Tag Archives: Energy industry

The value of information

We all know that data is valuable; without it it would be somewhat difficult to bill customers and stay in business. Some companies have accumulated masses of data in a data warehouse which they’ve used to drive organizational efficiencies or performance improvements. But do we ever ask ourselves when is the data most valuable?

Billing is important, but if we get the data earlier then we might be able to deal with a problem—a business exception—more efficiently. Resolving a short pick, for example, before the customer notices. Or perhaps even predicting a stock-out. And in the current hyper-competitive business environment where everyone is good, having data and the insight that comes with it just a little bit sooner might be enough to give us an edge.

A good friend of mine often talks about the value of information in a meter. This makes more sense when you know that he’s a utility/energy guru who’s up to his elbows in the U.S. smart metering roll out. Information is a useful thing when you’re putting together systems to manage distributed networks of assets worth billions of dollars. While the data will still be used to drive billing in the end, the sooner we receive the data the more we can do with it.

One of the factors driving the configuration of smart meter networks is the potential uses for the information the meters will generate. A simple approach is to view smart meters as a way to reduce the cost of meter reading; have meters automatically phone readings home rather than drive past each customer’s premisses in a truck and eyeball each meter. We might even used this reduced cost to read the meters more frequently, shrinking our billing cycle, and the revenue outstanding with it. However, the information we’re working from will still be months, or even quarters, old.

If we’re smart (and our meter has the right instrumentation) then we will know exactly which and how many houses have been affected by a fault. Vegetation management (tree trimming) could become proactive by analyzing electrical noise on the power lines that the smart meters can see, and determine where along a power line we need to trim the trees. This lets us go directly to where work needs to be done, rather than driving past every every power line on a schedule—a significant cost and time saving, not to mention an opportunity to engage customers more closely and service them better.

If our information is a bit younger (days or weeks rather than months) then we can use it too schedule just-in-time maintenance. The same meters can watch for power fluctuations coming out of transformers, motors and so on, looking for the tell tail signs of imminent failure. Teams rush out and replace the asset just before it fails, rather than working to a program of scheduled maintenance (maintenance which might be causing some of the failures).

When the information is only minutes old we can consider demand shaping. By turning off hot water heaters and letting them coast we can avoid spinning up more generators.

If we get at or below seconds we can start using the information for load balancing across the network, managing faults and responding to disasters.

I think we, outside the energy industry, are missing a trick. We tend to use a narrow, operational view of the information we can derive from our IT estate. Data is either considered transactional or historical; we’re either using it in an active transaction or we’re using it to generate reports well after the event. We typically don’t consider what other uses we might put the information to if it were available in shorter time frames.

I like to think of information availability in terms of a time continuum, rather than a simple transactional/historical split. The earlier we use the information, the more potential value we can wring from it.

The value of data
The value of data decreases rapidly with age

There’s no end of useful purposes we can turn our information too between the billing and transactional timeframes. Operational excellence and business intelligence allow us to tune business processes to follow monthly or seasonal cycles. Sales and logistics are tuned on a weekly basis to adjust for the dynamics of the current holiday. Days old information would allow us to respond in days, calling a client when we haven’t received their regular order (a non-event). Operations can use hours old information for capacity planning, watching for something trending in the wrong direction and responding before everything falls overs.

If we can use trending data—predicting stock-outs and watching trends in real time—then we can identify opportunities or head off business exceptions before they become exceptional. BAM (business activity monitoring) and real-time data warehouses take on new meaning when viewed in this light.

In a world where we are all good, being smart about the information we can harvest from our business environment (both inside and outside our organization) has the potential to make us exceptional.

Update: Andy Mulholland has a nice build on this idea over at Capgemini‘s CTO blog: Have we really understood what Business Intelligence means?

There’s more to sustainability than simply using less

I wouldn’t be too surprised if the Australian government passes legislation requiring all residents to shower with a friend in an effort to save water. We’re in a bit of a bind; the longest drought in living memory combined with global warming and climate change means that there is just not enough water to go around.

Energy, water and our population are all interrelated
Energy, water and our population are all interrelated

It’s not just a lack of water causing problems though. Manufacturing more energy (electricity) requires huge amounts of water (for steam), while manufacturing more water requires huge amounts of energy (for desalination). Factor in a growing and increasingly urban population and you quickly realize that washing your car every few weeks and buying energy appliances just won’t cut it.

Take the electrify industry for example. Today’s electricity utilities follow a model that is relatively unchanged since Samuel Insull’s day. Electrons are manufactured in large power stations before they are trucked down wires to where they are consumed by consumer and industrial devices. Demand dictates supply. Electrons are shared equally among devices and if we don’t have enough to meet demand, then everyone gets less than they need. The result is brownouts: motors fuse, traffic lights dim and people crash. Life generally stops.

Electricity production since Samuel Insulls day
Electricity production since Samuel Insull's day

Micro-generation and CHP (combined heat and power) will alleviate the problem somewhat, but if we want an electricity supply for a sustainable future then we need to completely rethink how electricity is managed. We need to move from a demand-driven system, to a supply-driven system. Rather than racing to manufacture enough electricity to fulfill demand, the focus would be on effectively using the energy available to us.

The technology required to reinvent electricity distribution is already emerging into the commercial world. The global rollout of smart metering is providing us with the basic infrastructure for a new, smarter energy distribution system. The challenge is to move beyond conventional centrally run demand management programmes, and adopt more distributed approaches. Technology is already emerging into the commercial arena demonstrating the first tentative steps on this journey.

Imagine if we could import the retail electricity spot price into the home or factory via smart metering. We have national energy markets, so why not create an energy market inside our houses? Local generation (solar, wind, CHP) would have a price set based on required required return on investment, while energy is imported (if required) based on the spot price. The decision if and when to consume electricity is then devolved to the appliances (fridge, air conditioner etc) by letting them bid for the energy they need.

An internal energy market
An internal energy market

The intelligence to support this complex behavior might be buried inside the appliance itself, or mediated via a smart plug. A hot water heater would trade of electricity price, usage profile and current water temperature to optimize its operation. Air conditioners might let the internal temperature rise a couple of degrees if its exceptionally hit out side. A dish washer might wait until a quiet period late at night—long after you’ve gone to bed—before running it’s cycle. Lights would always turn on (of course), but would also turn off again if they cannot detect anyone in the room.

Given an understanding of our usage patterns a market can be used to turn of appliances we don’t need, harvest power then it is cheap (by using waste solar power to pump water up hill), or even sell our excess. Technology enables us to understand our usage patterns and align them with the internal and national energy market to most effectively use the energy available to us.

The new complexity this approach creates could be packaged into solutions. Energy retailers could offer energy plans, analogous to mobile phone plans. Each plan would be tailored to suit different habits and needs. Plans might include value-added solutions, such as installing solar or wind power on premises, integrated into the home market.

In the same way that Threadless and Rolls Royce mined the synergies between business and technology to reinvent their respective industries, some companies might use a supply driven network to transform their business models. Rather than selling electricity (generating more profit by selling more) they might reconfigure themselves into power management companies who help you manage your consumption (generating more profit by selling less). This could range from configuring, monitoring and managing you home appliances to match their performance to your needs, through to installing solar panels on your own roof—at their own cost—so that that they can offer solar power on your internal energy market.

What are the challenges and opportunities created when we move to a supply driven model? What happens when we have supply driven homes? Supply driven committees? Supply driven regions? Or when entire networks become supply driven?

What are the challenges and opportunities created when we move to a supply driven model?
What are the challenges and opportunities created when we move to a supply driven model?

Smart metering and smart plugs are showing us the way. We already have a demand signal, though somewhat delayed, and we can retro-fit appliances with smart plugs to support demand management. The next step is to make this infrastructure a little smarter; upgrading the sensor network to support more distributed command and control, and embedding decision making in the home and, ultimately, the appliances themselves. This enables us to push decision making to the edge of the network where it can scale more effectively, provides us with a generation of much more efficient applications, and sets us up for the future.