A Holistic Approach Will Maximise The Utility Business Potential

Many different value drivers can be achieved by adopting a broader view when deploying smart technologies within utilities.
Published: Wed 15 Oct 2014

There is a great need for the energy market and its relevant players to approach smart-related technologies in a more holistic way in order to maximize their business potential in the short and long term and strengthen the business case. This is according to Ana Domingues (pictured), Head of Global Portfolio, Utilities Industry at CGI, who points out that many in the industry are not yet embracing this approach.

“It is important to look at the overall ecosystem of the energy market, including present and future market players. Since there is an increasing interconnection between these players, new business collaboration models must be developed to solve new challenges” explains Domingues.

The number of sensor devices in the network is growing because communication networks are becoming more cost-effective, instigating a move towards digitally-connected networks which enable the transfer of even more information. “This will help utilities find solutions for upcoming challenges such as the increase of micro-generation which creates a more complex and dynamic energy flow.” Technology enhancement will enable more digitally-connected networks and make available much more data which will drive and support the need to have new collaboration models that exist across the entire value chain.

Unbundling the utility value chain

In Europe, there is a movement towards a more unbundled value chain in the market, explains Domingues. Countries such as the UK and the Netherlands have started this move long ago but now many others are joining such as Denmark, Belgium and Norway. In these there is a build up of central market operation systems and the creation of central market operators. “This means that the network operators and retailers have to create separated organisations with retailers communicating with clients directly and basically “owning” them.”

However, to create efficient grid management, network operators will need services to be sold to consumers which enable them to leverage the opportunity of smart-related technology, such as smart meters, to better manage the grid. “The retailer needs and must want to offer these services as part of its business strategy to the consumer but retailers don’t know what services the grid operators need and they also don’t know what the consumer wants.”

Examples of this are the delivery of services based on dynamic pricing and on demand response - important for a more active network management of balancing demand with supply. This demonstrates that value chain members such as the central market operator, retailers, consumers and network operators must collaborate and create the needed interconnections in order to define new energy services; these will, allow network utilities to maximize the use of existing network and delay or even avoid massive investments which otherwise will be needed to cope with increased volumes of electric vehicles and distributed generation.

Pilot projects will demonstrate what delivers more

To understand which technological solutions work best for their local market, network utilities should promote pilots which involve consumers, in collaboration with local market retailers and central grid operators (including all the relevant processes). Through learning and piloting, there will be a better understanding of how best to deliver affordable and reliable energy supporting the move to a low carbon economy; this will make a difference in how the local market model should evolve. “Pilots are carried out across the backdrop of a wider vision to create an efficient system and clarify the benefits and investments to be realised by all parties involved,” says Domingues.

The biggest challenge for utilities, particularly in accordance with their local market, is to define a roadmap in terms prioritizing initiatives with a justifiable return on investment evolving legacy systems with the needed innovation. Utilities should also balance technology, risks and costs with the business opportunities they see in their local market. Inevitably there is no single recipe for a smart grid or an optimised network utility approach.

Many value drivers to consider

There are many value drivers that can be achieved through a more holistic view when deploying smart technology as it all interrelates to create value across a number of areas. It’s not just about decreasing the cost of a mobile work force, for instance; it is also about asset management, better customer satisfaction, and improving reliability of the network.

Nigel Spooner, Vice-President, Global Utilities at CGI, points out that the holistic connection of all the offerings cannot be achieved instantaneously to gain the benefits of this approach. He explains, “This would be completely unrealistic; it cannot happen overnight. We see this as a journey which brings together capabilities incrementally. Whilst utilities are anxious to see a return on their investment, that investment must be phased and form part of the proper roadmap. This must be done in a way which achieves benefits in both the short and long term.”

End-to-end business approach

While roadmaps vary across organisations and countries, the driver for business process reorganisation is an end-to-end business process perspective and an understanding of outcomes to be achieved.

“By looking at end-to-end processes, you can start looking incrementally at what business processes could provide more return on investment if they were changed to achieve certain business outcomes. This would be part of a long-term business approach which would consider as well the way a network Utility is organized. Utilities must not let their current projects, shaped by more short term value drivers, limit future ambitions,” says Domingues.

“For instance, the deployment of smart meters can be used for more than just reduce commercial losses. However, the meter data management solution to support this value driver cannot limit the exploitation of other benefits derived for example from decreased outages. Your technology choices of today must take into account the next steps in the roadmap aligned with a holistic approach.

Pilots should be conducted against a backdrop of maximising business benefits of different value drivers including network operations, asset management and optimisation of internal work processes. This should be in the vision from the beginning, says Domingues.

IT/OT Integration will accelerate

Since there is a need to connect smart technology to a number of enterprise applications, it is also important to converge the historically separate Information and Operational Technologies (IT and OT). Various departments within a company need access to data for a range of business processes.

The need for specific business outcomes will drive departmental integration, says Domingues. “There will be a need to reorganise and break the silos as a result of the needs of new business processes. The network Utilities ecosystem will eventually become interconnected in response to business needs. The solutions we develop for our clients support the journey of building knowledge and flexibility in alignment with their long-term vision.”

“The integration of business process is becoming more feasible because the sensor and communications technologies (not just metering) which produce the real time data are becoming more affordable. This helps to drive integration forward. The traditional lack of departmental integration must change and it will do so once a number of pioneer projects have demonstrated real success,” says Spooner.

CGI, a leading independent information technology and business process services firm, has a stand at the European Utility Week.