March 16, 2015

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A holistic IT strategy to enable the sustainability of utilities

Power/electricity is one of the most critical infrastructure components affecting the economic growth of a country.  Not only does it affect our day to day lives as consumers, but it is an extremely crucial input for industries. A sector’s significance with respect to an economy’s growth can’t be emphasized more. Similarly, another aspect that we might want to consider is the direct correlation between the per capita consumption of electricity and the per capita gross domestic product (GDP) of a country. A higher per capita consumption of electricity results in improved social development, and hence, faster economic growth.

Industry experts are talking about smart grids, smart cities, distributed generation, and reducing carbon footprints. However, we can’t waive the fact that the electricity sector, globally, is still struggling with ageing infrastructure, demand and supply gaps, power shortages, and billing and collection inefficiencies. While the sector as a whole can’t afford to lose sight of the much needed reforms, it is imperative that electric utilities realize the importance of technological enablement, to ensure the sector’s sustainability.

Information Technology (IT) can play a transformational role in bringing about standardization, transparency, reduction in losses, revenue realization, and the overall improved heath of the sector. Most utilities deploy IT automation as a solution to one-off operational issues, however, they need to realize that embracing IT as a long-term holistic strategy can help them transform their business landscape and enable them to contribute to the sector’s sustainability in the future.

Electric utilities can accrue several benefits by adopting a customized IT strategy. Some of these benefits include: improved operational efficiencies, reduced human intervention, faster decision making, substantial cost savings, and improved customer service. If this adoption is carefully devised and aligned with their respective business strategy, it will greatly impact the overall growth trajectory of the sector. 

The first step toward IT automation of utilities is the deployment of automated meter infrastructure (AMI). Many utilities in developed countries have been quick to realize the benefits of smart meters. However, the adoption of AMI by electric utilities isn’t as agile as it should have been. Moreover, AMI is not just about smart meters, rather, it covers a larger infrastructure diaspora. According to the U.S. Department of Energy, AMI is “an integrated system of smart meters, communication networks, and data management systems that enable two-way communication between utilities and customers.” AMI offers several benefits to utilities, such as capturing real-time consumption data, better load forecast, improved demand side management, easier outage management, effective asset management, and improved customer service. They are also better equipped to implement a variety of load reduction and energy saving programs, helping reduce the cost of providing electricity to end-consumers.

Since AMI forms the backbone of a smart grid, the maturity of AMI technology will ensure that the electricity sector moves closer to the smart grid vision. While utilities appear to be inclined toward smart grid to gain technological advantage in an increasingly competitive marketplace, yet this is just one of the multi-fold benefits that can be accrued.

A smart grid uses information and communication technology, generates/captures real-time information and ensures the bi-directional flow of energy and communication. Through a network of sensors, GIS, SCADA, and other components, a smart grid has access to real-time information feed, which it utilizes to analyze consumption trends, load patterns, and enable decision making for demand forecasting, managing peak and off peak loads, and thus improving operational efficiency. Additionally, the ‘self-healing’ feature of a smart grid, enables easy fault detection, isolation, and rectification. Thus, utilities are able to manage outages better. Another important aspect that utilities should consider is that a smart grid allows for seamless integration of distributed generation. Hence, utilities can easily and smoothly integrate several micro grids from renewable plants without affecting the overall quality of power. Thus, embracing smart grid technologies will pave the way for a self-sufficient electrical network that will contribute significantly towards the profitability and sustainability of electric utilities.

The frequency and volume of data that is emerging from these smart meters/grid devices/ network controls and sensors is massive, and unless it can be converted into useful and actionable business insights, utilities can’t look forward to any transformational advancements. Thus, Big Data analytics is another key trend that can significantly improve the way utilities conduct their “Run-the- Business” and “Change-the –Business” activities.

Big Data analytics enable utilities to assess the trends, patterns and anomalies in the flow of electricity and its demand and usage patterns, and thus facilitates quicker decision-making. It also helps in the regular assessment of the grid’s heath and ensures that corrective measures are taken well in advance, thus maintaining a regular quality supply of electricity. Due to ageing transmission networks, several outage-prone nodes need to be replaced but haven’t. Big Data analytics can help to identify such nodes and ensure the timely restoration of services. By applying analytics to meter data, utilities can identify consumer behaviour and usage patterns, which would in turn facilitate load forecasting, demand side management, improved customer experience, and higher customer satisfaction. On the face of it, these benefits might seem to be short-term operational improvements. However, if utilities were to adopt Big Data analytics, it could well become an effective strategy to tackle critical business challenges while meeting the expectations of the enlightened and ever-demanding customer.

As utilities begin to churn out a huge quantum of data, they would face challenges concerning where to store such data and how to frequently access it. This is where cloud computing comes into the picture. A cloud offers a scalable, easily accessible, and best pay-as-you-go storage option. Utilities can opt for private/hybrid clouds based on their requirements. This gives them the flexibility to host as much information as they want, and also be able to access it as and when required. Moreover, it gives them access to new, real-time data and analytical capabilities. By leveraging cloud computing, utilities can uncover operational and financial value locked up in Big Data. Using the cloud, utilities’ can shift IT expense from being a fixed cost to a pay-per-use pricing model. This ensures continuous cost improvement over time through greater automation and flexibility. There might be a few initial inhibitions due to the security concerns of hosting utility data on the cloud, but its benefits outweigh the cons. As this technology matures over time, cloud computing will become a game changer for utilities, enabling them deliver service excellence and manage customer engagements.

As customers become better informed and more demanding, we see that policy makers are becoming stricter with regulatory compliance and higher emphasis is being laid on green energy and reduced emissions; competition is getting fiercer and utilities will be pressurized to re-think their IT strategies. Instead of focussing on IT implementation as a piecemeal solution for enabling operational efficiency or cost reduction, they will need to identify ways to align IT to their business objectives. The focus will shift from ‘IT vendors’ to ‘IT partners’ who can help them devise strategies based on business needs, industry trends, technological advancements, and capital/ return-on-investment analysis. Instead of adopting IT as an implementation tool, electric utilities will have to embrace IT as a holistic strategy to achieve business-oriented goals to remain sustainable in the long-run.