Renewable generation assets - are utilities managing?

New white paper highlights how energy companies can streamline grid assets investment.
Published: Tue 07 Feb 2017

The shift away from centralised power generation to distributed energy resources raises new complexity for utilities and independent power producers.

One facet of this transformation is that utilities are less likely to undertake as many capital-intensive large-scale generation projects. But one factor that has been less considered is how utilities are managing a rise in overall generation assets.

A new report from US market research company IDC Energy Insights states that “dozens if not hundreds of assets (usually renewables) will displace large centralised power generation assets that deliver hundreds of megawatts (MW) from a single generation asset.

“This drives the need for investors to manage 10–30 times the number of energy investment lifecycle management projects in their portfolio.”

The white paper titled ‘Investment Lifecycle Management: The Power Producer Digitization Imperative’ gives an example of the assets of one electric utility company.

The CFO stated his group went from processing 15–20 investment assets a year, generating 250MW capacity, to 60–70 assets a year, generating 300MW capacity.

Renewable generation assets management - challenges

The research, sponsored by US software company Mercatus, is based on interviews with utility and power company executives in a bid to gain a deeper understanding of the issues around generation asset management and deploying renewable assets.

The white paper gives a full breakdown of challenges faced by utility executives, but one example is project length in an environment where utilities and independent power producers are under pressure to acquire assets at speed.

The IDC Energy Insights paper quotes the CEO of a large North American utility as saying: "Project length is 24 months at a minimum for a natural gas-fired asset, if everything goes perfectly in the regulatory approval phase. It needs to be less than 12 months."

Energy companies’ IT systems

The research organisation also identifies other issues within utilities that are constraining the management of renewable generation assets including legacy IT systems.

“For most energy producers, the existing infrastructure is characterised by disconnected, labour-intensive processes that create numerous information silos.

“Ultimately, this results in slow, suboptimal workflow with error-prone decision making. More specifically, this leads to significant risk not only in getting the forecast return on the asset investment but also in compliance during acquisition, asset construction, asset start-up, operations, and asset disposal.”

Energy investment software

One solution presented in the white paper is energy investment lifecycle management (ILM). This is defined as the core end-to-end business process and automation platform for the origination, development, financing, construction, and asset management of greenfield or acquired generation assets.

Mercatus offer a cloud-based ILM solution, which combines customer relationship management systems for the business development phase; project management solutions for project delivery; and enterprise resource management solutions that focus on financial general ledger/budget integration.

The system also offers document management and business intelligence tools that are often integrated with these systems to extend collaboration and reporting capabilities.

Mercatus CEO Haresh Patel said: “Legacy systems and business processes designed to support conventional, centralised power generation are no longer adequate to support the distributed power generation model of the future.

“They are fraught with organisational and data silos, manual and disconnected business processes and inadequate decision-support systems.

Investment process - labour costs

The ‘end to end’ solution of lifecycle management aims to address the concerns of utility executives interviewed who identified lost time, money and resources to be hindrances to their business. 

IDC Energy Insights makes an assessment that a 200-person organisation looking to invest in 1GW a year of renewable generation assets spends 1,700 hours preparing documentation for investment committees each year.

This equates to $330,000 in labour costs.

The white paper concludes that the “process is ripe for automation, especially when considering additional compliance, quality and velocity benefits”.

But also cautions that digital transformation is a C-level initiative that cannot be delegated. “You will lead the charge, but you need to rely on and trust your execution team.”

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