A2A Industry Perspectives (IP) provides content across all stages of strategy development:
- Policy
- Objectives
- Current State
- Risk Assessment
- Vision
- Strategy
- Goals
- Implementation Plan
Month: March 2018
Today I attended the Utilitydive webinar “How Utilities Can Better Manage Grid Modernization” hosted by West Monroe Partners; generally informative and underpinned by a great survey and case for change report “Managing Grid Modernization: Integrating IT and Operations at U.S. Utilities”.
A copy of the report is available here (in exchange for your marketing details).
And really, it’s presentations and information like this that have inspired A2A – utility operations are typically risk adverse, silo’d, disengaged, archaic and continually distracted with emergency response and regulatory requests; yet there is a human desire for modernization and associated buzzwords, but thought to be achieved by propagating the existing process, skillsets, cultures and technologies.
In today’s utilities, Information Technology and HR has likely been mostly outsourced; Operational Technology (OT) is held tightly by engineering and operations – as it is seen as ‘black magic’ by much of the business and the source of cautious advancement for the technical workforce; where much of the innovation is obtained by purchasing a vendors proprietary technology, islanded and ‘air-gapped’ from other systems, for security of course.
As shown in the West Monroe report, there really is a gap in industry for OT professionals, let alone IT/OT experts, and a lack of practical information, advice and OT leadership to make it happen properly:
- Process (ie workflow, re-org, roles and responsibilities)
- Systems (ie architecture, partnerships, deliberate investment)
- People (ie redeploy, purge, upskill, recruit).
For more information and perspectives, have a browse through A2A, reach out and connect.
High winds and rain across New England sees hundreds of thousands of premises without power, flooding and trees across roads. This is the second Nor’easter this winter, following the #bombcyclone in January 2018.
Power utilities and their contractors have working admirably in tough conditions to restore power and support the community.
But really, in today’s day and age, in one of the most populous and modern corners of a western nation – is this acceptable?
Many social media posts from the community would suggest not, so either the power systems are not engineered or operated to meet expectations of users or the environment has changed.
- Poles are seemingly overloaded, snapped halfway up
- Overhead lines through populous and tree lined areas
- Ageing underground cables and joints
- Americas infrastructure rated as C- by IEEE
But hey – the mass media was kind and the shareholder will profit, so all good?! /cynic
Many business cases for Grid Modernization (formerly known as Smart Grid) have focused on the technology and the direct and indirect benefits, generally a long bullet point list which sounds good, but is not usually presented as a compelling argument focused on outcomes.
The following contains a storyboard to use to develop a compelling Grid Modernization business case.
Context
The Distribution System Operator (DSO) is traditionally a monopoly with only one way for customers to access a reliable supply – the electricity network. Both customer behaviour and the regulated revenue stream were dependable and predictable.
However, the industry is experiencing increasing:
- total energy consumption
- regulatory scrutiny and WACC pressure
- customer price sensitivity
- accessibility of technological disruption and change (distributed energy generation, storage and vehicles) and;
- changing customer behaviour (participation in energy markets)
Disruptive technology
- Distributed generation
- reduced total demand
- maintain investment for peak demand
- increase investment for power quality management and protection
- Energy storage
- potential reduced customers
- reduced total demand as generating customers will store and consume rather than export
- increase investment for power quality management and protection
- Electric vehicles
- transient load / demand (peakier peak)
- maintain investment for peak demand
- increase investment for power quality management and protection
Enterprise Risk
For the DSO, adoption and proliferation of these disruptive technologies will lead to:
- an under-utilised or orphaned asset
- ongoing interest repayments for sunk capital investment
- potentially operating costs > regulated revenue
- reduced regulated revenue
- perceived barriers to changing customer behaviour and risk to current and projected regulated asset base
Objective
The objective is to:
- maintain a safe and reliable energy transport service at the lowest price (and increase shareholder Return on Investment).
AND/OR
- provide new services at the lowest price (and increase shareholder Return on Investment) such as distribution system operations (frequency control, load balancing), telecommunications or services
Asset Management Strategy
To meet the objective by investing in the minimum required asset to meet forecast demand, safety and service standards and increase existing asset utilisation (i.e. balance supply / load, smooth profile).
- Maintain network assets risk to ‘as low as reasonably practicable’
- Operational asset management
- Digital transformation / operational technology
- Influence customer behaviour
- Time of use tariff
- Demand management
- Seek alternative arrangements with customers (encourage distributed generation and energy storage)
- Improve network flexibility
- Increase application of advanced monitoring, interconnection, protection, automation and control systems
- Increase access to dispatchable energy storage
- Actively pursue alternative unregulated revenue streams i.e. telecomms, EPCM services, gas/water merger/acquisition
This is to be supported by ongoing corporate and asset strategies for continuous improvement (improve productivity / efficiency).
I’ll be presenting “Considerations in Developing an Operations Telecommunications Strategy” at the Burns & McDonnell Next Practices Forum in April 2018 in Denver ,CO.
I’ve been refreshing the private telecommunications network strategy for New England’s largest Investor Owned Utility, and is developing a holistic approach to guide telecommunications investment through to 2027.
The private telecommunications infrastructure consists of Wide Area Network (WAN) and Field Area Network (FAN) systems used to safely, reliably, and efficiently execute complex business operations.
My approach to telecommunications strategy development is pragmatic and provides consideration of possible business models, technology, and operating frameworks, including collaboration with Burns & McDonnell to evaluate investments including fiber optic and wireless network deployments.
In this presentation, I’ll discuss considerations and methodology to develop a compelling strategy including evaluating the current environment, developing a vision, and analyzing options to direct future investment and operations.
Register for the Burns & McDonnell Next Practices Forum here.