Optimized Network Utilities Are Embracing Flexibility and Innovation

Uncertainty in the energy industry is forcing utilities to adopt innovative and flexible solutions which are unique to their businesses.
Published: Thu 06 Nov 2014

We wrote recently about the holistic approach that utilities should adopt towards the development and adoption of smart grids and how this could enhance their business potential. [Engerati - A Holistic Approach Will Maximise The Utility Business Potential].

This holistic view, according to Ana Domingues, Head of Global Portfolio, Utilities Industry at CGI, will enable utilities to exploit market opportunities at a time of uncertainty, as well as help them to balance many different stakeholder expectations while having the flexibility to alter tactics as opportunities and circumstances change. In addition to this, a more holistic view will enable utilities to achieve all of this while maintaining a clear strategy that will help them to achieve their long-term objectives.

CGI, global IT and business process services provider, is labeling organizations that embrace, exhibit and act on these attitudes,​Optimized Network Utilities (ONUs). In CGI’s view, they are driven by three fundamental mindsets which:

  1. Embraces the bi-directional element of energy and information flows, assuming a leading role in an interconnected ecosystem

  2. Defines a journey of progressively rolling out technologies with a clear return on investment while building knowledge and flexibility

  3. Seeks to exploit 360º control and visibility by driving end-to-end business processes enabled by automation and integration of OT/IT

The paradigm shifts

There is a paradigm shift from centralised to distributed networks. This involves distributed energy resources as well as decentralised intelligence, resulting in more complex bidirectional energy and information flows. “The need to address these challenges and exploit powerful data flows will drive another paradigm shift from a grid focus to a more customer centric focus; this is aligned with another shift of moving from only valuing energy to also valuing flexibility on how energy is consumed. Inevitably more collaborative business models and a more end-to-end market approached will be needed,“ says Domingues.

In essence, all this means that the market will be moving into a “connect and manage” paradigm, away from passive into active network management.

The pace of change will vary across the world but in some countries it is happening now. As an example, Domingues points to a Dutch utility which is going to market with a new service, based on a solution jointly developed with CGI. The new service will see the optimization of demand and supply within clusters of customers, whereby the surplus or shortage can be traded on existing energy trading markets. “This is an example of where a network utility understands both the need of new business models in the market and the importance of being more customer-centric: recognizing the consumer as a market player in its own right and the value of flexibility.”

Another example is Alliander which has launched a new open source smart grid platform, developed with CGI, to encourage the emergence of new business models to allow municipalities, for example, to easily self-monitor and control objects in public areas such as street lights.

Domingues says that significant change will be required over the next decade. ‘The market is already responding to new technology and solutions. Utilities will become increasingly digitally connected, which is a major step as they have remained largely unchanged for the last century. Utilities are being asked to start turning to new technologies and alter their organisations overall.”

Domingues quotes a statement made by an American utility recently, “We are like a 130 years old teenager that has been asked to leave our parents’ home tomorrow.”

The need for innovation

Domingues points out that significant innovation will be required over the next decade, but it must be innovation that brings real value to the utility’s bottom line and that can be progressively incorporated into the existing legacy systems. Many utilities moving into the digitally connected world don’t have a clear view of where they should start when it comes to implementing change.

She says that many utilities want innovation but they often don’t know which solution would best suit their needs or how to prioritize initiatives, justify return on investment or how to go about implementing it. For instance, smart meters can bring about many different benefits, since the data they make available can be used across many business processes. For that to happen, higher levels of integration and change need to be incorporated by those which aspire to become Optimized Network Utilities.

There is not a single answer to all these questions since there are multi dimensions to consider, from market structures, to regulatory frameworks, market and consumer maturity, utility technology maturity, etc. Utilities will need technology partners which can co-create future smart grid solutions, aligning investment with business opportunities and the ability to realise the return; which help them keep in balance the importance of mature commercial off the shelf products and the need to incorporate innovation into legacy systems; and which give them access to a wide ecosystem of partners from very mature to innovative niche players. This is what CGI does in a number of leading edge smart energy projects with utilities with which we have long lasting relationships, such as with EDP in the InovGrid project (selected by EU and Eurelectric as a reference projects for business case assessment) and with UK Power Networks’ Low Carbon London, recognised by IDC Energy Insights as a key smart grid programme for promoting innovation in distribution networks.

The need for flexibility

Through innovation organizations will also need to reach higher levels of flexibility. That is, innovation must come with knowledge and flexibly combined systems, processes and structures to overcome uncertainties as the market place in which it operates changes. In many aspects, creating flexibility calls for an innovative and creative approach, explains Domingues.

Flexibility is needed because utilities are not only in a state of continual change - they also face many uncertainties, from regulatory changes to change in consumer behaviour, technology adoption technology evolution, market models and business models. “Business flexibility will be a key factor in the future and will require agile systems combining an evolution of legacy systems with the innovation required to become an ONU.”

Utilities should have the freedom to select vendors and technologies to accommodate market changes; to meet that end, solutions must be operational-technology agnostic. Solutions should also provide the necessary flexibility to align investments with the evolution of the business opportunities in the market, such as being offered as a service or in a modular, scalable way. That implies avoiding big bang approaches with solutions of the “one size fits all” type for all needs. Flexibility is also about the ease of integrating solutions. “Easily integratable solutions are key to enable business and organization flexibility to accommodate market uncertainties fast and efficiently,” explains Domingues.

“These are key characteristics of CGI’s own proprietary solutions, such as our active network management system, which are not only technology agnostic but also act as middleware solutions to plug the gaps between commercially available software and the requirements to move towards an ONU. Another example is our Instant Energy platform, which has given network utilities a simple and low cost way to pilot smart metering implementations. This solution played a key role in CGI being appointed the data services provider for the rollout of 53 million smart gas and electricity meters in Great Britain.”

Chief Information Officers will need to shift their primary focus from IT operations and business services to innovation and flexibility within the business. In order to do this, they need to have a much better understanding of the business’ overall requirements and what operational technology can bring into the overall play.

CGI, which has been named a leader in the IDC MarketScape: Worldwide IT Professional Services for Utility Smart Grid 2014 Vendor Assessment, is attending the European Utility Week.

Further reading & viewing

Engerati – New Ways of Seeing Network Utilities – Optimised Network Utility

Webinar: The Optimized Network Utility - the journey towards digital integration