Most power producers are quick to acknowledge the importance of digitalization and the opportunities it creates to improve efficiencies, reduce costs and better serve their customers. However, the truth is electric utilities are lagging far behind on their promises of achieving a digital future.
The disconnect between the idyllic digital world being sold by vendors and the actual investment by utilities was highlighted in a report released this week by Navigant Research. Very few utilities, the report found, have begun a wholesale digital transformation because the investment may be too rich for an industry struggling amid flat or declining demand for electricity.
“The conversation often focuses on the end result: A digital nirvana of a highly efficient workforce and fully engaged customers,” said Stuart Ravens, Navigant’s principal research analyst. “What is missing are the practical steps a utility must take to achieve a digital transformation, which is often a long and arduous journey.”
Only 20 some utilities have established a strategic, c-suite supported, company-wide approach to digitalization, Ravens said.
Despite the opportunities to take advantage of an explosion of new data spawned by more monitors, sensors and analytical software solutions, the power sector has been slow to embrace digital innovations designed to trim costs, increase sales and boost efficiency. Electric utilities have long been struggling to make ends meet because more homes and businesses are producing their own power at lower costs. The power sector is on the cusp of unprecedented transformation, which is being driven by technological forces outside the power sector. Power producers who fail to adopt a comprehensive digital strategy will fall further behind and struggle to remain relevant in a world turning to onsite power systems, microgrids and other forms of decentralized power.
The threat of more consumers leaving the grid to produce their own power is real for utilities and independent power producers. Another Navigant Research report estimated microgrids could become a $40 billion-a-year global business by 2020, taking about 6,000 MW of business away from electric utilities.
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.
Flexibility is perhaps the greatest challenge facing power producers struggling to integrate growing supplies of intermittent wind and solar power into the grid. Digital solutions and technologies will help the industry meet that challenge.
While efforts to make more sense of the information collected from power generation equipment can improve a plant’s bottom line, they also increase a plant’s vulnerability to a cyberattack. This may explain some utilities’ reluctance to fully embrace the digital revolution.
A recent survey of utility executives indicated 76 percent of those in North America believe the country faces at least a moderate risk of electricity supply interruption from a cyberattack.
The survey, conducted by Accenture, indicated 57 percent of respondents said they’re most concerned by an interruption of the power supply from cyberattacks, while 43 percent indicated the destruction of their physical assets was their biggest concern. Another 77 percent of utility executives indicated the growth of Internet of Things devices are a potential threat to cybersecurity.
Four in ten of the respondents claimed cybersecurity risks were not, or were only partially integrated, into their broader risk management processes.
The march toward digitalization and better cybersecurity solutions will be discussed in detail Dec. 5-7 at POWER-GEN International 2017 in Las Vegas, Nevada. To register, go to www.power-gen.com.
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