Five Ways Utility Leaders are Using AI to Transform Their Operations Today

How is it that electric utilities have come to represent the bleeding edge of innovation in the era of generative and agentic AI? At a time when many businesses are struggling to implement large-scale AI initiatives and extract value from their AI investments, electric utilities have now become the front line of AI adoption and innovation.

In fact, according to the recent EXL Enterprise AI Study, which took the pulse of C-suite and other senior decision makers across the banking and finance, insurance, retail, utilities, and healthcare payer industries, it was the utilities that were leading the way on AI adoption. According to the study, some 96% of energy and infrastructure companies are already deploying AI in at least two business functions and 92% say scaling their AI initiatives will be critical in the year ahead.

How have electric utilities managed to overcome so many of the obstacles to AI adoption that have challenged other industries, and what are some of the most widespread uses of the technology being deployed today? To truly understand the phenomenon, it’s important to understand what utilities are best at and how widespread innovation in areas like AI-powered resource management, predictive maintenance and renewables forecasting, have played to those strengths.

For all their challenges, electric utilities are exceptionally good at engineering, complex systems management and disaster preparation and recovery. The growth of AI is playing heavily to those strengths by giving utility leaders the rapid-fire insights and predictive intelligence they need to anticipate problems and address them before they spiral out of control. Following are some of the best examples of these projects based on my firm’s work developing and implementing AI-led solutions for some of the world’s largest utilities.

Managing Distributed Energy Resources

One of the most exciting areas where utilities are leveraging AI right now is in the management of distributed energy resources, such as solar panels, battery storage systems, electric vehicles and smart thermostats, to create bidirectional energy networks. Effectively, by using AI to track all available data across these distributed power storage inputs, and overlaying that information with trends in power demand, leaders in the space have been able to create entirely new sources of power storage and generation to augment the existing grid. These virtual power plants use intelligent control systems to pull together the output from distributed assets and make them operate as if they were a single power plant.

NRG Energy and Renew Home have recently partnered with Google Cloud to develop one such virtual power plant in Texas, which will link data from hundreds of thousands of smart thermostats to help manage demand during peak periods.

Digital Operations and Autonomous Grid Management

A second area of innovation that’s gaining widespread traction among electric utilities is the use of agentic AI to create “digital operators,” which continuously learn from vast streams of data and self-adjust to changing grid conditions with minimal human intervention. These intelligent agents can dynamically adjust supply and demand, reroute power, identify faults, schedule maintenance, respond to outages and even interact with customer-facing assets like distributed energy resources.

Predictive Maintenance Across Asset Lifecycle

AI-powered digital twin technology is also gaining wide adoption among utilities who are creating models that leverage sensor and historical maintenance data to predict equipment failures before they happen. This reduces service interruptions, lowers costs and extends asset life by scheduling maintenance exactly when needed rather than on rigid timelines. Duke Energy recently deployed hybrid AI models across its network to predict failures due to weather extremes, and estimates that this proactive prioritization cut storm-related outages by 72%.

Renewables Forecasting and Load Management

AI is also being used to help utilities optimize their use of renewable energy sources, such as solar and wind. Because these power sources are so weather-dependent, AI systems have become critical forecasters of energy demand, drawing on a mix of historical usage data, weather forecasts, economic indicators and other events to manage energy storage and redirect surplus energy during peak production periods. California’s Pacific Gas and Electric and E.ON in Germany have become  leaders in using AI-driven insights to balance grid demand.

Customer Experience Transformation

Utilities are also making tremendous progress deploying AI-driven chatbots and virtual agents to help manage customer queries, billing and outage notifications and personalized energy-saving recommendations. These technologies are also being used to assist human customer service agents by immediately surfacing critical information from the company knowledge base in real-time when representatives are working directly with customers. NRG Energy and Northumbrian Water in the UK have been pioneering the use of AI-powered customer support technologies, which have been improving first-contact resolution and overall customer experience.

The Way Forward

Utilities have become such a fertile test bed for the use of AI because their needs align so well with AI’s biggest strengths. The business of managing a utility is an incredibly data-intensive affair that relies on inputs from thousands of different sources – all of which can be severely impacted by one exogenous event like a catastrophic storm or a major heat wave. With AI, it is finally possible to evaluate all of those variables to determine the next best action. While innovation in the space is still being driven by a handful of leaders, the huge gains utilities are seeing by leveraging these technologies is not being lost on the rest of the industry.

Looking forward, expect to see continued experimentation and more widespread adoption of some of the core solutions addressed here, along with new innovation in areas like cyber security, regulatory compliance and sustainability initiatives.