energy systems. This was before the COVID-19 pandemic happened.

When I entered the power distribution business, my main priority was to provide a customer-centric service, which means ensuring stable energy supply and finding ways to help electricity rates become more affordable. 

According to an article, COVID-19: How Energy & Utility Companies Can Soften the Blow, most Energy and Utility companies usually have set contingency plans in place to address the impact of natural disasters. But no company is fully prepared for the coronavirus. And I agree since this pandemic is a new challenge in the power distribution business as we must craft strategies to ensure our customers and employee’s safety in light of the coronavirus.

The same article said that several measures must be undertaken by energy firms to address the impact of the pandemic. These measures include increasing the digital contact center footprint where companies should beef up on their customer services to allow real-time and two way interactions. Other recommended strategies are offering digital payments and leveraging social media to proactively tackle customer concerns.

Fortunately for us at the power distribution company I’m working with, we already have invested our efforts and resources in technological solutions that will make the lives of our customers easier even before COVID-19. 

In our case, before COVID-19, many customers would pay their power bills in our offices. We have recently added more payment partners. Our recent addition is Xenpay, allowing customers to pay their bills in the sari-sari stores, which minimizes the risk of exposure to the virus given that there’s a sari-sari store practically in every corner in the Philippines. We also have our digital payment channel through G-Cash. Now customers can conveniently settle their bills at the comfort of their homes.

As the article said, there’s a need to ramp up a company’s digital contact center footprint. For us, this means changing customer engagement from face-to-face interactions to social media. This is necessary given experts’ prediction that a vaccine for the coronavirus won’t be available for the next 18 to 24 months. In the meantime, distribution firms should find ways to minimize the need for our customers to go to our offices for official business.

For years now, companies are using social media to reach out to their customers more. But corporate social media accounts should do more than re-post news or carry announcements. While these are useful to customers, social media account should add more value. These days, power distributors must leverage social media more especially since studies show that people are spending more time in their social media accounts while confined at home. A Consumer Welfare Office that engages with consumers via Facebook messaging is useful.

medium.com

By this time, energy and utility firms should be working on additional digital assets to lessen face-to-face interactions with customers in light of the coronavirus pandemic. Photo c/o medium.com

By this time, energy and utility firms should be working on adding to their digital assets that will be utilized for mass knowledge dissemination, necessary to empower our customers. Using customer analytics to proactively identify and address customers’ concerns coursed through social media is a must these days.

Our company is working on an app that will let customers report power outages via social media, which in turn will alert our line-men in real-time, thanks to their GPS-enabled radios. This will allow our linemen to respond quickly to outages.

Relying on social media to minimize in-person interactions makes sense in this digital world. More so for the Philippines since according to a report on social media and digital trends, Filipinos spend an average of nine hours and 45 minutes online per day, making us the most active social media users around the world. This annual study by the creative agency, entitled, entitled Digital 2020, revealed that Filipinos spend an average of three hours and 53 minutes daily on social media.

The energy distribution sector is undergoing a massive transformation, thanks to technology. Before COVID-19, we were absorbed with cutting system losses, studying decentralizing power distribution systems, and technological solutions that will disrupt the sector. Now, we must also prepare for the new normal, a consumer-centric service delivery with limited personal interactions between consumers and power distribution company employees. Fortunately, we have the tools and human resources ready for digital engagement.

 

Opportunities for the RE Sector In The Time of COVID-19

Global renewable energy capacity increased by 176 gigawatts (GW) last year, reaching a total of 2,537 GW. According to the International Renewable Energy (IRENA), renewables accounted for 72% of all power expansions last year with solar and wind power providing 90% of the growth.

These numbers were promising and it looked like renewable energy’s growth trajectory was likely to continue in 2020. But this all changed with the COVID-19 pandemic.

Just like with many industries, renewable power is taking a hit with the construction of new power plants being halted due to the imposed lockdown around the world. There’s also the growing fear that the pandemic will likely affect clean energy investments negatively given the depressed prices of fossil fuels in the market.

But experts also warn that it’s too early to predict the extent of the impact of the Coronavirus on energy markets. They also stressed that there are opportunities for clean power to flourish in spite of the global economic slowdown caused by stay-at-home orders or lockdown, or what we call the Enhanced Community Quarantine in the Philippines.

The Global Head and Managing Director, Cleantech Coverage of Standard Charter, Sujay Shah points out that 70% of the world’s energy investments are driven by governments. With the stimulus packages being offered by governments, a total of USD7 trillion and counting, provide a “once in a generation opportunity for all industry participants including developers, investors, and financiers to shape this spending to accelerate the energy transition and low-carbon agenda.”

There are also opportunities, too for Southeast Asia (SEA) renewable energy market, which has one of the fastest energy growth rates in the world with a yearly 6% growth according to the International Energy Agency (IEA). SEA’s power demand has grown by 80 % since 2000.

Daine Loh, power and renewable analyst for Fitch Solutions as quoted by a Channel News Asia article says that there is a downside risk to the completion of new large scale-thermal and hydropower projects over the medium term, which will probably result in delays or cancellation of government-funded RE projects.

But she also stresses that the weakened power demand for this year due to the slowdown in economic activities could reduce pressures to peak demand outputs, thus freeing up some policy space for government to pursue their energy transition plans. “(It) may put pressure on governments to amend regulations to boost private sector investment in renewables in an effort to support growth in the market over the longer term.”

It also helps that getting financing for traditional power sources has been difficult in recent years. Loh says financial pressures could further weaken investments in fossil fuel power projects and give momentum for RE project financing.

Speaking of financing, access to capital is likely to be cheaper, too with interest rates dropping. The cost of borrowing for capital-intensive RE projects could be attractive.

The RE sector could benefit from the rebuilding of economies since increased construction activities would provide more jobs. As the economy recovers, countries will also have higher energy demand, and governments anticipating this demand may turn to renewable power that can provide more affordable power rates say Krib Sitathani, a project manager with the United Nations Development Programme in Thailand. “There is also the possibility that many governments to take this opportunity to manage their risks to stabilize their energy costs through increasing renewable energy production to not only stabilize their power production but also to ensure a more predictable cost,” he said.

For the Philippines, one of the possible negative scenario of the COVID-19 crisis is that Indonesia, where we source 90% of our coal closes down all its ports. We are okay as of today because there’s a drop in demand.  So I presume we have a lot of coal inventory already in the Philippines. But if this crisis worsens and Indonesia will have to close all its ports, then we are in for an insurmountable problem. 

Weforum.org

The RE sector could benefit from the rebuilding of economies as increased construction activities would provide jobs. Photo c/o http://www.weforum.org

 

To mitigate this threat, our government should order the immediate development of indigenous sources of energy: solar, wind, and geothermal.  To do this, the power sales procurement rules should be amended. Ultimately this is where the development of RE will have to depend unless the government adopts more draconian measures like requiring a much higher percentage of RE in all the portfolios of the distribution utilities. 

The current rules in evaluating PSAs do not differentiate between indigenous and imported energy.  Technically, this should be differentiated because from a risk perspective these are two different types of energy sources.  However, the current evaluation rules and, in fact, the evaluation skills of the utilities will not allow this differentiation. 

To enforce this policy, the Energy Regulatory Commission (ERC) should require utilities procuring power to testify that there are no indigenous resources within its immediate vicinity, or franchise area, or that it has not received any offers from indigenous energy source within the country. This testimony must be made in public and under oath, which will then be submitted together with the application for PA for the signed PSA. This means that utilities must bid or negotiate with indigenous sources of energy providers before doing any procurement from imported-energy sources.

The implication of this policy will be the development of indigenous energy of the country thus reducing risks of non-supply such what we are facing today.  The traditional economic analysis of imported versus local (if it is cheaper to import, import) can no longer stand the scrutiny of today’s reality.

The COVID-19 pandemic is causing so much uncertainty for the whole world. For us, in the renewable energy sector, we can take comfort that the world sees the value in investing in clean energy and that many governments know that RE is the way forward to providing affordable and reliable power. Thus, while there may temporary setbacks due to the virus in 2020, as with almost all industries, there remains high optimism for the long-term growth of the RE sector.

References:

https://www.channelnewsasia.com/news/asia/covid19-southeast-asia-renewable-energy-nuclear-asean-12617520

https://www.sc.com/en/trade-beyond-borders/covid-19-clean-energy-challenges-and-opportunities/

https://www.cnbc.com/2020/04/06/the-coronavirus-is-hitting-renewable-energy-supply-chains-factories.html