Accelerating digital transformation in electric and gas utilities
Feb 04, 2026
Electric utilities have invested heavily in technology, with many spending $500M–$1B over the past five years. Core platforms across customer, finance, supply chain, asset, and network management are being overhauled through large, high-risk programs, yet returns have been uneven.
To unlock full value, energy companies need a clear strategy that accelerates the shift from asset-heavy monopolies to agile, customer-centric service providers.
Rising complexity and the limits of traditional utility models
Power distributors and retailers are under growing pressure from rapid decarbonisation mandates, rising customer expectations for seamless digital experiences, and investor demands for capital efficiency. Traditional business models are breaking down as customers increasingly generate and sell power back to the grid, turning simple supply relationships into complex, dynamic interactions that strain network and billing systems. Reflecting this shift, software and services accounted for just 3–5% of grid investment from 2016–2022, but are expected to rise to 8–12% by 2041–2050, based on industry data and BCG experience.
For gas distributors and retailers, decarbonisation follows a different path, but near- and mid-term pressures are just as intense. Regulators demand capital discipline, customers expect high service levels, and investors require strong returns. As a result, energy companies are launching multiple major platform transformations in parallel—often running half a dozen large programs at once and investing billions in technology. Typical examples of platform transformation include replacing fragmented billing systems with a unified, cloud-based customer platform or adopting data-driven approaches to optimise asset management and maintenance.
Until these initiatives deliver, many organisations remain constrained by fragile, outdated IT environments.
Three strategic moves to unlock value from utility transformation
- Drive business outcomes, not technology, that will unlock the most value
With tight budgets and limited talent, large-scale transformations require tough trade-offs. Prioritisation is unavoidable but complex, as initiatives are highly interdependent. Rather than simple rank ordering, organisations need a rigorous, dynamic approach that maps programs, analyses dependencies, and adjusts priorities over time.
The shift is to anchor transformation on business outcomes, not technology. Companies should start by defining a digital and AI outcome map and assessing outcomes by customer impact, financial value, and regulatory importance. This clarity enables difficult but necessary choices.
Each priority outcome should then be linked to a focused set of enabling capabilities (typically 8–12), and the data required to support them, with clear ownership, SLAs, and access policies.
- Build a modular technology and data platform to future-proof the business
To deliver outcomes across complex initiative portfolios, electricity and gas providers need a next-generation, modular utility architecture that is scalable and designed for change. Core elements include customer-first digital engagement, intelligent (increasingly GenAI-powered) business capabilities, data treated as a strategic asset, automated end-to-end operations, and a resilient cloud-based core.
Modularity allows components to evolve independently, enabling faster regulatory response, adoption of new AI capabilities, and support for emerging business models such as consumer-led renewables. It also improves capital efficiency through reusable data products, cloud-native platforms, and shared APIs, boosting developer productivity by 30–50%.
Security and compliance are embedded by design—through zero-trust access, automated controls, and end-to-end data lineage—so innovation is not slowed by audits. Underpinning all layers is digital talent development: closing skills gaps and building a digital-first culture are essential to capturing full platform value.
- Connect the dots across transformation programs
A clear path exists to sharpen the investment portfolio and actively manage interdependencies. Defining key milestones reduces risk while focusing investment on value creation.
Delivery should be organised around business outcomes and value streams that link initiatives to strategy, improving transparency and enabling consistent, outcome-based value tracking at the portfolio level. This “connect-the-dots” discipline is a continuous management process, not a one-off exercise.
When performance lags, organisations should reassess priorities, fix weak program linkages, and concentrate investment on the highest-impact initiatives, accelerating fast payback and deferring lower-return efforts.
By adopting this three-pillar approach, electricity and gas companies gain a clear, actionable route to unlocking enterprise-wide returns from their digital investments.
More importantly, it equips utilities to address growing complexity, meeting the expectations of regulators, employees, and customers, supporting the energy transition, and moving beyond legacy models to operate as genuinely customer-centric service organisations.
Energy Connects includes information by a variety of sources, such as contributing experts, external journalists and comments from attendees of our events, which may contain personal opinion of others. All opinions expressed are solely the views of the author(s) and do not necessarily reflect the opinions of Energy Connects, dmg events, its parent company DMGT or any affiliates of the same.
