Why utilities are moving to the cloud: risks, rewards, and results
The utility industry is undergoing a significant transformation driven by decentralization, and increased consumer devices, but they are held back by legacy tech.
Cloud solutions are at the forefront of this transformation, providing utilities with the necessary tools to navigate the complexities of the energy transition, especially when it comes to keeping up with consumer demand. What does moving to the cloud mean for utilities? What are the risks, and what new benefits does it enable?
Cloud technology offers strategic and commercial benefits that transform utility’s operations. Adopting a cloud-native approach enhances the reliability and resilience of software, particularly from a cybersecurity perspective. A cloud-first paradigm shift leverages automation to drive consistency, reliability, and security. Automation in infrastructure configuration and deployment through infrastructure as code significantly reduces human error and improves efficiency, allowing tech teams to focus on innovation rather than maintenance.
Moving from on-premise to cloud enables agility
Typically, utilities have used a cobbled together mosaic of IT hardware and software applications, many of which have not been designed specifically with utilities in mind. These legacy systems were better suited for a time when on-location tech afforded more control to businesses—they could maintain performance, security and general upkeep of IT assets. Hardware aside, legacy systems also often use localized software, hosted on servers or even end-user devices, which is also costly and cumbersome to acquire, integrate, use and maintain. This raises costs, hampers excellent service, and stifles innovation, making it more difficult to keep up with today’s rapidly changing energy landscape.
Moving to cloud-based solutions offers utilities several advantages over their legacy on-premise predecessors. Next generation solutions such as Kraken offer utilities the ability to move at a rapid, agile pace. Utilities' billing and communication needs are changing faster than ever before, driven by technological advancements (e.g., Amazon Machine Images), regulatory directives, and new market/product designs. The fast pace of change makes it increasingly difficult — and risky — to procure a static customer IT solution to-spec because specs often change. Utilities need technology that evolves and scales to their needs. Cloud solutions enable utilities to deliver and maintain IT solutions that change iteratively over time, with the ability to update services or offerings as business needs dictate.
Adopting cloud solutions results in improvements across operational efficiency and cost savings
Utilities have been slow to adopt cloud technologies due to their unique operational, commercial, and regulatory constraints. However, utilities have noticed that when it comes to operational efficiency, cost savings, and enhanced customer engagement, cloud solutions offer unique opportunities that previous on-premise servers cannot provide. For example, Duke Energy's migration of grid assets and intelligent applications to Amazon Web Services (AWS) significantly reduced grid simulation time from 6 weeks to 15 minutes — that’s 4,032 times faster! Agility like this makes it so utilities can manage the growing demand for electrification and integrating renewable energy sources.
Cloud solutions are having a real impact on operational efficiencies and cost savings across utilities’ businesses. Cloud platforms streamline processes that were previously manual and time-consuming. For instance, grid interconnection studies, which traditionally took several years, can now be completed in under 10 days using cloud-enabled solutions (advanced analytics, processing, computational power, and high-performance compute). Utilities like Enel have reported significant cost savings, with reductions of 21% on compute and 60% on storage after moving to the AWS cloud solution. These savings can be reinvested into capital expenditure infrastructure and other strategic areas, further enhancing the utility's capabilities.
Cloud solutions enhance customer experiences
Cloud solutions are transforming customer experience in the utility sector. Traditional systems treat customers merely as endpoints or “rate payers” for billing and meter readings, ignoring their unique needs and preferences. Kraken's energy management and billing software shifts this approach by enabling personalized interactions and solutions. Using Kraken's universal agent model and user-friendly interface, agents can resolve complex inquiries on the spot, enhancing customer satisfaction and engagement. This model streamlines customer service by eliminating multiple service levels and back-office operations, reducing contact volume and associated costs while improving first-call resolution rates.
Cloud solutions make innovation possible
Cloud platforms facilitate accelerated innovation and the testing of new products and rates. Kraken's continuous innovation and continuous deployment (CI/CD) model allows for real-time updates and automated testing, ensuring rapid and high-quality feature deployment. This agility is crucial for utilities to quickly adapt to regulatory changes and market demands.
With cloud solutions, all the utility’s data is available in one place. This provides a huge operational advantage as the business can leverage this data to drive innovation. Utilities often face hurdles with outdated, on-premise billing systems that cannot handle new, complex tariff structures. Adding a new rate design into the legacy system can take several months to even years, while driving up operational costs. The capability to offer optimized tariffs for electric vehicle (EV) charging, as demonstrated by one of Kraken's European clients, highlights the potential of cloud solutions to support large-scale virtual power plants and innovative energy management strategies.
Cloud solutions provide advanced security for utilities to safeguard their operations and customer data
Cybersecurity and data privacy are critical for utilities transitioning to cloud-based systems. Cloud providers like AWS deliver robust security measures, including advanced encryption, threat detection, and compliance with industry standards. Tyson Roche, Head of Information Security and Data Privacy at Kraken, underscores the importance of security and privacy in the energy sector, leveraging his expertise in cybercrime detection and response. Utilizing the security features of cloud platforms allows utilities to safeguard operations and customer data while benefiting from the scalability and flexibility of cloud solutions.
The growing understanding that sensitive information is safe in the cloud is bolstered by the security culture of providers like AWS, in addition to the application we’ve seen in the healthcare and government sectors. Compliance with regulatory requirements is key to developing confidence within the organization. AWS’s multi-region and multi-availability zone redundancy guarantees incredibly high availability and resilience, with core services aiming for 99.999% availability. This reliability allows utilities to concentrate on their core business, relying on cloud providers for physical infrastructure security and maintaining compliance without the burden of managing all aspects themselves.
Cloud-native services for databases, load balancers, and storage offer high availability and maintenance, reducing traditional maintenance challenges (such as the time and space they take to maintain). This enables tech teams to focus on developing new solutions and driving business growth. Monitoring, observability, and measurement are essential in the cloud environment, with AI tools for anomaly detection and central monitoring services ensuring robust oversight. The shared responsibility model in cloud security assigns physical infrastructure security to cloud providers, while clients must ensure their applications and data access comply with standards. This model promotes a culture of security and compliance, supported by certifications and multi-region redundancy, instilling confidence in cloud security and availability.
To navigate cybersecurity and data privacy in the cloud, there needs to be robust partnership and collaboration between cloud providers and clients. While traditional cybersecurity methods require continuous investment and hiring specialists to stay ahead of evolving threats, the shared responsibility model, where infrastructure security is managed by dedicated engineers and application security by specialized teams, ensures continuous monitoring and threat detection. To maintain strong security, both teams should hold regular security discussions and enact proactive measures.
Cloud solutions are no longer a “nice to have,” but a critical component for driving innovation and sustainability throughout the utilities sector. Consider the internal combustion engine vehicles versus the modern electric vehicle — the latter receiving automatic upgrades and requiring much less maintenance. Cloud technology eliminates the need for individual businesses to manage their own infrastructure, creating opportunities for new business models and services like energy as a service and personalized outcomes. The integration of data and cloud technology will drive significant changes in the utilities industry over the next five years, enhancing competitiveness and enabling the provision of innovative services.
Cloud solutions enable utilities to tackle the complexities of the energy transition
The utility industry's shift towards cloud solutions is gaining momentum, spurred by the pursuit of operational efficiency, cost savings, enhanced customer experiences, and innovation. These platforms equip utilities to handle the complexities of the energy transition and comply with regulatory demands. Embracing cloud technologies allows for streamlined operations, reduced costs, and personalized customer interactions, while robust security measures ensure data protection and risk mitigation. As the sector evolves, cloud solutions are set to play a pivotal role in achieving industry goals and advancing the clean energy transition. The coming years will be transformative, marked by technological advances and new business models that promise significant industry changes and improved competitiveness.
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Why utilities are moving to the cloud: risks, rewards, and results