Across the globe, electricity utilities are at different stages of embracing the digital wave. The key differentiator lies in the existing capability and the vision of the utility.
Across the globe, electricity utilities are at different stages of embracing the digital wave. The key differentiator lies in the existing capability and the vision of the utility. Utilities that have already made progress on the digital path are eying at disruptions such as customer analytics, blockchain, augmented and virtual reality, machine learning, robotics process automation, etc. On the other hand, utilities that are at a nascent stage in their journey towards digitisation are focussing on IT enablement, ERP, smart metering, etc. Thus, comprehending ‘digital’ is different for different utilities.
The Union government is targeting to roll out 35 million smart meters by 2019, which needs to be integrated with recent IT initiatives like R-APDP, NSGM, etc. With the government’s target of 175GW of renewable capacity by 2022, there would be a significant variability, volume and variety. The National Electric Mobility Mission envisages about 6-7 million electric/hybrid vehicles in India by 2020, with a possibility of overloading of the distribution network. Simply put, both supply and demand of electricity are on the verge of becoming unpredictable, intermittent and variable. This presents a perfect case for grid-scale energy storage to dovetail with renewable sources of energy and electric vehicles. While this sounds simple, utilities would need state-of-the-art automation and machine-to-machine communication systems capable of low-latency and high-reliability operation, thereby creating an ‘internet of energy’. Furthermore, it is imperative for the utility of the future to guide the electricity demand by offering demand-response programmes, providing financial benefits to its consumers.
It is fair to say that the power sector is at the threshold of a paradigm shift and will materialise through following three tipping points:
Parity in solar power and conventional electricity generation cost
Energy storage cost is cheaper than electricity transmission costs
Price of electric vehicles reaches cost and performance parity with internal combustion engine vehicles
On one hand, these technological changes could be seen as disruptions, while on the other, these could be visualised as opportunities to be availed by going digital. As per the International Energy Agency (IEA), there will be more than 11 billion smart appliances in the power sector across the globe by 2020. With this quantum of devices generating data, it is imperative that utilities conduct advanced analytics in areas such as asset health, revenue analytics, consumer satisfaction, etc. Home/building automation, including the smart lighting and smart thermostats, is another key domain that utilities can venture into and benefit. Another example is to deliver a better consumer experience such as support value-based pricing and innovative energy aggregation offerings, provide information and create dialogue about new personalised energy offerings, develop new beyond-the-meter products and services and support peer-to-peer trading. On the grid side, utilities could intelligently manage their network and assets for improved reliability and efficiency. Digital technologies could also help in integrating increasing amounts of renewables into the electricity grid by better matching the demand to supply. Across the globe, utilities are piloting the use of drones to inspect transmission and distribution lines for damage from storms and normal wear and tear; this concept is likely to gain traction in the near future. Utilities may also use artificial intelligence computers that employ machine learning algorithms to predict and identify at-risk sites and assets, preventing outages. Using augmented reality headsets that provide instant information and visuals could improve operational performance. Moreover, utilities could enhance productivity by employing technologies such as robotics process automation and mobile workforce management. While utilities have a plethora of avenues for converting digital disruptions into opportunities, it is pertinent to mention that with the convergence of IT and OT along with digital technologies becoming ubiquitous in the power sector, the risk of cyberattacks is ever increasing. Thus, utilities will have to embed resiliency and robustness in their systems and ensure that they are secured ‘by design’.
What it means to utilities is to truly innovate so as to address a changing customer, a collision of technologies, aging infrastructure and workforce, a new competitive market and growing stakeholder expectations. Thus, utilities must adapt quickly as they need to be customer-centric, hyper-connected, proactive and predictive, adaptive, automated and performance focused.
Utilities of the future need to deliberate and delve deep into the some of the following questions, which would allow them to take the leap to the next level:
Whether to implement smart metering on a capex-led model or as a service?
When is the appropriate time to leapfrog from smart metering to smart grid?
How can data from the electricity grid enhance the life of assets and avoid or defer the need to fund additional infrastructure?
How to improve the bottom line in presence of increasing solar rooftop, open access and demand side management, thus avoiding entering into the utility death spiral?
Can controlling the consumer’s load at a granular level via home/building automation yield any benefits to the utility?
Whether to execute demand response programmes on its own or to play an overarching role by only coordinating with negawatt aggregators and letting them engage with consumers?
Whether to deploy a distributed energy resources management system in parallel to or in place of a distribution management system?
What benefits can be achieved by leveraging advanced data analytics?
What are the value added services that utilities can offer for improving the bottom line?
The author is Associate partner, power & utility, EY.