Smarter computing in Energy and Utilities

50 Years of Growth, Innovation and Leadership

A Frost & Sullivan White Paper

Juan Fernandez and Brian Cotton

www.frost.com

Smarter Computing in Energy and UtilitiesThe IT systems infrastructure that enables Scalability, Resiliency and Security

http://www.frost.com

Frost & Sullivan

CONTENTS

Abstract .................................................................................................................................. 3

Navigating an Uncertain Future in the Energy and Utilities Industry ............................. 3

The Business Need for Smarter Computing in the Energy and Utilities Industry ......... 7

Introducing Smarter Computing ......................................................................................... 7

Transform the Utility Network ............................................................................................ 9

Transform Customer Operations ........................................................................................ 10

Improve Generation Performance ...................................................................................... 10

The Business Value of Smarter Computing in the Energy and Utilities Industry ........... 11

Oncor: Transforming the Network to Support a New Business Model ............................ 11

Bluewater Power Transforms its Customer Operations with a Smarter Computing Approach ............................................................................................ 12

Vestas: Turning to Big Data to Improve Generation Performance .................................... 13

Building the Intelligent Utility Network to Support a New Business Infrastructure ..... 14

References ............................................................................................................................... 15

Smarter Computing in Energy & Utilities

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CONTENTS

ABSTRACT

As energy and utility companies around the world face challenges, they are changing business models to remain relevant in a smarter energy value chain. Shifting climate patterns and environmental concerns are bringing renewable energy sources into energy producers’ portfolios. More stringent regulatory mandates and increased security concerns are changing the way businesses operate. At the same time, markets are opening up to new competitors, threatening the traditional stability of the industry. Energy and utility companies are faced with the challenge to adapt their models in this new era, and many are now turning to a Smarter Computing approach to meet the challenges and stay competitive.

Smarter Computing can help turn energy and utility companies into leaner, more responsive competitors, while helping ensure adherence to regulatory compliance objectives. It can guide the companies’ IT departments to transforming IT systems to support the imperatives of a scalable, secure, and resilient business infrastructure. A number of progressive energy and utility companies around the world are implementing a Smarter Computing approach, including Oncor, Bluewater Power, and Vestas. With IBM’s help, they are beginning to realize the benefits of Smarter Computing and are better able to meet the demands of operating in a rapidly changing, competitive environment.

NAVIGATING AN UNCERTAIN FUTURE IN THE ENERGY AND UTILITIES INDUSTRY

Energy utilities around the world are entering into a new environment, where risk and opportunity are disrupting a 100-year-old industry model. The energy and utilities industry is going through a phase of rapid transformation in a period of expanding global demand and significant changes in a number of areas. In what was traditionally a predictable and stable industry with a one-way value chain, from generation, transmission and distribution, to customer energy and information flow, new challenges are forcing energy and utility companies to transform themselves to remain relevant and competitive.

One significant challenge is the emergence of new entrants and disruptive technologies into the value chain. The increasing complexity of the value chain, which includes competing retailers and wholesalers, and the end-clients’ capability to create their own electricity, is compelling utilities to evolve their relationship with their customers beyond their historical role as a monopoly supplier. The transformation of the relationship between utility and customer is further complicated by new technologies around telecommunications, renewable energy, electric vehicles, and home automation that can blur the lines between a supplier of energy and the consumer. The resulting new value chain enables a bi-directional flow of energy and information among the various participants.

Another challenge lies with environmental concerns that put pressure on traditional energy sources that contribute to climate change through carbon emissions. Estimates by the United States Energy Information Administration indicate that the demand for energy will grow by 53 percent between 2008 and 2035.1 The vast majority of this growth (85 percent) will come


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“In the 20th century the goal was universal access to electricity…

in the 21st century it will be about

modernization.”

Jim Rogers, CEO, Duke Energy

from countries outside of the Organization for Economic Cooperation and Development (OECD), making this issue globally relevant. Meeting that demand will require expanding energy generation, particularly with sustainable sources, but it will also demand increasing the efficiency of consumption, highlighting the impact of every watt consumed. Climate change and environmental awareness have become fixed points in consumers’ minds and in the wider area of public policy, and will continue to drive new regulations.2

This challenge can have profound effects on the industry, and is related to another challenge around the ability to control grid stability in the presence and growth of distributed renewable generation resources. As wind and solar energy sources are added to the generation mix, their impact not only on local loading but also on the overall ability to balance the network is immense, driving a clear need for modifications in the utility network’s capabilities. As Jim Rogers, CEO of Duke Energy sees it, utilities have to change because “in the 20th century the goal was universal access to electricity…in the 21st century it will be about modernization, and by 2050 all our existing plants but hydro [electric] may be closed down or changed because of environmental regulations.”

Utilities are also facing challenges that are more internal in nature, concerning their aging assets. An aging infrastructure, as well as an aging workforce, stresses a utility’s ability to maintain service reliably. This is compounded by the business need for higher efficiency from existing assets, reduced waste and increased return on capital investments, and the related drive to implement new strategies for improving energy delivery, efficiency and utilization. In an increasingly competitive environment, utilities have to deliver higher-quality services and more reliably, while keeping rates low.

Perhaps the challenge that is most concerning is a change in the nature of the customers themselves. Customers are empowered by the shifts in the industry, are enabled by technology, and emboldened by social media. There is a growing desire for customers to have an active role in their own energy management, through interfaces such as mobile phones and tablets, and to manage their energy usage and control the devices that use energy. Some customers are also making supplier selections based on lifestyle choices, including those supplying renewable-sourced electricity. This is an epic change in the industry, which is forcing utilities to treat customers as more than ratepayers or “meters” of energy consumption; they are now powerful sources of revenue that can control both their level and pattern of consumption.3

The traditional business model of utilities does not lend itself well for meeting the demands of the future. Enabling the partnership with the customer requires significant communications resources—something that many utilities often lack in both human and system resources. The new paradigm demands constant generation and data processing to enable actionable responses by both provider and consumer. The implementation of smart grids is essential to the success of shifting onto the new paradigm. However, because creating the smart grid is taking place while the older power grid remains fully operational, it requires development and implementation of new control mechanisms and security innovation to protect all players in the value chain.



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The market forces in today’s energy and utility environment have shifted market power to the consumer, which is forcing utilities to change business models to become more customer-centric. Utilities are searching for new strategic approaches to adapt to different industry dynamics that have added new participants, technologies, and business models. Utilities must become more agile to compete in a rapidly evolving ecosystem.

Therefore, the challenges and complexities of the new energy and utility industry are requiring utilities transform their business models, and the technology that supports them, to succeed. Utilities undergoing this process are shifting from the traditional energy value chain that is based on a one-way network, to a smarter energy value chain based on an intelligent utility network (IUN). The transformation process is guided by three vital imperatives, as shown in Figure 1.

Transform the utility network from rigid, one-way systems to dynamic, automated, and reliable information networks that are orchestrated to enable all participants to gain value in proportion to services delivered on them.

Transform customer operations to empower customers, facilitate more choice, and improve customer satisfaction by providing access to information, products, and services that can increase efficiency, reduce bills, and address energy needs.

Improve generation performance by changing the generation portfolio to optimize the supply mix to meet regulatory requirements, while continuously improving the efficiency of the current assets and maintaining financial viability.

Figure 1: Imperatives Guiding the Transformation of the Energy and Utility Industry

Energy and UtilitiesIndustry

Transformation

Transform the Utility Network• Single View of Grid Data and Information• Meter & Grid Data and Information Management• Enterprise Data and Information Management• Risk and Regulatory Compliance • Risk and Scenario Modeling• Fraud Analysis and Reporting• Dynamic Resource Reallocation and Response• Unified Smart Grid Strategy

Transform Customer Operations• Single View of the Customer• Customer Care and Insight • Dynamic Rating and Billing• Enterprise Data and Information Management• Customer Relationship Management• Monitor Usage in Real-Time• Integrated Demand Management• Customer Information Applications Strategy

Improve Generation Performance• Predict Energy Resource Availability• Risk and Regulatory Compliance• Asset Performance Management• Enterprise Data and Information Management• Plant Information Lifecycle Management• Power Generation Maximization and Operational Cost Reduction• Market Trading Management• Generation Strategy

Source: Frost & Sullivan analysis and IBM


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Key Infrastructure Requirements

•BigDataCapable•Scalable•OptimalPerformance•SecurityandResilience•Flexible

The imperatives shown in Figure 1 revolve around how a utility can transform its business model to be more attuned to the customer, using modern, multi-functional transmission and delivery networks, while broadening its generation and operational assets to meet regulatory and financial goals. The transformed model equips the utility with tools to listen to its customer and develop services that fit their needs, while remaining relevant and competitive, and opening the ecosystem to partners who can help increase the value of the network to all participants. It enables the utility to accommodate new power generation modes and improve the efficiency and sustainability of its operations. Finally, the new model empowers the customer to take control of their energy consumption, and helps integrate the intelligent utility network to value incubators in the communications, consumer electronics, and transportation industries. The utility that embraces these imperatives will become an active participant in a smarter energy ecosystem, able to accommodate new partners and compete against new entrants, and take advantage of disruptive technologies. However, the transformation requires a common plan for IT and operational technology (OT) to support a utility data and information management strategy, so that IT systems and architecture can support and enable utility business drivers. The critical element of success is a scalable, resilient, and secure IT infrastructure to handle the demands imposed by these imperatives.

Utilities are struggling to capture value from their operational and IT investments. To profitably grow and prepare for the IT complexities that are expected from the dramatic data and information growth across grid and various lines of businesses, they will need to modernize the IT infrastructure with scalable, reliable and secure systems that are workload optimized. Rather than engaging in a rip-and-replace exercise, IT managers need to carefully administer technology investments and reduce the total cost of IT ownership. Historically, the utility IT infrastructures were built to support the traditional business model, which made their IT systems sprawling and isolated from each other. This limits their scalability and agility. Moreover, new computing or storage capacity was often bought based on requirements of separate line-of-business (LOB) projects. This led to redundancy across a utility, and can inhibit IT managers from being able to deliver hardware capacity and performance optimization. It also limits the ability of the network to contribute to regulatory monitoring and adherence. The transformed infrastructure must be scalable to address the ever-changing demand and to enable potential new partners or services. The system must also support multiple workloads to accommodate large volumes of customers’ and operational data. The infrastructure also needs to bring a high level of automation to help adapt to changes in pricing and new applications, enabling IT managers to direct resources where they are needed most, and it must be reliable and robust to ensure constant uptime. Finally, it is crucial that the infrastructure be standardized and support interoperability to close gaps in the existing architecture, governance rules, and process management simultaneously across units and to support newly added businesses, such as merged or acquired partners.

Energy and utility industry leaders are beginning to seek advanced IT solutions to help them deliver new value to customers, partners, and shareholders; support intelligent utility networks; and increase the efficiency of their operations. Forward-thinking CIOs are starting to transform their IT infrastructures to respond to the imperatives driving innovative business models that deliver increased business value and improved overall smart grid return on


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investment (ROI). To successfully deliver on the promise of increased business value, utilities need modern IT infrastructures. These IT systems must be capable of processing a constantly updated stream of information from customers and the supply network, and provide high application availability. They must enable powerful analytics providing insight into changing customer service preferences and operational conditions. They also need to perform at optimal levels and be secure and resilient to any disruption. Finally, they need to be flexible to support different types of business models to keep costs down. Smarter Computing is an approach that can help energy and utility industry CIOs transform their IT infrastructures to address these imperatives.

THE BUSINESS NEED FOR SMARTER COMPUTING IN THE ENERGY AND UTILITIES INDUSTRY

Introducing Smarter Computing

Smarter Computing is a new approach to transform IT infrastructures to enable utilities to build and support an intelligent utility network. The Smarter Computing paradigm builds IT infrastructures that are:

• Designed for Data, meaning that the IT infrastructure is capable of harnessing all available information, including real-time streaming data from smart meters and devices on the grid, to unlock insights for better decision-making. It is about extending beyond traditional sources of data to generate insights by leveraging new forms of information, which can be incorporated into a utility’s grid operation management systems (like OMS or DMS) and enterprise systems (like supply chain management systems) to reduce operational costs, master a single version of a customer’s profile, enhance data security, and get insights from huge volumes of complex data.

• Tuned to the Task, meaning that organizations consciously match workloads to IT systems that are optimized to the workload characteristics, ranging from monitoring asset performance and database management, to business intelligence and analytics, to managing energy source integration. Optimizing the IT systems to the workloads enables greater performance and efficiency, helping CIOs enhance application availability and maintain a lean operational profile.

• Managed with Cloud Technologies, meaning that the IT infrastructure delivers virtualization, self-service provisioning, and other technologies that enable greater efficiencies out of existing IT assets, and supports the deployment of resources and new services in a flexible, dynamic, and cost-effective manner.

The Smarter Computing paradigm supports business transformation by creating a technology framework to enable business operations that realize the business imperatives, and generates business value in an increasingly competitive, cost-conscious environment. The Smarter Computing approach in the energy and utilities industry revolves around how generation, transmission and distribution, and customer data is collected, processed, analyzed, saved, and shared across lines of business in a utility, and with customers and partners on the intelligent

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utility network. The IT infrastructure that supports business operations in the IUN delivers business value by using data to guide decisions, using optimized systems to maximize efficiency, and leveraging the cloud to transcend administrative silos and legacy system limitations. Figure 2 illustrates the application of the Smarter Computing approach to energy and utilities transformation to an IUN.

Figure 2: Aligned to the guiding imperatives, Smarter Computing in Energy and Utilities enables the industry transformation

Energy & Utility Organizational Transformation

Transform the Utility Network

• Single View of Grid Data and Information

• Meter & Grid Data and Information Management

• Enterprise Data and Information Management

• Risk and Regulatory Compliance

• Risk and Scenario Modeling• Fraud Analysis and

Reporting• Dynamic Resource

Reallocation and Response• Unified Smart Grid Strategy

Transform Customer Operations

• Single View of the Customer• Customer Care and Insight • Dynamic Rating and Billing• Enterprise Data and

Information Management• Customer Relationship

Management• Monitor Usage in Real-Time• Integrated Demand

Management• Customer Information

Applications Strategy

Improve Generation Performance

• Predict Energy Resource Availability

• Risk and Regulatory Compliance

• Enterprise Data and Information Management

• Asset Performance Management

• Plant Information Lifecycle Management

• Power Generation Maximization and Operational Cost Reduction

• Market Trading Management• Generation Strategy

Process Automation Business Analytics Business Process Management

EventProcessing

CustomerIntelligence

BusinessIntelligence

TransactionProcessing

Messaging & Web Services/Data & info Presentation

Data Processing, Storage, Collaboration & Sharing, Data and Information Management

Data Acquisition and Physical World Interfaces

Generation OptimizationGrid Orchestration Customer Satisfaction

Faster ResponseReduced Risk Lower Total Cost of Ownership

Higher EfficiencyReliable Utility Service

DESIGNED FOR DATA

SCALABILITY, RESILIENCY AND SECURITY

CLOUD ENABLED WORKLOAD OPTIMIZED

Business Imperatives

SmarterComputing

InfrastructureSupportingBusiness

Operations

Business Value

Source: Frost & Sullivan analysis

Energy and utility CIOs can use IT infrastructures that incorporate Smarter Computing principles to carry out the operations underlying their transformation imperatives. Using an infrastructure that is designed for big data and scalability, executives and IT managers can uncover insights into system performance and customer demand patterns, helping to achieve efficient balances between supply and demand. The new business models emerging in the industry require a business infrastructure that can support new customer services, as well as accommodate multiple new generating and retailing partners. A utility IT infrastructure that can be managed in the cloud can deliver these new sources of business value in the industry. Finally, the Smarter Computing approach gives CIOs control over capital and operational expenditures because existing IT infrastructures can be transformed and need not be completely replaced. Smarter Computing can help turn utilities into lean, agile competitors, while helping ensure adherence to regulatory compliance objectives.



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Inaproof-of-concepttestof theSmarterComputingparadigm,IBMandAMT-SYBEXdemonstratedefficientdatacaptureandprocessingforupto 100 million smart meters on a single computingplatform.

Transform the Utility Network

The Energy & Utilities industry is changing its business model to accommodate a smarter energy value chain and a substantial part of this activity is based on transforming the traditional one-way utility network into the IUN. The ultimate goal of this imperative is to provide more reliable utility service with improved operational and financial efficiency, which will hinge on collecting, integrating, processing, and storing data from the meters, devices, and sensors on the grid. The business value of a transformed utility network will come from automation and ability to use the insights from the network to anticipate changes in demand, and supply energy and utility services efficiently, while managing grid and utility assets to handle both normal and peak loads. At the same time, regulatory compliance and risk mitigation strategies will depend heavily on grid and fulfillment information availability, security of the grid and critical information, and robust fraud monitoring and reporting capabilities.

A Smarter Computing approach can be an essential enabler of the IUN because it gives energy and utility CIOs the ability to measure, control, and gain insights from the network data, to have a trusted “single view” of the infrastructure. By using a computing infrastructure that is designed to handle large amounts of streaming data, while integrating it with historic data from a variety of sources, line of business and IT managers can apply advanced analytics to monitor and predict grid performance. This gives them powerful real-time decision aids, and supports business applications necessary for efficient performance and regulatory compliance. When the IUN is built with computing hardware optimized to energy and utility workloads, the operational system can have high data and information availability in a secure environment, making it more resilient and resistant to fraud and criminal intrusions. While implementing aspects of the IUN model in the cloud, CIOs can facilitate collaboration across the operational pillars of business, and virtualize and consolidate processes and workloads to lower maintenance and power requirements to support the IUN.

Smarter Computing best practices can also help realize other business values by enhancing a range of areas from the utility network operations, enterprise applications themselves, and business imperatives, including:

• Sustaining linear scalability while lowering the cost per transaction;• Automatically setting operational and security parameters to match performance and

compliance standards; and• Orchestrating partners across the value chain to assure an optimized, balanced, secure,

and reliable network.

IBM and its business partner AMT-SYBEX are applying the Smarter Computing approach in transforming the utility network to handle data feeds from large numbers of smart meters. By using a computing platform specifically designed to capture and process meter data, a test system was able to load data from 10 million meters in 36 minutes and scale up to handle data from 100 million meters, on a single server platform.4 This suggests that utilities serving even very large customer bases would be able to maintain the data processing requirements of the IUN environment.


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Transform Customer Operations

The transformation of the Energy & Utility industry’s business model also represents a fundamental shift in the relationship between a utility and its customers. One aspect of this dynamic is an increasing importance of customer satisfaction to a utility. With more choice of energy suppliers in a competitive environment, coupled with the spread of social media, utility customers are becoming empowered consumers. They are able to not only demand more from their providers, but they are also able to influence others in their communities to demand more. Another aspect is that customers are able to take a more prominent role in managing their energy and utility usage, which can be a critical factor in a utility’s demand management activities. Utilities are realizing that they need to transform their customer operations in response to the changing nature of their relationships with their customers. This has implications throughout a utility organization, from customer care and billing, to sales and marketing, to generation and distribution.

Energy and utility CIOs can employ a Smarter Computing approach to transforming their customer operations to help increase customer satisfaction and to better integrate customer usage information into demand management strategies. By implementing the designed-for-data principle, a utility can integrate a wide range of customer data and develop a master, “single view” of each customer. Applying advanced customer analytics to this data can yield detailed insight into customers’ preferences and usage patterns, which can be useful in developing customized offers and improve the quality of customer care agent interactions. In addition, systems would be able to collect data faster and reduce billing processing time, and increase billing accuracy. Moreover, a Smarter Computing-inspired customer operations system could accelerate the creation, testing, and deployment of new services in the cloud, including those to enable customers to more effectively manage their energy consumption.

Smarter Computing can also help create additional business value in transformed customer operations, such as:

• Dynamic rate plans based on intelligent devices and appliances in the home communicating with the utility through the cloud;

• Improve the efficiency and effectiveness of the contact center performance across all channels, addressing customer needs, regulatory mandates, and organizational constraints; and

• Provide customers with information, controls, and choices to better manage their consumption.

Improve Generation Performance

In today’s energy and utility industry environment, generation operations need to be integrated from generation equipment to the distribution network to the trading floor, for higher efficiency, lower costs and reduced risks, faster response to changes in demand, and increased control over carbon emissions. Improving generation performance requires an IT architecture that can provide a complete, contextual view of all aspects and components of the generation operations, including the mix of generating assets, considering fuel supply, carbon load, and variability in renewable sources. The architecture must also be able to support high-performance computing


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operations for generation modeling, forecasting, and simulation to predict performance under changing generating supply, energy demand and policy-driven considerations.

Smarter Computing principles can help CIOs meet this imperative by implementing workload-optimized systems that can efficiently monitor and predict conditions across generation assets, and to support analytic applications that forecast changes in demand so that operational adjustments can be made in real time to accommodate them. An IT system that is designed for data can feed critical data into high-performance computing applications, reducing the processing time for modeling and optimization activities. Implementing virtualization and systems software capabilities enable IT task/processing optimization. Moreover, deploying an IT architecture within a cloud model can facilitate more productive ways of using technical resources to accomplish a plant’s operational goals. A high-performance computing (HPC) cloud solution can move utility computing grids to the next level by empowering end users and system administrators to schedule, deploy, and manage a virtual pool of technical computing resources, provisioning and configuring resources based on users’ needs.

Using a Smarter Computing approach to improving generation performance can deliver additional business value, including:

• Supporting a robust and secure data and information storage infrastructure, which can ensure adherence to various regulations, aiding emission, safety, and contractual compliance, for example.

• Bring high-performance computing infrastructure into mainstream technical computing to enable analytics related to commodity, energy and trading, consolidating scattered computing clusters to streamline monitoring and control over diverse generation assets.

THE BUSINESS VALUE OF SMARTER COMPUTING IN THE ENERGY AND UTILITY INDUSTRY

Energy and utility companies are facing a wide range of changes in their industry that is challenging the foundation of a 100-year-old business model. The traditional one-way value chain is transforming into a dynamic value network in which energy and information flows bi-directionally between utilities, customers, suppliers, and partners. Customers are taking a more active role in managing their energy consumption, regulators are imposing stringent curbs on carbon emissions, and financial markets have sharp expectations for returns on assets. The IUN is being built to support new business models developed to take advantage of growth opportunities in the new industry environment, and leading energy and utility companies are embracing Smarter Computing principles to enable them to transform the IT infrastructures needed to support these models.

Oncor: Transforming the Network to Support a New Business Model

Transforming a company’s business model to take advantage of the opportunities in newly deregulated energy markets is a complicated task. Dallas-based Oncor is an energy services provider serving more than 7 million customers with more than 3.1 million points of delivery,

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OncorusedaSmarterComputingapproach

to transition its digital infrastructure and

supportanaggressivenew business model to growinacompetitive

energy market.

BluewaterPowerimplementeda

SmarterComputingapproachtotransform

its customer operationstomeet

stringent regulatory andreporting

requirements.Atthe same time it was

able to cut costs andpositionitself for future growth

opportunities.

and it is blazing a trail with the IUN to become a leader in its market. Realizing that reliable electric service delivery is an essential component of success in competitive markets, Oncor made the strategic decision to build an IUN as the backbone of its growth. An early step was to replace its analog meters with advanced digital meters, which will greatly expand the intelligence with which Oncor can transform its relationship with customers and transform its operational models. However, the company also understood that its current IT infrastructure was not designed to handle the flood of data that digital meters provide.

Oncor selected IBM as a partner to help it establish the digital infrastructure on which it would base its IUN strategy.5 Because Oncor’s existing infrastructure was not designed to support the IUN, the team elected to implement a Smarter Computing approach to rebuild its IT infrastructure. This would not only preserve the value of its existing assets, but enhance the overall value of its IT infrastructure with new, targeted investments. The centerpiece of the implementation was an advanced storage system designed to accept tens of millions of records every day and analyze them quickly, then securely store the data. Even as Oncor’s system is designed for data, it is built from storage and server components explicitly designed to accommodate the massive batch processing workloads placed on it, yet retain the ability to scale out and up quickly.

Oncor’s decision to implement a Smarter Computing approach is returning a variety of business advantages. The ability to quickly and reliably process and store its customer data enables Oncor to meet tough regulatory requirements active in the competitive Texan market. The new system is also helping the company to maintain a reliable service delivery reputation with deeper insights into its network. By analyzing the information, Oncor can detect when service interruptions and service restoration occurs. Finally, the Smarter Computing approach is saving Oncor money with a system that is easier to maintain, which lowers administrative costs.

Bluewater Power Transforms its Customer Operations with a Smarter Computing Approach

Bluewater Power, a medium-sized utility in Ontario, also embarked on a large-scale transition from analog to smart meters, but its situation was far different from Oncor’s. The utility industry and government in Ontario acknowledged that the growth in demand for electricity in Ontario was growing faster than it could bring new generation capabilities online. Coupled with new environmental regulations and financial reporting requirements, the government mandated that smart meters be installed in all consumer premises. The smart meters would be part of an initiative to shape consumption patterns with time of use (TOU) pricing schemes, which are intended to move consumer demand for power to less-expensively priced off-peak periods, and thereby help optimize the overall generation capacity in the province.

Bluewater faced three immediate business challenges: (1) the mandated introduction of smart metering in Ontario, (2) regulatory changes, and (3) new financial reporting requirements. The company evaluated its IT infrastructure capabilities and concluded that its data centers were not prepared to meet these challenges, so it decided to apply Smarter Computing principles to help it transform its customer operations to meet these requirements. Bluewater’s transition


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began with enhancing its current Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) applications on a Smarter Computing-inspired infrastructure. This helped the company collect, process, and store the data that would be generated from smart meters. This gave Bluewater the capacity, flexibility, and scalability to meet the business challenges it faced.

The transformed infrastructure also gave Bluewater the ability to deliver new services to its customers using the TOU data, mandated by the Ontario government. By using AMI and Smarter Grid networks to develop better service offerings and optimize business processes, the utility can use the business challenges as an opportunity for growth, enabled by recording and analyzing new streams of customer data. Bluewater is also controlling costs with the Smarter Computing approach. By implementing an IT infrastructure that is designed to handle the large volumes of data and leveraging workload-optimized components in a virtualized environment, Bluewater estimates that storage provisioning time improved by 60 to 70 percent, cutting physical rack space needs by 50 percent, and avoided the need to hire one additional IT employee.

Vestas: Turning to Big Data to Improve Generation Performance

Vestas, based in Denmark, is the world leader in high-tech wind power systems. To make wind a sensible part of a utility’s generation portfolio, placing the wind turbines in locations with reliable wind is essential to the commercial viability of the technology. The optimal sites not only equate to improved generation performance, but also to a reasonable rate of financial return to the utility using wind. The key to placing its turbines in the best sites, and ultimately to the success of its customers and itself, is Vestas’ wind library, which incorporates global weather data and data gleaned from its existing, sited, turbines. Using its current library, Vestas was able to provide relatively accurate assessments of wind flow, but this process would often take up to three weeks—an unacceptable duration in a highly competitive industry. Vestas decided that it needed to greatly expand the power of its wind library to increase the accuracy of turbine siting and dramatically reduce the amount of time to produce the results to support its customer and its own business cases.

Vestas partnered with IBM to implement a Smarter Computing approach to upgrade the capabilities of its wind library and siting projections, which would give it a substantial competitive advantage. At the same time, the company wanted to lower its IT operational and maintenance costs, and lower its own carbon footprint. Using the approach, Vestas deployed a big data-capable, advanced analytics solution on a high-performance computing system. This system was designed to analyze massive amounts of structured and unstructured data, including weather reports, geospatial and sensor data, satellite images, maps, and weather modeling research to increase siting accuracy and eliminate a month of development time for a given site. The high-performance computing system, optimized for the complex forecasting workloads and managed with cloud technologies, enabled Vestas engineers to distribute tasks, effectively increasing computational power while shrinking its IT footprint. Results were returned in 15 minutes, compared with the three weeks it used to take, and energy consumption was reduced by 40 percent.

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“Vestasturbinesoperatefordecades,andclientsdemand to know how much energy they will

produceandwhattheirreturn on investment

will be before they are installed…UsingSmarterComputing,wecannow

answer these questions quickly to identify new

markets for wind energy andhelpourclientsmeet

aggressive renewable energy goals.”

Lars Christian Christensen, Vestas Technology R&D

The business value of the Smarter Computing approach to Vestas is central to its survival. For Vestas, it means a stronger value proposition and a more efficient business operation. For Vestas’ customers, it means greater business case certainty, increased reliability on their investment, and the potential for a faster return on their investment than before. “Vestas turbines operate for decades, and clients demand to know how much energy they will produce and what their return on investment will be before they are installed,” says Lars Christian Christensen, vice president of Plant Siting and Forecasting, Vestas Technology R&D. “Using Smarter Computing, we can now answer these questions quickly to identify new markets for wind energy and help our clients meet aggressive renewable energy goals.”6

BUILDING THE INTELLIGENT UTILITY NETWORK TO SUPPORT A NEW BUSINESS INFRASTRUCTURE

Energy and utility CIOs and IT managers are being asked to transform their IT infrastructures to enable their companies to transform their business models, and themselves, into lean, responsive organizations able to compete in a changing industry. Customers are becoming more empowered and are taking an active role in managing their consumption patterns. New and more stringent financial and environmental regulations are pressuring companies to be more accountable, while increased competition means customers are free to churn away to other service providers. To succeed in this market, energy and utility companies need to reinvent their business models to transform their network infrastructures and their customer operations, while ensuring improved generation performance and financial returns.

The application and operational requirements to realize these imperatives come with substantive IT workloads and dramatically increasing volumes of data. Traditional utility IT strategies are unable to cope with these pressure points. Moreover, in today’s competitive climate, utility CIOs have the additional requirement for their IT operations to reduce costs and IT systems to be flexible and scalable to adapt to business needs that include regulatory, demand, and energy supply changes in the industry.

The Smarter Computing approach is a holistic solution that can guide utilities’ IT and OT departments in establishing a common strategy for delivering IT infrastructures to support scalable, resilient, and secure operations. The efficient utility enterprise is built based on this transformed network infrastructure. A number of energy and utility companies around the world are beginning to realize the benefits of implementing a Smarter Computing approach. CIOs may wish to investigate using a Smarter Computing approach if they are considering:

• Building capabilities to measure, control, and gain visibility over the entire network to visualize infrastructure availability and performance, while being able to track and document events to support decisions about all types of utility assets;

• Aligning the utility’s values with the customers’ values, for example around environmental emphasis versus cost-effectiveness, and providing customers with information, controls, and choices to better manage their consumption;


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• Future-proofing their company against new regulations and requirements, as well as ensuring that their company can achieve existing compliance objectives; or

• Lowering the cost of operation and minimizing financial and security risks by avoiding multiple data input or data inconsistency issues.

Forward thinking energy and utility companies, such as Oncor, Bluewater Power and Vestas, are employing a Smarter Computing approach to help them transform their digital and business infrastructures to meet the demands of a changing and increasingly competitive industry.

REFERENCES

1 United States Energy Information Administration. “International Energy Outlook 2011.” 19 September 2011. Report Number: DOE/EIA-0484(2011).

2 Walsh, Bryan. “Talking Energy with America’s Greenest Coal Exec.” Time 02 March 2011. http://www.time.com/time/health/article/0,8599,2056447,00.html. Retrieved 13 December 2011.

3 Hobbs, C.D. “The Changing Face of the Utility Industry.” Forbes Custom.com. http://www.forbescustom.com/EnergyPgs/utilipoint/UtilityIndustryP1.html, retrieved 12 December 2011.

4 “Unprecedented Performance and Scalability Demonstrated for Meter Data Management: Ten Million Meters Scalable to One Hundred Million Meters for Five Billion Daily Meter Readings.” IBM Case Study, September 2011. http://www.ibm.com/developerworks/forums/servlet/JiveServlet/download/548-391263-14685713-373005/Informix%20TimeSeries%20Affinity%20Meterflow%20Benchmark.pdf.

5 “Oncor Powers Up Storage Capacity and Flexibility, Cuts Complexity.” IBM Case Study, November, 2011. Document TSC03136-USEN-00.

6 “Helping Wind Farms Grow the Future of Energy.” IBM Technical Computing Insights, November 2011. http://www-148.ibm.com/tela/servlet/Asset/412299/VestaWind_HR.pdf. Retrieved 27 December 2011.

This report was developed by Frost & Sullivan with IBM assistance and funding. This report may utilize information, including publicly available data, provided by various companies and sources, including IBM. The opinions are those of the report’s author and do not necessarily represent IBM’s position.

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Smarter computing in Energy and Utilities

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Transcript of Smarter computing in Energy and Utilities