Digitization: The Most Interesting Word in Energy

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Application of Digital Technology

Advok8 is a strategic consultancy, always exploring business and technology opportunities in the Energy Industry.  The calls for digital transformation and modernization and automation and remote management and …  all transformational! 

There is a scene at the beginning of the movie George Patton.  He diverts his Jeep from its intended course to a field full of crumbling ruins, evidence of a 2,000 year-old battlefield of Zama where the Romans defeated Hannibal.  Patten gets out of his Jeep and kneels.  He describes the battle between Carthaginian soldiers and three legions of Roman soldiers, the latter who slaughtered everyone.  Patten says, “I was here.”  Truth is, this is fiction.  Yet, for many in the power utility market, it is prophetic.

Digitization is today’s reality for the power utility.  The battle has been fought several times before.  Telephone companies, cable television companies, internet service providers, and media content companies have all fought this battle.  Even the US military has been engaged in digitization and automation.  Today’s “modern” soldier employs a vast array of digital technologies.

Strategically and technically, it is vital to learn the lessons.  To repeat the successes.  To avoid failures.  Digitization is vital for several reasons.  I will go through each of them to explain observations and challenges:

  1. Digital IDs.  As competition enters the market, and as customers become active participants in service selection, digital IDs essentially allow the service provider to universally identify competing services, providers, and customers.  The most obvious example of this is the digital set-top box cable television companies have used.  By virtually allowing the customer’s ID, the service delivery could be automated.  For the power utility, the DERM, smart meters, and customer premise initiatives start this.
  2. Automation.  Smart Grid, microgrid, and vehicle electrification are all significant pursuits.  Initially, the telco and cable television OSP networks were very similar to the power utility.  Distribution from office (substation) to customer premise over a tapering, metallic conductor.  Through automation, the network evolved.  Digital intelligence and automation moved to remote terminals, then neighborhood terminals, and then the side of the house.  Behind each terminal, the service provider built-in resiliency and redundancy through self-healing networks.  The power utility automation goals are the same.  Decentralize intelligence.  Empower the consumer.  Automate maintenance and repair.  Improve reliability. 
  3. Reliability and Quality Assurance – This is perhaps the most critical area because it has been the power utility Achilles Heal for a long time.  While financial and operational performance improved, reliability did not.  Why?  Because a significant variable impacting reliability is not controllable (i.e. weather, vegetation, disasters).  Because the operational goals, tied to regulatory service assurance, were unrealistic.
  4. Workforce transformation – Always a difficult subject to strategically address shifting workforce competencies.  This is difficult because strategy is one thing, but the other side is people, their jobs, and work lives.  Power utilities are very unique and have a more urgent crisis than others.  They are entering into transformation at the same time as the bulk of their workforce is retiring.  Because of this, modernization and automation take on a double meaning.  Improving operations AND supplanting the workforce.

Looking at these four major drivers, how long will it take to digitize the power utility infrastructure.  This started with the 1970’s digital telephone switch in the telecommunications industry and ended with 2000’s broadband fiber to the home.  It took thirty years.  More importantly, there were several lessons along the way:

  • Competition in the local telephone industry was necessary as a flexor to allow periods of great growth and periods of recovery.
  • Telephone companies ultimately realized that there is no such thing as one size fits all. Eventually, the prominent local exchange providers sold off smaller municipalities where their fiber to the home networks made no sense.
  • Digitization homogenized individual services into one Internet-based technology delivery system.  Voice, data, video are all delivered via IP routed and operated networks.
  • The workforce was transformed via a more plug N play approach to installation and maintenance, with intelligent customer premise terminals replacing most technology between the network start and stop points.  Customer intelligence is the only barometer of qualitative and quantitative network operations in a digital world.

Cable Television had a similar story.  The digital set-top box to the complete transformation to IP-based services started in the 1990s and ended with digital broadband over hybrid fiber-coaxial networks in the 2020s.  It took forty years and may still be evolving:

  • Set-top boxes evolved to a point where we now have broadband modem/routers and digital DVRs in the home.  What is really outstanding is the plethora of services cable television companies have been able to offer:  video, on-demand, broadband, IP security, home security, shopping, and much more. 
  • Most importantly for this discussion, they have automated customer and network self-care within these devices.  Like tomorrow’s power utility endpoints, these devices are technologically aware. 

Power Utilities must take these lessons to heart.  There will be an exciting and challenging era of growth that will last twenty to forty years.  Gauging from the above examples, there will be many cautionary tales along the way.  Most importantly, it will be important to recognize some historical references that can eliminate major growing pains.

  1. Escaping regulatory constraints to participate in a competitive operations environment has been vital to past modernization and growth.
  2. The municipalities you service are of different flavors.  One size does not fit all.  Organizations have discovered the hard way that they can’t employ multiple sizes with operational efficiency.  It has been easier to “trade” their municipalities to create technology and economic “oneness” than to pound round pegs into square holes.
  3. As power utilities look at cybersecurity, there has been much written about proprietary or new-fangled approaches.  Not enough has been written about physical security and employee/contractor breaches.  Keep it simple.
  4. Digital drives automation.  Endpoint intelligence drives workforce transformation.  Open IP technology drives cost reduction.  Equipment standardization drives plug N play.  These, and a few others, are the strategic moves that must be part of planning.

At Advok8, we are always here to help with business and technology transformation related to growth.  One of the most critical communal things that any power utility can do is getting their business and technology people to actively participate in the Industry standards bodies.  One of the most dangerous things in acting in an NIH (not invented here) way.  Find and hire people who have already “been there and done that.”  An arbitrary piece of advice.  Looking at smart meters is not new.  DERM is new.  In both cases, having someone experienced in the development and mass deployment of set-top boxes or fiber to the home would be valuable.

This battle has been fought before.  The battlefield, and the reasons for digitization, are systemically similar.  Understanding the previous conflicts enables you to fight more efficiently.

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