“Electric power companies are tapping new technologies to serve increasingly sophisticated customers conditioned by other industries to expect the high tech digital experiences that have become the “new normal.” New technologies are also expanding opportunities to improve operational efficiencies and prompting experiments with new business models. But regulatory structures are taking time to catch up. Change has begun, but it will need to spread faster for regulated utilities to meet evolving customer expectations.”
“And then we could add to all that the overall opportunities of digitalization and integration of operational systems, back-office systems, and supply chain management. When we look at all this, it seems clear that utilities should move technological awareness and strategic thinking from being a niche activity to the core of planning and strategy.”
The energy supply market is broken into generation, distribution and sales and each of these areas are affected differently by current digital technology trends. The main trend across the whole industry however is the rise of renewables and the intermittency challenges that these new sources of energy create.
Whereas in the past, power was generated when consumers wanted it, today about a quarter of the UK’s power (about 40GW daily) is generated from renewable sources that rely on the weather system. The amount of energy produced from wind across the UK can now be over 20GW but it can equally drop by more than 90% in unfavourable weather conditions. As a result of this intermittency, excess power that is generated either needs to be consumed immediately, or it needs to be stored, or it must be dumped. Dumping is, clearly, not a preferable option.
Electricity is the most valuable form of energy, and once you have energy in that form suppliers need a really good reason to convert it to chemical or other forms. For storing energy, batteries are the highest profile solution, but it is also very expensive. As an example to give scale, the US Department of Energy target for battery prices is $100/kWh and, based on this price, if the UK invested in batteries the £16Bn projected cost of Hinkley Point C nuclear station the country would only buy enough storage to store the output of that power station for two days. Storing the rest of the country’s power as well would be more than 10 time the cost. Due to this expense, storing a significant amount of energy is feasible for a day or two, but not, for example, for the potential weeks at a time that wind generation might be in undersupply due to low wind conditions. Storing that amount of electricity would require a considerable increase in its price.
Rather than investing in battery farms, the UK is currently filling the resultant gap in supply by flexing the output of gas & coal power stations – these are seen to have advantages over nuclear power because they can be more economically turned on and off due to lower capital costs.
For coal/gas generation, managing the CO2 output is by far the more pressing issue than the unrenewable supply of input fuel. Even at current burning rates there is still thought to be 300 years of coal remaining in the ground. The realisation now, however, is that the atmosphere cannot take the carbon hit from all the coal that we burn. A solution to this is to carbon capture during electricity production, but this process is energy-intensive in itself which increases total CO2 emissions for the same amount of power generation. The UK grid is currently, mainly, a mix of wind, nuclear, and coal / gas generation. It does, it has to be said, do a good job on keeping lights on.
If a country wants to go fully renewable then super grids are an option. Super grids offer a lowering of the cost of all participating countries by enabling them to pool load variability, to distribute renewable energy from areas that are overproducing to areas that are overconsuming, and to reduce the super grid’s reliance on imported fuels. Market leaders in the field of super grids include the big Western companies: ABB, Siemens and GE. One such project being proposed is the European Super Grid. Technologically, the solution that gets touted for long distance is high voltage DC power – for example the Chinese run high voltage DC from the Three Gorges Dam across to Beijing and the East Coast. Of course, the expense of installing such a super grid is large.
This is the underlying complexity of the energy market’s transition to renewables. You either need to store electricity in batteries with all the associated expense, accept a nuclear power station and the waste problem that this implies, or you accept that the balance of supply comes from gas / coal stations despite the carbon bi-products. This sets the question of how do we generate energy that is low carbon while still keeping the lights on?
EDF Energy is one of CWIC 2019’s speakers in the Utilities track. EDF Energy is a unique company because it both sells energy to consumers and it runs its own power stations. It is one of the UK’s leaders in battery deployment, having invested in some of the earliest and largest scale batteries in the country. As an organisation, their focus is expected to be on increasing the efficiency of their power stations, building capacity through Hinckley Point C and more wind turbines, and innovating with digital technologies to make their systems more efficient and safer.
One of the leading digital technologies being deployed in the utilities market is electronic health monitoring of assets. As the cost of digital technology decreases and the ease of deployment increases, utilities firms are able to monitor increasing numbers of units of ever reducing size economically. For example, it is now common to monitor the productivity of individual wind turbines in real-time and respond automatically. This increased granularity of monitoring and control is very important in the generation and distribution side of the market. The principle benefit is improvement in the up-time and lengthening the life of existing assets.
EDF Energy also have the relationship with their consumers which enables them to do demand response. Demand response is another way to mitigate supply challenges. This includes, for example, asking consumers to voluntarily accept power constraints at certain times.. However, the success of demand response depends on how long consumers perceive it is okay to not be able to charge a car, or use electric heating.
At this point politics enters the situation – and it must be noted that regulatory uncertainty is one of the biggest roadblocks to innovation in the utilities market. In the Autumn of 2012, the UK Conservative Government announced plans wherein the energy market would be forced to give customers the lowest tariff available. This move stifled the conversation on resource-adjusted variable pricing, and the opportunity for the market to reduce demand at certain times using pricing. This move is understandable – you don’t want, for example, the elderly, to not heat their homes because they are afraid of the bill. The industry and politicians are gradually moving back towards the possibility of resource-adjusted pricing, but it is still a complicated conversation.
Digital technologies can help make these conversations easier by increasing consumer knowledge of the price of utilities. Smart metering is the solution making the most waves on the demand response side. For enterprises, Building Energy Monitoring Systems (BEMS) offer corporations an efficient way of monitoring their utility bills and reducing consumption especially in relation to heating, ventilation and air conditioning systems. How utilities companies can make demand management an attractive proposition through digital technologies will be an interesting topic of conversation to pursue at CWIC 2019.
Also presenting in the Utilities track at CWIC 2019 is Anglian Water. The water market is, like the energy market, a regulated monopoly. The best business cases for digitisation in the two are asset life expansion through real-time condition monitoring. Each company manages very expensive infrastructure systems and being able to extend the life expectancy of their assets offers considerable financial returns.
The water market does not have to handle the same intermittency of supply issue as the energy market. Reservoirs offer a (relatively) cheap way to store excess water supply until it is needed (although high urban demand is stressing these systems during long summers). However, one issue the water market does have is controlling the quality of the water entering the national system when it rains heavily. If it hasn’t precipitated in a while, toxins build up on the surface of the soil and get washed into the sewer system. In a smart system the intake could lock up for the first couple of hours of a downpour so all the surface water is pushed into the rivers rather than into the reservoirs and sewage treatment works. This protects the system, because some of the chemicals that are used in agriculture are detrimental to the bacteria that treat our water at sewage farms. Real-time biomonitoring of water run off will enable more effective protection of critical assets, such as sewage farms, while optimising the volume of clean water captured.
In other areas, the water industry is moving to innovative solutions such as putting robots with sensors (that can be as simple as a microphone) down water pipes to detect leaks or delivering keyhole surgery for fixing leaks so that the companies don’t have to dig up roads or send a person into the system to fix a pipe.
By and large the utilities companies themselves don’t do any of the R&D; they contract out a lot of their operations in order to maintain their focus on efficient asset management. Synthotech is one British engineering business who is leading the way in providing innovative engineering solutions to the gas industry. TTP is another organisation who has produced new solutions for the sector. Their teams have designed, for example, a device for atomising leak-sealing monoethylene glycol (MEG) for distribution within the gas network to reduce leakage. CW are really pleased to have TTP chairing the Utilities track at CWIC, and u-blox as its Gold Sponsor.