The digital transformation of our society or the digitalization of everything (DOE) is a topic that’s grabbing headlines everywhere today. T&D magazine has published numerous articles regarding how digital technology is changing the electric industry, but many business transformation experts believe we have only scratched the surface of what digitalization will do for the industry and the society.
Let’s review the digitalization movement so far in the power industry. We’ve been swapping out analog system components for their "modern" electronic equivalents in the power industry for 40 years. Advances in digital technology and communications in the last 20 years have so influenced the electric industry transmission and distribution (T&D) modernization efforts, that we now refer to systems being installed as smart grids. That’s because we are adding intelligent electronic devices (IEDs) and internet connections to facilitate the collection, processing, and exchange of information, allowing interoperability and communication between connected devices.
Many utilities embarked on the path toward distribution system digitization with smart meters or advanced metering infrastructure (AMI). AMI allows the collection of near real-time usage data from customers, facilitates data analysis, and provides a venue for control functions such as time-based rates and demand response. Utilities also are adding sensors and embedded software to the grid along with two-way communication and software platforms that allow distribution automation monitoring and control, fault and outage management, VoltVAR management, and real-time optimization of distributed energy resources (DERs).
Improvements made possible by replacing legacy substation equipment with modern digital components provide increased capacity, reduce space requirements, and improve safety and substation functionality. The resulting digital substations not only improve monitoring, diagnostics, and reliability within the substation, but also for the connected grid. Each additional digital device placed in the substation or on the grid improves situational awareness and the potential for leveraging system performance using analytics to investigate, interpret, and communicate or act upon meaningful information derived from collected data.
The trend toward the DOE in the electric industry and essentially all other industries is facilitated by the universal availability of IEDs, but the real catalyst may be the growth of advanced analytics, machine learning, and other forms of artificial intelligence (AI) that effectively use the mountains of data we now have the capability to capture. The "why" behind the digital transformation movement may seem obvious, but it is about more than implementing discrete technologies to gain specific operational improvements. Developing a broad array of digital technology-related assets and business capabilities — which has been coined "becoming a digital enterprise" — has a multiplier effect on a business’ functional potential. Achieving proficiency in using data and technology to continuously evolve all aspects of a business can significantly enhance what it offers and delivers as well as efficiency, cost, and possibly most importantly, how it interacts with its customers.
A great example of a utility taking steps to become a digital enterprise is CenterPoint Energy, situated in severe weather prone Houston. The company has installed an advanced metering system, an advanced distribution management system (ADMS), DSCADA, a mobile data platform, a power alert service system, an integrated voice response (IVR) system, and a Customer Vision Platform. These systems not only greatly enhance system performance, but they also clearly strengthen the connection between CenterPoint and its customers. Likewise, Portland General Electric (PGE) launched a smart grid test program this summer to demonstrate the potential of integrating digitally equipped devices owned by customers with the PGE’s smart grid for demand response and other customer focused programs. Digital enterprises have the luxury of serving many customers while providing individualized service.
Several industries, including aerospace, manufacturing, and healthcare are using digitalization to enhance their operations and customer responsiveness by creating digital copies of entire business and manufacturing systems. The digital version of the operation can be used to monitor, control, and predict the result of system modifications. The US$9.4 billion market potential for so called digital twin programs was evaluated by the firm Tractica. Digital simulations help companies accurately and cost-effectively evaluate equipment, process, and business changes to speed new products to market. General Electric offers digital twin and phasor-analytics toolsets to help utilities identify, classify, evaluate, and validate electric system features and events with the aim of enhancing grid reliability, security, and efficiency.
Much of the untapped potential of digitization, particularly for utilities, may be the ability to analyze customer data, like that from smart meters, and quickly and at minimal cost create customized rates, or customize demand response programs and DER opportunities similar to the PGE’s pilot. The list of possibilities goes on once a company becomes a digital enterprise. The manufacturing sector is using digital technology to optimize production activities and seamlessly tie production to finance and supply chain management activities, all to improve customer responsiveness. While cliché, the key for most businesses is to make one’s company invaluable to customers.
Those on the path toward the DOE may reveal that the journey comes with challenges. The velocity of change is at rates unthinkable in the old days. Work patterns change, digital competency becomes essential for the work force, organization models become flatter, frontline workers are empowered with much more responsibility, nearly everyone on the team is expected to work anywhere/anytime, and increasingly going forward, we can expect that AI will guide where the team spends its time. Additionally, cybersecurity as well as personal privacy become more and more complex and critical aspects of every function. Like other changes that utilities have fostered, digital transformation requires executive-level management sponsorship and change management training. Every utility that has installed major smart grid systems will attest to that. Finally, one digital transformation expert tells its clients that becoming a digital enterprise is not a fixed destination: digital maturity is the evolving capacity to reap the benefits of continuous change.