Utilities Should Move From Reporting to Automation and Analytics
Advances in technology, connectivity and software have made an increasing number of tools available to improve utility performance. The Advanced Metering Infrastructure (AMI) deployments of the past decade demonstrate there is tremendous value to be found in the data generated across utility service networks.
Instead of being used strictly for reporting purposes, however, the data solutions can be used to enable greater levels of automation and data-driven decision making. While some early adopters are transitioning from merely reporting information to using it for more automation, most remain in the early stages of the journey.
“Understanding the value of data and actually capturing that value are two different things,” said Jeff Buxton, Executive Consultant with Black & Veatch. “The challenge remains in figuring out how to build use cases to justify investments in automation and analytics platforms that will create value and improve efficiency.”
According to the 2016 Black & Veatch Strategic Directions: Smart City/Smart Utility report, more than 70 percent of respondents indicated some level of AMI planning or deployment. Yet at the same time, nearly 40 percent have not yet made financial commitments to manage and extract value from their data.
“There is a corresponding need to have highly competent knowledge workers who understand both utility operations and the technologies to successfully leverage these data platforms,” Buxton said. “Complexities – such as use cases reliability, workflow integration and return on investment hurdles – create obstacles to make the full value extraction possible.”
Improving Efficiencies while Maintaining Fixed Rates
Utilities deploy capital-intensive assets to reliably and safely deliver services to ratepayers. In a regulated market, utilities are granted returns on deployed capital and documented operational costs based on rate cases approved by regulatory bodies.
Once underlying base rates are established based on expected operational and asset-based costs, shareholder performance can be enhanced when utilities are able to subsequently improve their operational efficiencies while still maintaining the fixed rate base. The same is true for managing capital assets. The more efficiently utilities can deploy capital, the better the return on assets and the greater return to shareholders.
In an unregulated market, the same driving forces around operational costs and capital assets are in play, but the objectives are more focused on maintaining or delivering services in a cost-neutral manner. Efficiencies in operations and capital mean the utility can deliver other valuable services to the ratepayers.
This is where automation and data-driven decision making come in.
“For utilities of all stripes, the goal of increasing asset and operational efficiency through improved data management is fundamentally tied to their underlying business model,” said Jeff Neemann, Solution Lead for Smart Integrated Infrastructure for Black & Veatch.
But Neemann said the greatest hurdle to investing in data management and analytics applications involves overcoming the cost concern, which includes budget constraints, and justifying the ROI.
“ROI is most often delivered through identifying valuable use cases that are able to improve operational efficiency,” Neemann said. “This happens by developing accurate and reliable data analytics which enable new operational processes. These processes are optimized by minimizing unneeded work efforts, improving the efficiency of required work efforts, and automating workflow.”
Opportunities in the Cloud
One approach to managing data and applying analytics tools that is garnering much attention is the concept of moving to the cloud or adopting Software-as-a-Service (SaaS)-based offerings. This is viewed as a particularly attractive option for the following scenarios:
- Utilities that cannot or do not want to finance large-scale staff and IT investments;
- Utilities beginning their smart initiatives that may not have the infrastructure in place or the competencies needed to quickly develop value-adding use cases;
- Utilities that want to leverage the pre-developed use cases of existing data analytics vendors who can more rapidly deploy proven solutions to new data sets.
The scalability and more rapid deployment of cloud offerings can create opportunities to start smaller, with more focused applications, and build some quick, easy wins, Neemann said. He cautioned, however, that cloud-based business models also include the risk of amplifying dependence on others.
“The deeper the utility integrates complex analytics solutions into a vendor’s cloud, the harder it will be to transition data analytics to a core competency that is owned, operated, and enhanced by the utility itself,” Neemann said. “This impacts the ability to develop the utility knowledge worker who will be needed as part of the ‘Utility of the Future.’”
Business Processes Drive Value
Buxton said that too often data management tools become a reporting platform rather than an analytics tool. It is through improvements in business processes that value can be extracted from smart grid/smart water and other investments.
“When considering data management and analytics solutions, it is vital to understand that the quality of the analytics is what’s important,” Buxton said. “There is not a one-size-fits-all solution. The key to a successful implementation is to identify the utility business processes from which value can be derived.”
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