Benefits of digitalization in the power industry

As electricity markets evolve for integrating large amounts of renewable energies and for improving energy efficiency of different sectors, energy and utility companies find it difficult to keep their margins and integrating new technologies they didn’t know before.

Today, hundreds of startups and big companies provide technologies and platforms that allow power producers, utilities and other companies in the energy sector to reduce their operating costs, increase revenues and exploit new business opportunities.

Digitalization of Energy Systems, a report by Bloomberg New Energy Finance (BNEF), predicts significant shifts in the intelligence of digital technologies used in energy from today to 2025, and a big change in the sectors of the energy system that most benefit from these technologies. The same study, shows that investments in digital energy are growing at 20% rate every year, reaching $55 billion globally last year. These are shared among smart meters, energy management systems and automated demand response or microgrid load scheduling.

Figure: Market size for digital technologies in energy Source: Bloomberg New Energy Finance.

But what are the main benefits that these technologies are bringing to players in the power sector?

1. An optimized maintenance – the transition from preventive to predictive reduces the costs of ownership by maintaining the reliability and availability of an asset.

Preventive and conditions-based maintenance allow asset owners to reduce their O&M costs, by the enhanced planning of the maintenance activities, in this way unnecessary work is avoided. Maintenance on a running machine which is in good condition puts the assets in jeopardy rather than improving them, plus reduced downtime period is ensured by identifying the point of failure quickly.

2. The ability to cut down asset management costs by freeing up asset managers’ significant time so that they can focus on the responsibilities that really matter.

According to a McKinsey Global Institute study, only 39% of an employee’s time is spent on role-specific tasks. The other 61%? Slogging through email, trying to find a missing file, or syncing with co-workers. Many asset management activities, such as managing contracts, tasks and expenses, can be digitalized, reducing the time spent by people doing the job. Also, invoices, bills and reports can be greatly automated, thus bringing huge efficiency gains to the whole organization.

3. By managing electricity loads in response to price signals, these players are able to participate in the market and benefit from lower power costs.

Accurate energy forecasting for variable renewable energies allows to avoid imbalance costs which are increasing in many countries. When these assets are coupled with flexibility sources or controllable consumption loads, forecasting energy and electricity prices becomes crucial to optimize load scheduling and participation to different energy and ancillary markets. Technologies today allow to optimize the behaviour of complex systems made of different production units, energy storage systems and energy consumers.

4. Digital energy is the path to unlock new business opportunities 

Innovative business models unlock new revenue and profit sources by offering innovative services. Digital technologies allow asset managers to become virtual power plant managers, utilities to implement new business models based on distributed generation and solar installers to build energy communities.

5. Digital tools give companies in the energy sector new ways to interact with their customers, making them more loyal.

Many utilities and other energy service organizations are seeking to transition from electricity provider to trusted energy advisor. Whether they are residential or industrial consumers, or even owners of power plants, digital services allow to enhance the interaction with the customer. Custom web and mobile apps are helping energy & utility companies to enhance the overall perceived satisfaction with the brand. Advanced reporting tools allow O&M contractors and asset managers to improve the transparency with the owner and to effectively deliver the information when and how it’s needed.

 

 

This is the first of a series of articles, where we take a look at how energy companies can boost their revenues through digital energy. In this series we will discuss:

  • Where is digital energy going?
  • Why your company shouldn’t build its own energy monitoring and management software
  • Why a marketplace is better than an all-in-one solution for the energy sector