GE drives smart utilities
The power and utilities industry is under pressure to become more energy efficient, amid growing costs. Industry-leading companies such as GE believe that smart solutions will represent a paradigm shift in the way utilities are managed and consumed.
The power and utilities industry has steadily followed in the direction of an emerging trend right to the intersection of digital technology and big machinery.
It is being called the Industrial Internet of Things (IIoT), although General Electric prefers to simply put it as the Industrial Internet.
As major utility companies chart the course to growth and returns through digital transformation, the global number of devices being managed by utility companies is projected to grow to 1.53 billion in 2020. But this is just the beginning of this industry’s transformation.
“The world today has more machines than there are people, and a lot of useful information is coming out of these machines,” says Azeez Mohammed, GE president & CEO for Power Generation services in the Middle East and Africa.
“When you connect the two, you can unlock a huge amount of productivity that can take this industry to a whole new level.”
The whole concept of Industrial Internet is built on making industrial machines smarter, through the adoption of sensors, software and big data analytics. As consumers become more dependent on the information provided by devices and smart technology, IIoT or Industrial Internet seeks to do the same for business by streamlining operations and making them more efficient.
GE has since 2012 invested billions of dollars into the budding market for Industrial Internet, with a strong a conviction that the move will above its immense benefits, deliver the much needed efficiency in the power and utilities industry.
There is currently about 300 GW of installed capacity in the MEA region, operating at 25 per cent efficiency. But Azeez believes that with Industrial Internet solutions, efficiency could reach 60 per cent, which could translate into huge savings in energy power costs.
“Every 1 per cent of efficiency is going to take thousands of tonnes of carbon out of the atmosphere. This is going to result into $50bn worth of fuel saved over a period of 3 to 5 years,” says Azeez, pointing out electricity as the biggest cost for any industry.
Last year GE entered a partnership with Sapphire Group in Pakistan to improve power plant output to 20MW, enhance reliability and fuel efficiency at the Muridke Power Station through its suite of Industrial Internet solutions.
Similar solutions are being deployed to enhance predictive analytics and improve performance at Engro Powergen Qadirpur, also in Pakistan.
While the concept of Industrial Internet is still in its infancy in the region, GE has strong reason to believe that it has the potential to unlock economic value to the tune of $465 billion annually by 2025 within Middle East, North Africa, Turkey and Pakistan (MENAT).
Early adopters of its solutions in the region include high ranking companies, such as Masdar, Powergen and RasGas Company Limited (RasGas), one of the world’s largest liquefied natural gas (LNG) producers in Qatar, which is marking the first global deployment of Industrial Internet technologies in the LNG sector.
“The unmatched potential to enhance operational efficiency, productivity and manage risks is the main motivation for companies in the region,” says Azeez.
All GE clients build their Industrial Internet solutions on an operating software platform called Predix, which caters to machines in various industries, enabling companies to save billions. One application assesses oil and gas pipelines for environmental risks to prevent possible leaks, while another gathers flight data for GE jet engines in use, plotted out in colourful, easy-to-read dot graphs.
However Azeez admits that part of the catch-up challenge is the low fuel price in the GCC, which makes energy efficiency a less significant driver for Industrial Internet adoption. But he hastens to point out the solution’s other unparalleled benefits that the industry could leverage to transform itself.
“It doesn’t matter whether fuel prices are low, the benefits of digitalisation can still be felt when less fuel is used domestically as this allows more oil to be sold on the international market at better prices,” says Azeez.
“When prices are going down, the only thing that oil companies can rely on is volume. To guarantee this, they really must focus on preventing downtime so that they churn out more and more.”
To emphasise the importance of Industrial Internet, GE Power and Water launched its 24/7 Monitoring and Diagnostic Centre in Dubai early this year, the first ever out of the US. With a focus on predictive measures, the centre is already helping in continual monitoring of over 300 power generation turbines and plants in UAE to allow service teams to react faster and minimise downtime of critical machinery.
A similar centre has been opened in Saudi Arabia to provide unprecedented insights into turbines.
“These centres will help to bring home the whole concept of Industrial Internet and make companies in the region appreciate its actual impact in enhancing their productivity, efficiency and minimising downtime,” says Azeez.
“If you look at the industrial world, productivity has dropped to nearly one per cent over the last four to five years. This gap can only be closed by deploying Industrial Internet on a significant level.”
According to GE data, one percent more fuel efficiency on a gas turbine fleet can result in upwards of $6 billion in fuel savings per year. Also, software-connected sensors in turbines on a wind farm can generate between 5 to 10 percent more power, translating into a 20 percent boost in profitability.
The energy and utilities industry is currently the second largest vertical after manufacturing in terms of spending for IoT related products, solutions and services. IDC expects IoT market in Central and Eastern Europe, the Middle East, and Africa (CEMA) to expand as much as 22%, year on year, in 2015, to reach $14bn in total value.
The global smart meter installed base of 400 million devices in 2014 is estimated to double, growing to over 925 million by 2020, making it a leading IoT device. In 2020, the Asia-Pacific region will account for almost 65 percent of the global smart meter installed base. The smart lighting installed base, estimated at 46 million units in 2015, is projected to grow over 5 times to 2.54 billion units by 2020.
These facts suggest that leading utility companies are working hard to connect assets, people, products and services to capture detailed usage information that can enable real-time decisions by both the utility company and the consumers of utility products and services.
But despite the immense benefits, risks remain, with cybersecurity a top concern both for the companies developing Industrial Internet software and their prospective customers.
GE has recently made significant investments aimed at countering cyber threats and has acquired some of the world’s best cybersecurity companies. Last year, GE purchased Wurldtech, a Canadian company created to protect industrial machinery and infrastructure from cybercrimes at an undisclosed price.
Wurldtech’s corporate parent alone represents a huge market. G.E. says it monitors the data flowing from 10 million sensors on $1 trillion worth of equipment every day.
“Threat vectors are on the rise as more digital solutions come onto the market. But at the same time we work jointly with our partners to help mitigate any threats,” says Azeez.
Azeez is convinced that as more companies in the power and utilities industry wake up to the magic of deploying Industrial Internet, the entire industry will be inspired to follow suit.
He says that for companies to drive internal digitalisation, the Chief Information Officer (CIO) must be elevated and given a seat on the decision making table side by side with the CEO.
“It is already happening. I hope this will achieve the desired results very soon,” says Azeez.
With nearly 8GW expected to be added annually to the existing 150GW installed capacity in the GCC, GE is convinced that continued efficiency will help to significantly scale down electricity costs, which remains a major concern in the region.