A2A Industry Perspectives (IP) provides content across all stages of strategy development:
- Policy
- Objectives
- Current State
- Risk Assessment
- Vision
- Strategy
- Goals
- Implementation Plan
Author: matt.acton@a2aconsulting.com.au
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.
Operational Technology (OT) is the electronic and computing equipment used for the Real-Time protection, operation and management of the assets, infrastructure and networks. It is characterised by its mission and business critical use, industrial digital electronic technologies and computing nature, installation practices and technical skillsets.
Operational Technology includes:
- Real-Time Systems (RTS) including computing hardware such as servers, storage, firewalls and peripherals, operating systems, databases, middleware, software applications and associated data cabling, racks, licenses and configurations. Real-Time software applications include the Distribution Management System (DMS), Outage Management System (OMS), Energy Management System (EMS), Communications Network Management System (CNMS), Plant Information (PI) data historian and Market Management System (MMS)
- Supervisory Control and Data Acquisition (SCADA, also known as automation, process control, instrumentation, control systems) systems including Front End Processors (FEP), Remote Terminal Units (RTU), Programmable Logic Controller (PLC), hardwired Input-Output (I/O) collection, Human-Machine Interface (HMI), Front-End Processors (FEP), terminal servers, manufacturer specific controllers and associated transducers, small wiring, embedded software, firmware and configuration
- Digital protection and control equipment including all digital and numeric relays, controllers and associated transducers, small wiring, firmware and configuration
- Digital metering, instrumentation and monitoring equipment and associated transducers, small wiring, firmware and configuration
- Telecommunications and networking including all:
- Electronics (active and passive) such as Radio transceivers, receivers, transmitters, multiplexors, switches, routers, modems, handsets, firewalls, rectifiers and associated small wiring, cabling, firmware and configuration
- Physical infrastructure including telecommunications structures (towers, masts, monopoles, lightning protection, Earthing and antennas), Power Line Carrier (PLC) line traps, self-contained mounting (shelters, racks, kiosks), optic fibre (fibre, conduit and pits), data cabling (copper pilot and coaxial cables)
- Associated contracts for frequency spectrum licensing, co-site sharing, dark fibre leases and utility data carrier services
- Configuration, testing and troubleshooting equipment and tools including Personal Computers (PC), spectrum analysers, oscilloscopes, multimeters, Optical Time-Domain Reflectometer (OTDR), application or manufacturer specific test and simulation equipment and associated software, firmware and configuration
Operational Technology does not include:
- Near Real-Time Systems including computing environments, software applications and associated licenses and configurations. Near Real-Time applications including the corporate Geographic Information System (GIS) and Mobile Workforce Management (MWM)
- Corporate Information Technology (IT) systems including computing hardware such as servers, storage, firewalls and peripherals and operating systems (OS), databases, middleware, software applications with associated data cabling, racks, licenses and configurations. Corporate IT applications include the Enterprise Resource Planner (ERP) or Asset Management System (AMS), Meter Business System (MBS), Customer Relationship Management (CRM)
- Power electronics[1] including:
- Power electronic control systems including Static Synchronous Compensators (STATCOM) and Rapid Earth Fault Current Limiters (REFCL)
- Electro-mechanical protection systems including electro-mechanical relays, Metering, Current Transformers (CT), Voltage Transformers (VT) and Circuit Breakers (CB) and associated transducers, small wiring, test equipment and configuration
- Electro-mechanical instrumentation and control systems including High-Tension mimic panels and analogue meters
- Direct Current (DC) systems (Uninterrupted Power Supplies, chargers and batteries)
- Alternating Current (AC) power systems (Generators, Transmission and Distribution networks)
- Environmental management systems including security systems, air-conditioning, weather stations and fire alarm systems
- Land, property and physical security such as buildings, fences, gates, access roads and land leases
[1] In other industries power electronics and energy storage systems could be considered OT, however for a Distribution System Operators’ (DSO) area of expertise it is considered as Transmission and/or Distribution infrastructure
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 for the shareholder.
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 (prosumer 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
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 barrier and risk to current and projected regulated asset base
DSO Objectives
The DSO objective is to maintain a safe and reliable service at the lowest price (and increase shareholder Return on Investment).
DSO Strategies
To meet the objective by investing in the minimum required asset to meet forecast demand, safety and customer 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 (OT)
- 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. telecommunications, EPCM services, gas/water merger/acquisition
This is to be supported by ongoing corporate and asset strategies for continuous improvement (improve productivity / efficiency) to minimize operating overhead.
The Distribution System Operator’s (DSO) purpose is to connect customers with electricity. This valued and essential service is achieved via an electrical infrastructure that is:
- Pervasive and accessible across geographic extremes
- Inherent high risk due to electrical hazards
- Asset and capital expenditure intensive
- Requires a skilled workforce
- Experiencing changing customer behaviour and price sensitivity due to technological advances
- Essential for Energy trading
- Increasing community reliance for modern society
- Capable of additional revenue streams eg telecommunications, engineering & design services
To meet and manage customer service objectives of improving safety, reliable and affordable; the electrical infrastructure and workforce has increasingly leveraged digital technology.
Digital technology is a broad term for all electronic, power electronic, computing and software systems used to provide, process, transform, protect, distribute and transfer electrical infrastructure, corporate and customer data.
Current State
The DSO’s digital technology portfolio includes Information Technology (IT) and Operational Technology (OT) including disciplines central SCADA Computing Systems, Geographic Information Systems (GIS), Metering Systems, Telecommunications Systems and both Substation and Pole Mounted Protection, Control and Automation systems.
A majority of the technology and information is core to the achievement of Western Power’s current and future customer service objectives, unique to an electricity utility and key to development of the energy industry.
Currently at most DSOs, technology is service orientated and grows inefficiently in response to specific problems or through the initiative of individuals.
This leads to two risks to the achievement of enterprise objectives!
Issues / Risks
- Undiscovered, islanded or under-utilised technology and information leading to underutilisation of infrastructure assets, constrained capital and skilled workforce
- Duplicated / disjointed technology frameworks, skillsets, processes leading to inefficiency, employee disengagement and current/emerging network risk
Vision
<Insert DSO’s Vision – Technology or otherwise>
Proposed Strategy
- Identify and establish a representative technology leadership group
- Provide a single accessible/consistent/agile/clear governance/framework
- Review and revise asset strategies, engineering standards and operations processes
- Re-prioritise the investment portfolio, including divestiture of commodity business units
- etc