by Ted Surette, National Sector Leader – Power & Utilities, KPMG and Bob Hayward, ASPAC CIO Advisory Centre of Excellence, KPMG.
The internet has reached almost every building, every person, every device and now every thing on the planet. The plethora of new technologies have the potential to have a devastating impact on the utilities industry, warn Ted Surette and Bob Hayward, if utilities don’t take a proactive approach to integrating them into their business.
The utility industry is reeling from an assault of new technologies with disruptive impacts on long established business models that have not seen this pace of change since the days of the very first power grids.
Multiple forces are in play. The costs of infrastructure technology – such as compute, storage and networking – are continually declining. In the past decade, the costs and availability of infrastructure reached a tipping point that unleashed a surge of use that was previously prohibitively expensive. As a consequence, it has become practical today to gather, store and analyse vast quantities of data that would have been impossible to justify just a few years ago.
The internet has reached almost every building, every person and every device on the planet. We are now witnessing the internet’s tentacles extend into every machine, every object, and indeed every ‘thing’ on Earth that we try to communicate with.
The world is being covered in sensors. These minute devices can measure temperature, pressure, flow, motion, chemicals, noise, smoke, smells, location, position – in fact just about anything imaginable today can be detected through some form of sensor. Many other ‘things’ are also being connected: actuators, beacons, drones, RFID tags, meters, cameras, robotics, personal mobile devices, wearable devices and more. All of these ‘things’ are getting cheaper, getting connected and are getting smarter. In many use cases, they are communicating with each other (machine-to-machine, or M2M technology) and making decisions.
This Internet of Things (IoT) will be the basis of many new innovations, forcing organisations in all manner of industry sectors to adjust rapidly or face obsolescence.
Parallel to the global rollout of connected things, the past few years have also seen impressive rates of innovation in the field of sophisticated industry-specific algorithms to detect previously unknown patterns in data. These ‘analytics’ solutions, when paired with novel types of visualisation, can be applied to the most complex and intractable business problems.
Some commentators are now observing that we are fast approaching the era of smart machines, where analytics combined with forms of artificial intelligence, inference engines, neural networks and cognitive computing all delivered in an integrated machine or service are already having an impact on automating some knowledge work.
Analytics, combined with new ways to store, process and search huge pools of data can help move organisations from information systems mostly devoted to reporting the past, to revealing important information happening right now. This move in focus of IT from hindsight to insight is now being extended to foresight – the power to predict likely future events, customer intentions and important market shifts using predictive analytics.
By tapping into the stream of data from IoT and relating that to IT and OT data, as well as external information (weather systems, social networks for customer profiling), new insights can be uncovered that can dramatically improve business decisions.
Today, it is possible to determine critical patterns by analysing data from entirely different sources, even if the data is structured or unstructured, and even if the information is complete or ambiguous. Real value in today’s utility industry can be found through information asymmetry – joining the information dots in fresh ways from new sources and types of data that provide unique insights and foresights unmatched by competitors.
Here are just a few examples of the power of connecting the information dots for power utility firms:
- For core network operations. Predictive and condition-based maintenance of substation equipment to decrease unplanned outages; monitoring of real-time asset utilisation and optimisation of generation and transmission equipment to maximise return on assets (ROA); and short-term weather forecasts to enable prepositioning of repair assets and adjust generation to meet demand appropriately.
- To gain customer insights. Fraud detection, current diversion, enhanced customer billing, demand forecasting and personalised pricing. Use of social media (like sentiment analysis) enables new levels of customer insight and reduces customer support traffic.
- To enhance field service. Sensors and IoT solutions instantaneously detect brown-outs and power outages; use of mobility and location solutions provides new levels of responsiveness to equipment problems in the field.
- Energy trading. More sophisticated analytics tools enable market traders to quickly find cheaper prices for energy purchases and best sale prices in spot markets.
- Regulatory reporting. Big data and analytics enable faster and more accurate reporting to regulators and provide evidence for higher rate requests.
- Security, intelligence, and data management. Vulnerability assessments must be conducted regularly to safeguard communications with active grid components; master data management and optimisation are even more important in big data applications.
In terms of technology disruption, the power utility sector is facing some of the biggest challenges of any industry. No less than five different types of technology are intersecting and undergoing rapid rates of innovation at the same time:
- Information Technology (IT): Cloud computing, analytics, Internet of Things; Big Data
- Operational Technology (OT): Smart Grid, embedded systems, process equipment
- Energy Technology (ET): Solar, wind, fuel cells, energy storage, distributed energy generation
- Automotive Technology (AT): Driverless cars, hybrid or hydrogen fuel cell cars
- Consumer Technology (CT): Smart appliances, smart meters, data feeds to personal mobile devices.
The convergence of all these technologies has the potential for a devastating impact on the power utility industry. In the near future households may be generating much of the energy they need themselves (ET), including plugging their car into their house (AT) with high levels of visibility on power use and demand (IT), with less consumption (CT) and improved automated distribution networks (OT).
Leading utilities firms across the world are proactively preparing for these digital disruptions. One of the first and most powerful ways they are doing this is to maximise their decision making capabilities by tapping into the world of data now available, inside and outside of the business. Only by having information asymmetry and connecting all the available dots of data can a modern utility business successfully navigate a way forward through this period of intense change.