Innovation in traditional multi-utilities. Only those who were “plan-ahead” companies in the past can move fast now.

In the age of great changes with global impact, technological progress is one of the most disruptive. It challenges business models, while requiring deep rethinking even of the more traditional activities in the industry.

Widespread use of new technologies is revolutionizing the way multi-utilities operate. It is deeply transforming services offered to customers and their own expectations.

We talk about these issues with Salvatore Molè, the Group Manager of Innovation at Hera Group.

How will technological evolution impact the multiutility business?
The digital era is already a reality, not a near future. In Hera, 24% of customers regularly use the apps that we have made available, while over 30% of them receive exclusively a virtual bill. We also deliver many marketing activities through digital communication channels.

“This rapid evolution of technology and its increasingly extensive deployment have led customers to expect from their multiutility operator forms of response to their needs that are ever simpler and faster.”

Today customers can switch supplier with one click on their smartphone. It is therefore easy to understand how technological development, together with an increasing competitive pressure, had led to a more dynamic client interaction in our industry. On the one hand, that resulted into extreme ease of access, but, on the other hand, it meant shorter duration. From this viewpoint, technology plays an essential role.

Does this pattern affect a specific business area?
No, this is a general trend that affects all our businesses. In addition to marketing in liberalized businesses, technological evolution and digitization are also having a strong impact on more traditional activities, such as the distribution of water, gas and electricity. These activities are currently run under concession; in the coming years, they will experience a phase of strong competition through the tenders that will take place for the renewal of assignments.

What is the main challenge that you face in embracing innovative solutions?
The roll-out of new technologies, following tests through pilot projects, must be very fast. Once we have identified innovative solutions and assessed their benefits, we must pursue a large-scale adoption almost immediately, especially given the size of our platform of local assets, mainly made up of over 65,000 kilometers of underground networks.

“Another challenging aspect is represented by the need to tap into an external ecosystem of innovation.”

The speed of technological progress rarely allows us to carry out R&D projects. In any case, we can still rely on opportunities that derive from the availability of appropriate technological solutions, already successfully applied in other industries or innovatively combinable to achieve new benefits. To deliver results quickly, we must continue to analyze and evaluate the emerging trends in technology and innovation that impact different industrial sectors, not only the Energy & Utility market. Having a network of external partners that can support the evolution of the Company is fundamental from this perspective.

Can you give us an example?
In the chemical sector, there are long-established processes for cracking or upgrading gaseous elements without polluting emissions; such processes can modify the molecular structure or separate substances from each other. Well, we have experimented with the use of these technologies to transform bio-gas, produced from organic waste, into bio-methane, by eliminating non-methane components. In this way, we have obtained a biofuel that has characteristics suitable to an use in residential heating and automotive applications. They are not marginal projects; with this technology, today we already produce more than seven million cubic meters of “clean” gas, with a waste management model of circular economy, i.e. with an optimal solution from the environmental point of view. That is not all. In the integrated water cycle, which includes some highly energy-intensive activities, we have applied artificial intelligence algorithms based on data analysis to the purification plants. That allows for optimal real-time regulation of oxidation treatment for sewage, with the advantage of considerable savings in the use of electricity and, therefore, a reduction of CO2 emissions. Even in gas distribution activities we have leveraged on the latest opportunities provided by technology. For the replacement of the old analog meters, we have developed and started installing new smart meters, which can remotely read the consumption in real time and secure houses in case of earthquake or gas leakages inside them. The smart meters can also self-diagnose the system status and are capable of completely autonomous reactivation, if necessary. These represent three examples of innovative solutions, declined in three different businesses, which we have carried out in parallel over the last few years.

How was it possible to generate such radical innovations on different areas?
We could not have carried out all these innovations so quickly, without a forward-looking approach that led us to build adequate industrial partnerships – even with startups – over time, and an internal culture of innovation, where curiosity and search for continuous improvement are the leading engine of change.

What do you foresee in the near future?
We have an intense investment phase ahead of us. We have to bring to an industrial level the innovations that we have developed through pilot projects, if we aim to upgrade all our infrastructure and the services that we provide.

“The network digitization will have a number of beneficial fallouts.”

By placing sensors along all our infrastructure in the territory, we can already count on a continuous flow of detected data; we are working to gain an ever-growing ability to analyze information, with the aim to improve the current offer and enrich it with more personalized services, but even to protect our data from possible cyber-attacks.

So, technology is expanding Hera’s offer…
Most definitely. For instance, PuntoNet is a project that creates different multifunctional points in urban centers at the service of people and municipalities. Those stations, in addition to an easy and controlled collection of urban waste, provide a recharge service for electric bikes and cars, make it possible to detect any aggressions through video surveillance systems and transmit alerts on dangerous situations for people. Moreover, through Puntonet, cities can receive real-time data on traffic and pollution, helpful for optimizing their management, or even provide wi-fi services to citizens.

Innovation will therefore require an increasing commitment…
It is a process that always presents us with new challenges and will never stop. We are building a large intangible asset of information, which will require additional development of capabilities in terms of storage and data processing, as well as increasingly complex and sophisticated algorithms. But it is essential to have the culture of innovation in your DNA.

Salvatore Molè
Salvatore Molè
29 July 2020
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Jens K. Hansen
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Blue Arrow - Lugano