With presidential candidates targeting alternate energy development, the Clean Power Plan officially in place last month, and the rapid evolution of connected devices and the Internet of Things -- life in the energy sector is even more interesting than usual. To catch up on the latest developments, I sat down with one of our energy experts, Alyssa Farrell. Here are the highlights from our conversation:
How has the energy sector evolved over the past few years?
Alyssa: The energy sector is seeing new entrants, often competitive, along many parts of the utility value chain. As a result, relationships with customers are more important than ever. Whether it’s improving reliability or delivering personalized energy services, today’s utility executive is focused on improving customer experience and customer satisfaction. To deliver on that expectation, utilities need to modernize internal systems to capture new customer insights regardless of which operational system created the relevant data.
How are utilities making use of big data and the Internet of things”?
Alyssa: Utilities have had a big data challenge for many years, but they solved it by continually increasing the size of their operational technology systems. The Internet of Things is bringing those large operational technology systems together with IT (networks and analytical software). For utilities, this can lead to enhanced “sense and respond” capabilities, placing more real-time intelligence in the hands of grid operators. Another example is enabling more personalized energy services, such as Jason Handley from Duke Energy recently described in this YouTube video.
How are utilities responding to regulatory requirements regarding smart meters?
Alyssa: Many regulators have insisted that smart meters are critical to achieving national energy efficiency goals. In reality, while smart meters give utilities the opportunity to establish peak pricing programs (if allowed within the tariffs) changing customer behavior is proving to be very, very difficult. Customers expect more dynamic feedback from their energy provider, often in the form of mobile or in-home displays. So as utilities move ahead with smart meter deployments, they’re also thinking beyond the meter to providing interactive customer displays or partnering with third parties who specialize in mobile information delivery.
With more and more data available for analysis in the energy sector, how do you see decision-making in the future?
Alyssa: More data is always a good thing, if you’re SAS! More data means that you have increased confidence in the decisions because there are more data points to use when building predictive models. At the executive level, increased confidence in energy forecasts, commodity trading and asset decisions will have a direct impact on your bottom line. In addition, you have more data to build richer graphical displays, whether on an interactive map, scatter plot, or tile chart. So we say, bring it on!
The energy sector has heavy investments, an amortization period between 30-50 years and a market with semi-annual “convulsions,” sometimes caused by regulatory obligations, or by market reactions (eg. oil crisis). So, how are organizations responding?
Alyssa: We see the business model of utilities shifting away from a heavy reliance on assets as an investment vehicle. The volatility in the commodity markets certainly support a diversified fuel portfolio. And market analysts predict that growth in the utility sector will come from monetizing customer relationships. All of these factors are influencing utility investment decisions, often seeking to reduce long-term operations and maintenance costs. As a result, leveraging predictive analytics is critical to manage the risk of asset failure and to extend the full lifecycle of the asset.
With the growth of environmental concerns and alternative energy development, what impact do you see on operations management?
Alyssa: The variability of production from distributed energy resources such as wind and solar definitely impacts operations. Budgets are squeezed, cost recovery isn’t a sure thing, maintenance now has a wider range of technical issues to diagnose and repair. From a reliability perspective, improved weather forecasting, in many cases, can facilitate better planning for when to bring the resources online. This will smooth the transition on and off the grid when the resource is available. The end solution is going to require advancements in battery storage, intelligent switches, improved analytical capabilities, a higher redundancy of power production with peaking generation from natural gas, and certainly other innovations that aren’t even commercially viable yet.
Consumers are increasingly concerned about energy efficiency, and energy companies have the ability to propose appropriate tariffs according to consumers’ consumption profile. How will this affect the relationship between companies and customers?
Alyssa: We’ve been hearing the term “trusted energy provider.” I think this is a goal for many utilities. It’s a win-win scenario for the both the utility and the end consumer, where emissions targets are achieved and energy costs do not increase as a percentage of total household spending. To achieve this “trust,” customers may need to share more data with their power provider. And utilities must share long-term plans with their customers.
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