IBM is currently interviewing C-suite executives for a global study on how organisations including energy utilities can use data for competitive advantage. The study, IBM’s 20th, will be published in November and is called “Winning in a data-rich world”. Client Director Jon Edmonds talks to Engerati about the upcoming study and other projects IBM is working on with energy companies.
E: What are the primary focus areas for IBM at the moment with regards to the digitalisation of the utility sector?
IBM: There are three main areas; firstly how can utilities use the data they have to gain a 360 degree view of their customers in order to serve then better and retain them. Utilities want to put customers at the heart of their operations and transform how they interact and share data with them from mobile devices right through to billing systems. However, many are dealing with systems that are 20-30 years old and these need replacing with new more flexible, cloud-based applications to improve customer experience.
Secondly, asset management – with RIIO-2 utilities are expected to have much more optimised use of assets which will require a change away from time-based to predictive asset management. They are looking to apply analytics to data collected from equipment to gain greater insight on condition of the asset. We have done some work on this with National Grid.
Thirdly grid operations: in an era of renewables, decentralised energy and EVs, how do you manage the challenge of balancing the network? The system is much more complex these days in a way that is similar to how computing has changed. In the past you used to have a mainframe computer going to a terminal at a desk, now you have multiple devices connected to multiple applications in the cloud. As with energy, it has gone from big coal plants and passive consumers to people generating their own electricity and storing it as well, and now that has to be balanced. Utilities are seeking new ways to use data to do that, something we call becoming an “Energy Integrator”. IBM has a project with the Dutch TSO TenneT using blockchain to organise balancing from multiple storage points. With blockchain you don’t need a monolithic central system, it creates a much more flexible, distributed mechanism for doing things at lower cost and it is easier to scale.
E: Are there different solutions for power, gas and water or are there some synergies?
IBM: They all share the new vision of the customer being important now and all are focussed on asset type solutions. For example, some water companies are looking at training AI to identify corrosion in pipes. From an electricity point of view there is the additional challenge and solutions based on balancing the system which is another area we believe where AI will play a role in the future.
E: Which divisions of a power company can benefit the most from the data and Internet of Things revolution?
IBM: Retail and asset management are two areas where we think the Internet of Things is likely to have most impact. We are already seeing IoT platform-based services in the energy retail sector, for example smart home services like Hive and Nest which allow utilities to provide additional services for consumers based on data gathered from devices. This will expand further as smart meters are rolled out, and you already see companies like Centrica shift their focus to home services. The use of IoT, to gather data from a utilities’ operational assets is also very important and this is probably the most active use of it currently. Previously asset managers would have had network sensors but thanks to IoT the cost has become a lot lower to gather lots of data from the field and process it in the cloud. Combining this with other sources such as weather data enables asset managers to get better predictions for things like maintenance schedules.
E: What are the risks of ever greater connectivity?
IBM: Cyber security is a top area of focus for every utility. Most people will be familiar with the hacking in 2015 of the Ukrainian power grid and these types of attack are a major concern. The risk is that systems out in the field that in the past were ringfenced off, as they become more connected to outside networks, there is an increased threat from malicious attacks. Utilities have said they are each getting thousands of attacks a day. It’s really, really vital they are able to protect themselves against those. At least part of the solution will again come down to how utilities use data. With the right tools in place, companies can collect data on security events across their operational and IT networks and use external information on potential threats along with AI to better understand the nature of those threats and respond appropriately. We call this creating a “security immune system” which considers all the aspects of the system not just individually but as a whole – in the same way as a human’s immune system would.
E: Are some companies better prepared than others for the opportunities big data and applications such as Blockchain, AI, predictive analytics, optimization and advanced computation will bring? How can they benchmark their progress?
IBM: This is one of the things we are looking at in our study. Last year’s C-Suite study, Incumbents Strike Back, looked at how existing enterprises were responding to new disruptors that are being driven by the explosion in data. That study found only 26% of the utility companies we interviewed were leading in terms of their digital reinvention to support that response. We believe that 80% of the world’s data is behind the firewall of existing companies. Who leads and who will fall behind in this era will be determined by how well they can exploit the value of that data. Those that are successful will be those that invest in the right platforms as well as in innovation. For example, National Grid has established a division in Silicon Valley called NG Partners which invests in emerging technology start-ups which is one of the ways it is seeking to innovate and move into new business areas. How you partner with a broader ecosystem will also characterise who emerges as a leader. Our 2019 study will assess and provide recommendations for what companies have to do to in this new era of data and disruption.
Last year’s C-suite study can be found here: https://www.ibm.com/services/insights/c-suite-study