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Plug Those Bottom-Line Leaks

A growing trend in asset management and the spread of digital technology gives us opportunities at practically any spending level to help curb the leaks and improve the bottom line

Utilities are not growing the way they did for 100-plus years.  Recently, the Energy Information Administration reported that customer revenues have declined 9% since 2010.  This is a serious problem because for a number of decades, revenue growth helped make up for the higher operation and maintenance (O&M) costs associated with the electric industry’s aging infrastructure.  Labor costs and O&M costs for the most part come out of a company’s cash flow, which lowers net income. Lower net income means lower profitability, which makes a company less attractive to investors.   Thanks to a growing trend in asset management and the spread of digital technology in substations and on transmission and distribution lines, there are approaches at practically any spending level to help curb the leaks and improve the bottom line.

The first approach, reflecting a growing trend in asset management, is condition-based maintenance (CBM). Simply stated, maintenance work is organized based on need as opposed to a fixed schedule.   The beauty of this option is that utility maintenance managers can tailor their program in an infinite number of ways to address available dollars; minimizing the most labor intensive routine servicing; roll out based on staff levels and CBM training; focusing on critical system issues or problem equipment and so on.  Once organized, existing records, including manually recorded inspection or condition records can be used to start the program and target systems that would benefit most from the addition of automated data collection and condition sensors.   The growing availability of digital data on utility systems and changes in the workforce are speeding adoption of CBM in the utility sector according to ABB.  

ABB believes that utilities can realize the following benefits from transitioning to a CBM system:

  • Extend asset life
  • Improve equipment reliability
  • Enable root-cause problem solving
  • Minimize maintenance spend
  • Minimize overtime costs
  • Minimize spare parts requirements
  • Optimize maintenance intervals
  • Improve worker safety
  • Minimize unscheduled downtime
  • Reduce maintenance errors
  • Reduce unplanned outages
  • Lower planned-outage costs
  • Simplify regulatory compliance and reporting

A second approach to plugging bottom line leaks is using smart grid data that may be collected for various operational purposes to develop a comprehensive asset health management (AHM) systemAMsystem.  This is greatly facilitated at utilities that have installed digital substations and substation assets. But more generally, almost all network communications with smart grid capabilities frequently boast data-rich equipment sensors and monitoring technology. Many utilities are ill equipped to fully utilize the extensive data these systems can deliver without a great deal of human intervention. New tools are needed to manage, analyze, prioritize and transform this data into actionable information.  One such tool is a comprehensive AHM system.

AHM systems are designed to collect and integrate data from across a system; provide asset operational and performance intelligence including tracking of real-/near-real-time information about the condition and performance of assets; and, provide analytics and dashboards so information can be contextually understood. AHM systems support repair and replacement decision-making, manage conditions that may impact operations, determine what O&M needs to be done and then prioritize required work.  AHM includes CBM and then goes well beyond with deep T&D equipment expertise, performance models, analytics, visualization and full system integration.  An end to end AHM system does everything except clean the kitchen sink:  it can take full advantage of the integration of OT and IT systems by generating work orders, ordering inventory, documenting work completed and developing regulatory compliance reports.

An end to end AHM strategy is a significant undertaking that requires a meaningful commitment of time and capital.  The end result is a system with the following attributes:

  • Asset knowledge and expertise;
  • Sensors and monitors;
  • Communication gateways;
  • Data integration, archiving and storage;
  • Equipment performance models and algorithms;
  • Analytics and dashboards;
  • Integration to systems for asset management, supply chain management, and work management and execution.

Once a comprehensive AHM system is in place and the utility culture adapts to take full advantage of its capabilities, the organization will realize significant benefits for decades to come in areas relating to:

  • the management of O&M expenditures within accepted spend levels;
  • the ability to meet established reliability standards;
  • overall performance reflecting the demands of regulators, rate payers and investors.

The areas that once represented bottom line leaks will be transformed to areas of cost savings through O&M productivity, reduced unplanned outages, and more precise and documented asset capital decision making.

Read more about CBM and AHM in this very informative white paper from ABB.

TAGS: Awareness
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