O&M, Renewables

Outsiders Driving Unprecedented Change

Issue 5 and Volume 121.

Imagine building an unmanned, fossil-fuel power plant abroad that can be turned on and off remotely from an office in New York City. It’s not a pipe dream. One such plan is now under discussion and there are probably more in the works.

It’s not surprising, considering the convergence of digital solutions, power plant technologies and technical advancements in automation. Consider this: A significant percentage of jobs in the U.S. (38 percent) and abroad will be lost to automation in the next 15 years, according to a new study from PricewaterhouseCoopers.

The power sector is on the cusp of unprecedented transformation, which is being driven by technological forces outside the power sector. Expect both great collaboration and intense competition between these brash newcomers and the industry’s established players

The power sector has traditionally been slow to embrace change. Most major changes in the power sector have been driven by those on the periphery of the power industry, not by those within the industry. The transformation underway now is no different.

The heart of this transformation can be found in the digital realm of the Information and Communication Technology (ICT) sector. The technical innovations in this sector are re-shaping entire industries, economies and societies. Innovations based on digital ICT include the introduction of artificial intelligence, the use of augmented reality and self-driving electric vehicles. The power sector isn’t exempt from these ICT-driven evolutions. ICT innovation will be a major factor behind demand growth for electricity worldwide.

Opportunity is knocking for power generators in desperate pursuit of increased efficiency amid flat or declining demand for electricity. For power producers, the opportunities to exploit these innovations to trim costs, increase sales and boost efficiency are growing at breakneck speed, thanks to new digital technologies.

In this issue of Power Engineering, we’ll be examining one of the benefits borne from digital innovation. Specifically, our author from Expert Microsystems Inc. explores the benefits of advanced pattern recognition software and how it can be used in conjunction with advanced analytics to identify warning signs of an impending failure. This kind of automation also means a much smaller capital and human resource investment for power producers.

The new power sector will be very different. Decentralized power systems will flourish as entities other than investor-owned utilities and independent power producers enter the power generation market. Today, small and large businesses in every sector can produce their own power to better manage their demand and create new revenue streams. Utilities and IPPs are struggling to adapt and should take advantage of abundant opportunities for collaboration between centralized and decentralized power providers.

Although the threat of more consumers leaving the grid to produce their own power is real for utilities and IPPs, reports of a looming death for providers of centralized power are outdated and exaggerated. Some utilities and states have made great progress in modifying their business models to reflect the growing popularity of decentralized power.

Some utilities are redefining their role as a power provider to reflect this ongoing shift in the power market. Expect traditional power companies to evolve into energy management companies charged with managing the complexity created by growing supplies of decentralized power. Expect utilities to begin designing, building and managing onsite power systems for their industrial customers. And expect an overhaul of traditional energy economics that places a higher value on information borne from digitalization.

At the turn of the century, more than half of the nation’s power was produced with coal and the prospects of renewable power and energy storage playing a starring role in U.S. power generation were quickly dismissed. The technologies were too expensive, unproven and difficult to integrate into a grid built around coal.

Today, renewable power and energy storage are two of the biggest emerging markets in power generation. The cost of energy storage has plunged 60 percent in the last two years and officials predict the U.S. will add 7,300 MWh of storage in 2022 alone, up from 336 MWh in 2016. Renewable resources accounted for most of the generation capacity added in the U.S. in 2016 – 63 percent to be exact. Solar led the way at 39 percent.

These new drivers of change are creating new possibilities for power producers and consumers. The established players and these new drivers of change will be gathering in Las Vegas, Nevada, later this year at POWER-GEN International 2017.

If you have a question or a comment, contact me at [email protected]. Follow me on Twitter @RussellRay1.