Energy & Utilities: Transforming in an era of disruption
Energy and utility providers face fundamental disruptions to their business models, revenue streams and regulatory relationships which are unparalleled in their history. They demand uncharacteristic agility on the part of the utilities to survive and thrive through the current transition period.
Industry trends influencing operational and investment planning decisions
As a result of improving technologies and emerging regulatory models, industry financials are changing dramatically with broad implications across operations, asset management, regulatory, customer and supply chain processes. There are several converging factors forcing disruption:
- Decreasing cost of renewable generation and gas-fueled generation to customers, challenging utility monopolies with the threat of substitution
- Entrance of third party aggregators into the distribution market
- Regulators moving toward outcome-based rate making, away from traditional rate making formulae providing a fixed rate of return on the asset base to investors
Changing business models
While utilities must contend with an aging asset base and workforce, the interconnection of intermittent renewable sources to the grid creates new stresses on assets designed for one-way power flows. For example:
- Engineers must contend with changing load and flow patterns as customers seek to sell excess generation to their neighbors or back to the utility and ensure power quality within agreed ranges and efficient delivery of energy.
- Operations must be equipped to understand and react to reverse power flows. Asset management must understand the fleet health and address continued reliable delivery of power on the aging and increasingly stressed distribution grid.
- From an overall financial perspective, the utility must contend with changing capital expenditure (CAPEX) and operating expenditure (OPEX) needs for asset replacement and maintenance as a result of these new power flows.
Business as usual is no longer good enough
While traditional demands for safety and reliability persist, industry disruptions underway mean that business as usual is no longer good enough. Utilities must deliver new efficiencies to keep costs low and achieve new business agility to participate in new retail-oriented interactions with customers and third parties.
Regulatory pressures on utilities to do more with existing assets and resources and to open markets to new competitors and participants threaten the utilities’ financial positions. The old model of a monopoly energy provider, with regulatory financial incentives to invest in and expand the network, no longer reflects the reality in many regions where the networks are fully built out and expansion potential is limited.
The prospect of declining revenues to support a fixed asset base portends higher rates for remaining customers—driving further substitution with competitive sources and the prospect of an ever increasing rate spiral.
Find new opportunities with data
Utilities intuitively recognize they must find opportunities for operational improvements using their existing data. Although utilities collect huge volumes of data, most of that data is used within a narrow context, often providing only a portion of the required information to decision makers throughout the enterprise.
Utilities increasingly rely on accurate forecasts to operate efficiently, however, the underlying assumptions are all changing. Fact-based decisions built from the bottom-up based on all of the available information are critical to transform—for investment planning, operations, maintenance and supply chain processes among others—in order to maintain reliability, safety and efficiency as the underlying business model changes.
To stay competitive, utilities must innovate processes with bold, analytics-rich solutions that go beyond operational excellence to unlock new dimensions of value. Silo-breaking analytics holds the key to achieving operational excellence and business-model transformation.
Build on a strong foundation of asset instrumentation and connectivity
The utility industry is one of the more advanced in terms of asset instrumentation and connectivity. As a result significant volumes of detailed operational data – from grid instrumentation, meters and connected consumers – is now available to capture, aggregate and analyze. Turning the flood of data into actionable insight can help utilities to improve current business processes, or transform them altogether.
Success in analytics is achieved by using a foundation of common capabilities that can be applied to various utility domains and systems and can help integrate them. That’s why analytics are core capabilities in IBM IoT for Energy and Utilities solutions – embedded throughout to provide accurate, relevant and detailed information in context to support and advise critical decisions of operations, maintenance, regulatory, field service, planning, reliability and investments.
Here are several examples where embedded analytics in the IBM IoT for Energy and Utilities solutions can be applied:
- Describe past and current asset performance, as mentioned above in the examples of displaying historical asset performance trends, identify underlying factors, such as sensor data or list recent inspections or procedures performed on a specific asset or class of assets.
- Predict potential asset degradation or failure using industry models developed specifically for critical assets. Carefully evaluate equipment performance to calculate asset health and risk scores as well as predicted time to failure if there is evidence of performance degradation.
- Prescribe the appropriate maintenance procedures and determine optimum maintenance schedules for individual or classes of assets. Identify components or parts most likely to fail based upon current asset health, maintenance records contained in enterprise asset management systems such as IBM Maximo® and operational factors influencing asset performance.
- Cognitive to analyze volumes of unstructured historical, operational and technical information associated with utility infrastructure, discover insights hidden within these massive archives and apply them to improve human and machine expertise that enables better decision-making and improves operational performance.
Enable continuous improvement through data accessibility
Accessibility and sharing of asset data across the organization enables the lines of business to coordinate analysis, planning and execution in context of financial goals and regulatory constraints to continually improve overall performance.
Incorporating as much relevant asset data (historical and current) as possible – maintenance records, operational performance, environmental, financial and regulators – allows lines of business to access and analyze assets in context of their unique business responsibilities and collaborate across departments to effectively respond to market disruptions and regulatory demands and contend with financial constraints.
IBM IoT for Energy and Utilities provides a holistic and granular understanding of assets by rolling up data across sources to support financial and regulatory processes spanning multiple lines of business.
Deliver reliability on an aging distribution grid
As operations gain insight into individual and aggregate performance with the goal of improving reliability and availability, utilities are in a better position to efficiently prioritize repair and replacement schedules to minimize impact on downtime and extend asset life.
Using IBM Maximo Asset Management can help providers reliably deliver power on an aging and increasingly stressed distribution grid. By providing a robust set of capabilities – including asset health and risk calculations, predictive capabilities and integration with enterprise asset management systems – maintenance and field service personnel can proactively respond to impending equipment degradation or failure. Here are several use cases where Maximo asset management capabilities can be applied:
- Visibility into a detailed and accurate understanding of maintenance history, reasons for the current problem, recommended actions to remedy the problem and the ability to prioritize maintenance schedules and resources based upon risk, failure probability and consequence of failure calculations.
- Schedulers and planners to gain the ability to optimize scheduling of planned outages, equipment upgrades and supporting resources through analysis and prioritization of repair criticality, estimated costs and even identification of best window(s) of opportunity based upon analysis of historic weather patterns and near-term forecasts.
- Through analysis and identification of factors – endogenous or exogenous – that contribute to equipment degradation or failure, reliability engineers can develop strategies, policies and procedures that ameliorate those problems to promote better asset utilization as they contend with changing load and flow patterns.
- Dashboards and reports provide both overall and highly detailed equipment performance assessments – historical and real-time – of grid, regional, connected and individual assets to help determine where and when resources should be deployed to ensure power quality within agreed ranges and efficient energy delivery.
Achieve analytics-driven operational excellence with IBM IoT Energy and Utilities
The IBM IoT for Energy and Utilities solution enables a user to drill down to assess regional health, individual asset health and connectivity – upstream and downstream – and use this real-time information to help automate outage processes from detection through resolution, enabling information access for improved business and operations intelligence.
Through remote asset/device monitoring and IBM IoT for Energy and Utilities-cycle management for field assets and smart devices, as well as integration with grid operations and enterprise asset management systems, operations can gain an immediate understanding of overall network/grid performance, health and risks be equipped to anticipate and react to reverse power flows.
IoT for Energy and Utilities is an analytics solution that includes a range of capabilities to meet a provider’s current and future needs. To learn more about how analytics can help energy and utilities organizations, please download the Energy & Utilities Solution Brief.
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