Electricity is the workhorse of our world. Without it, life as we know it shuts down. Since the modern miracle of electricity emerged in 1892, it has underpinned economic growth, increases in living standards and health. Today’s energy services are vital to not only human wellbeing but economic development worldwide.
But despite this global dependency, the energy grid as it stands today wasn’t designed to manage current complexities; several critical trends are driving it to function very differently than how it was originally envisioned. The electron once followed a simple, linear path from generation to our communities, but it is now facing a complicated, multidirectional course. This is due in part to distributed generation which is much closer to points of consumption, and an increasing number of fuel types many of which are hard to manage and even harder to predict. In addition to the complexity associated with new operational demands, grid operators are also investing more and more to ensure the grid remains secure as it is increasingly a target of attack.
As the Grid Evolves, it Will Grow More Complex
While this challenge isn’t new, the next 10 years will bring a level of complexity far beyond what we’ve experienced thus far. Consider efforts for decarbonization. The rise of prosumers plus new mandates focusing on renewable energy from states like California mean that disparate resources will continue to increase. The growth of electric vehicles has also put new pressures on the grid. By 2040, over half of all vehicles will be electric, and AAA has found that 50 million Americans are likely going electric for their next vehicle purchase. That said, Dr. Michael E. Webber noted, “deep electrification is a direct pathway to an efficient—and more productive—economy, and that’s something we all support.”
Accessibility of electricity to all through utility scale efficiency and decentralization, is on the rise. As more citizens produce some portion of the energy that they need, additional complexities arise. The truth is, utilities are in a tough spot. They didn’t ask for the rise of prosumers and cyber threats, nor the complications that have come with consumer electricity demands. There is, I think, a light at the end of the tunnel—it starts and ends with digital innovation.
Software is Essential to a Secure, Efficient Grid
Imagine if utilities could match the amount of energy that is generated through multiple fuel types (including consumer provided) with changing consumption patterns in near real time. As we enter the new Digital Energy era, this is the opportunity for the 21st century grid. Our customers have the revolutionary hardware, but now it’s time for them to think about revolutionary software.
The economic value of the convergence of hardware and software is massive. According to some estimates, an incremental $2 trillion of value can be unlocked across just the electricity value chain as a result of digitization. At this point in time, we are not a particularly efficient industry largely because we are in a state of over-supply by design. Software is going to help get us much closer to optimal output despite increasingly volatile consumptions patterns. Getting to predictive, prescriptive and fully autonomous operations are tablestakes for the digital utility of the future, not just due to the desire for operational efficiency but also because it’s the only practical way to manage the complexity.
So how can the industry achieve this? Utilities must run, analyze and optimize their networks to reach what we call Network Level Optimization.
As the industry begins to think about digital innovation, the first step is to ensure that modern operational software is in place and integrated. This class of software that operates generation, transmission and distribution is arguably the most mission critical software on the planet. This software will not only deliver electricity, it will provide a model-driven view of the network itself and begin to self-optimize. It will also provide the data necessary to effectively utilize assets and drive foundational performance.
Energy Innovators are Already Using Data to Improve Performance
Consider RWE Generation, a leading generation company in Europe powering more than one third of the energy supply in Germany. RWE has taken steps to modernize its gas and steam turbine to improve plant efficiency by up to two percent and output by up to six percent. This convergence between its hardware and software means bringing more reliable energy to more people. Another example is Chicago-based ComEd, which uses algorithms to manage and optimize distributed energy resources for its microgrids. By using software to control the network, it’s able to manage actions for multiple microgrid installations.
Once the foundational elements are in place, utilities will be left with massive amounts of data. Today, this is the point where most utilities stop in their journey towards digital transformation. There’s so much data that it’s hard to know how to make sense of it all, which is why as an industry we’re only using about 3-6 percent of our data. That’s where the power of advanced analytics and optimization platforms come in. These tools involve layering on a single platform that takes the full view of the network and uncovers opportunities for greater performance and efficiency. By getting the most out of their assets, utilities can predict and prevent failures while improving overall performance.
Exelon, one of America’s leading energy providers, is a great example of a utility at the forefront of this advancement. It is using its data to predict when systems need repairs and to ultimately improve its operations at generation facilities. Exelon’s new optimization algorithms are also crunching data from its wind farms, which has helped boost annual energy production from its wind turbines by one to two percent.
It’s clear the industry is already beginning to see software and real-time yield management technology provide efficiency gains. New York Power Authority’s (NYPA’s) CEO Gil Quiniones recently noted that 54 percent of the energy that NYPA generates is consumed by consumers, whereas most of the industry is closer to 40 percent. What’s more: With every point of efficiency gained, there is potential for $1.5 billion saved.
NYPA is on its way to becoming the world’s first digital utility, but it’s important to realize that no two utilities are at the same stage in their digital transformation. For example, Uniper, a major German utility, is taking data management in-house by creating its own application for predictive maintenance.
Creating the Electrical Grid of Tomorrow
To modernize and reach the potential of the 21st century grid, we must invest in technology to better manage operational systems and optimize assets. In their own silos, Generation, Transmission and Distribution aren’t reaching their full impact unless they are connected, and they require software to manage the dissemination of energy reliably, efficiently and safely.
Now is the time to think about the convergence of hardware and software to improve the grid’s reliability and profitability. The industry must begin developing plans for regulators and determining the best course of action for customers and needs. Digital innovation will define the 21st century grid, and it’s never been a more important time to align our industry with the pace of technology innovation. The problems we face today are the simplest they will ever be, and each passing day brings with it more complexities to consider.
About the author: Steven Martin is the Chief Digital Officer for GE Power and is responsible for leading and advancing the business’s digital industrial strategy. He oversees GE Power’s software business, which is focused on building solutions to transform the electricity industry from generation to transmission and distribution. Prior to joining GE in 2016, Martin spent 14 years at Microsoft and was most recently the chief data scientist for Azure.
Martin holds a BS in behavioral psychology from the University of Texas at Austin and is an ongoing student of behavioral economics.
Digital solutions will be part of the POWER-GEN International conference and exhibition Dec. 4-6 in Orlando. Click here to learn more about the conference tracks.