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Transforming utilities with digital power

Regional utilities are looking to optimise and transform existing processes and business models. Exponential growth in technological capabilities and evolving customer expectations lie at the heart of this fundamental change

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Dietmar Siersdorfer, CEO, Siemens
Dietmar Siersdorfer, CEO, Siemens

A few months ago, Dubai Water and Electricity Authority (DEWA) entered into an agreement with Siemens to collaborate on an advanced data-driven project.

 The project is designed to help DEWA achieve its vision of becoming a sustainable, innovative world-class utility, and to ensure the highest levels of performance, efficiency and reliability of its power generation assets.

The agreement set forth a joint work plan to identify ways to improve thermal efficiency, provide cost effective solutions for performance optimisation, manage costs and reduce fuel consumption and emissions.

In other words, DEWA wants to entrench digitalisation across its operations with the help of highly regarded companies in this arena. Similar agreements are being signed by utility companies across the GCC region, as asset optimisation becomes an important aspect in scaling down operational costs.

The rapid advance of digital technologies presents an opportunity for the utilities sector. Softwarer applications already used in many other industries, such as decentralised production, real time analytics pulled from big data, sensor networks, and mobile computing, will change the contours and competitive balance of utilities over the next few years, according to industry experts.

The result? improved output in power generation, efficiency in distribution and electrical grids, more connected homes and businesses, better customer relations, operations, and workforce processes as utilities adopt a more competitive and professional footing.

Research conducted by Strategy& finds that most utility company senior executives believe digital technologies, such as data mining and mobile customer engagement are strategically critical. The problem, however, more than half of the utilities concede that their investments in these new technologies are at best medium and often low.

“We found a sector that has considerable digital ambition, but suffers a mismatch between those aspirations and its digital vision, investment, culture, and capabilities — a will to embrace the future, but no way forward,” said the report by Strategy&.

“With the rapid pace of technological change already under way, the immediate period ahead will be crucial in determining whether utilities will stop playing catch-up and actually implement effective digital strategies that create difficult-to-challenge competitive advantage.”

But perhaps the best summation of where utilities are today when it comes to digital transformation is a quote from Dietmar Siersdorfer, CEO, Siemens Middle East: “For us, digital must encompass all functions, all business units, and all employees.”

In a recent interview with Utilities Middle East, Siersdorfer says that recent technology trends around the world have set power grids on a path for a complete overhaul, with the growing push for diversification of energy sources inspiring a paradigm shift.

“New industry realities are pushing regional utilities to reassess their positioning for the digital future in a world of fast changing consumer tastes and ubiquitous interconnectivity. That is why the UAE and the Middle East are particularly of great importance for Siemens when it comes to investment in digitalisation,” says Siersdorfer.

Early this year, Siemens announced that it would boost investments into its digital presence in the Middle East with $500mn over the next three years.

The German industrial giant’s investments will include two MindSphere Application Centres in the UAE, among 20 being built in 17 countries around the world. Each centre will cater to multiple countries and specialise in a particular industry in which Siemens is active through 900 software developers, data specialists and engineers working together to develop digital innovations for data analysis and machine learning.

MindSphere is Siemens’ open architecture, cloud-based operating system for the Internet of Things (IoT). The two new centres in the UAE will be located in Abu Dhabi and Dubai, the latter of which will handle airports, logistics and cargo to co-develop innovative approaches that improve the movement of people and goods.

The centre in Abu Dhabi will cater to process industries, mainly focusing on oil and gas, water and waste water, enabling customers to improve operational efficiency and reduce their costs across the whole value chain.

MindSphere can integrate with monitoring of critical points on buildings or physical machines such as high voltage switchgear that visualises the various metrics that plant managers need to monitor. This can, for instance, significantly reduce failure or unplanned downtime in gas insulated switchgear (GIS) that might jeopardise network performance or industrial processes.

The solution also enables improvements to manufacturing productivity with the added benefit of the integration of tools with real data to machine simulations.

The live data collected from the process can then be used to improve the accuracy of the simulation and develop prognostic algorithms to predict the future behaviour of the manufacturing process.

This brings benefits such as being able to perform targeted predictive maintenance, avoid unplanned downtime and ensure that the correct spare parts are always in stock.

Siemens’ investment in the region also ecompasses software grants aimed at boosting digital skills among youth in the region; establishing a hydrogen economy with Expo 2020 and DEWA; and helping create “the most connected expo ever” using the MindSphere system.

“We see vast potential for the adoption of digital technologies in the Middle East and want to support the region’s transformation in various ways, ranging from youth development to setting up our MindSphere Application Centers,” says Roland Busch, global chief technology officer, Siemens.

Siemens and DEWA are currently working together to identify ways to improve thermal efficiency, provide cost effective solutions for performance optimisation, manage costs and reduce fuel consumption and emissions.

At the core of the project are Siemens’ data-driven digital asset optimisation services, part of the company’s Digital Services for Energy portfolio, and the development of a new intelligent, self-learning controller for the SGT5- 4000F gas turbine.

Siemens’ Digital Asset Optimisation uses on-site digital monitoring of a unit’s performance and data analytics to closely target a specific issue, such as age-related degradation, and to provide recommendations for an operating mode to address this and other issues that may be leading to the unit’s under-performance.

Ten SGT5-4000F gas turbines at DEWA’s L2-station and M-station were monitored over the past several months. Based on the results, Siemens and DEWA are jointly developing optimised solutions including an intelligent, self-learning gas turbine controller for automated adjustment of firing temperature to address preventable degradation. This is expected to significantly boost levels of efficiency and output.

Siemens along with other gas turbine makers, such as Mitsubishi Hitachi Power Systems (MHPS) and GE are faced with a market crunch for their heavy duty gas turbines, as Bloomberg reported recently that Siemens was considering a departure from its gas turbines business, following its announcement last year to cut about 6,900 jobs, or close to 2% of its global workforce.

But industry players and analysts believe that continued research and investment in digital innovations will provide the much needed breakthrough to stabilise the gas turbines market amid threats from the growing demand for renewable energy.

“With all the real time data now available, we are aware of how turbines are performing. The basic principles remain fundamentally the same: a rotating system coupled to a generator. And there were always certain core parameters, like RPM, temperatures in and out, emissions, and operating efficiency. But what’s changed now is that we can monitor and analyse all manner of data flows constantly,” says Siersdorfer.

“The key word is flexibility. As the electricity-generating market has been transformed, so have generators’ requirements. Gas turbines are relatively flexible, especially compared with a huge coal or nuclear plant,” adds Siersdorfer. “So they could ramp up or ramp down as necessary, depending on demand. Now, though, especially with the arrival of renewables, which are inherently volatile, gas turbines need to be even more flexible. But that operational flexibility must also be measured against ensuring the lowest costs and the lowest emissions.”

He says that the rise of digitalisation and change in the service-customer relationship is part of the broader transformation of the power generation industry. “Look at it from the operators’ point of view. In Europe, there have been huge changes, notably some countries’ shift from nuclear to renewables, with the main result being ever increasing pressure on costs. In the Middle East the top priority remains security of supply.”

Digitalisation opens the door to preventative maintenance: Access to real time data means faults can be detected early. That is all made certain key requirements more important than ever. Paramount is the flexibility for turbines to be fired for greater choice around the timing of service intervals to guarantee availability.

Granular data monitoring also means the life span of expensive capital equipment can potentially be prolonged thanks to more careful usage over the years.

Perhaps another breather for the gas turbines market is additive manufacturing, which could transform servicing. Although still in its early stages and yet to be rolled out in the Middle East, it is a technology very much at the forefront of change and is already reshaping business.

“The possibilities in technology are endless. Most obviously for us, additive manufacturing can reduce service and spare parts lead times immensely, and at the same time improve technology performance. Burner tips in gas turbines, for example, have limited lives,” says Siersdorfer.

Recently, Siemens signed a Memorandum of Understanding (MoU) with DEWA to kick off a pilot project for the region’s first solar-driven hydrogen electrolysis facility at DEWA’s outdoor testing facilities at the Mohammed bin Rashid Al Maktoum Solar Park in Dubai.

The facility aims at testing and showcasing an integrated MW-scale plant that will produce hydrogen using renewable energy from the solar park, store the gas, and then deploy for either re-electrification, transportation or other industrial uses.

“Hydrogen technologies will accelerate renewable energy integration and deployment in the region and pave the way for the transition to a sustainable and green economy in the UAE,” says Siersdrofer.

DEWA and Expo 2020 Dubai intend to use fuel cell vehicles powered by the green hydrogen generated at the facility. DEWA has already allocated $1.15bn to support the infrastructure for electricity and water at Expo 2020 Dubai and is the official Sustainable Energy Partner.

While uptake for renewable energy continues to gain momentum across the GCC, the challenges of power intermittency are expected to rise and can only be addressed through robust digital solutions.

“It is a top priority for every utility to have a dependable transmission grid and distribution network by deploying world-class technologies and driving innovation with the help of the technology providers,” says Claudio Facchin, president of the Power Grids division, ABB.

According to a recent Transparency Market Research report, by 2018, the global market for smart grid technologies, which includes sensors, management and control technologies, communication networks, and software, will be worth $80.6bn, a growth of 28.7% from 2011. By 2020, the global smart grid market is forecast to exceed $400bn.

“The demand drivers such as cost reduction, availability of service, value addition, efficiency and customer satisfaction will continue to drive the market for digital solutions across the GCC utilities industry,” says Alaa Elshimy, managing director, Enterprise Business Group, Huawei Middle East.

Elshimy says digital solutions are enabling utilities to have full visibility of the entire electric power eco-system, right from generation to the end user point, without having to overhaul their existing physical infrastructure.

As power grids evolve, they must be capable of adapting to rapidly fluctuating conditions, serving a complex power generation, supply and demand landscape. This will rely on digital technology at a deeper level in electricity substations than ever before.

GCC utilities are expected to invest more than $100bn in digital solutions over the next five years in order to optimise their assets.

But the rapid push for digital transformation could be derailed due to lack of adequate expertise and the necessary leadership to provide strategic direction, something that regional utilities are keen to address through knowledge transfer programmes designed by solutions providers.

Siersdorfer  says that while vision from the top is crucial, making sure the rest of the organisation is empowered to bring about meaningful change is essential.

“It is important to empower people inside your company because even if you have a solid digital strategy, you can still fail if the rest of the organisation isn’t on board,” he says.

 “The digital transformation has to be embraced by everybody, but the CEO needs to drive the change.”

Stressing this point further, Siersdorfer says that leadership is all about ownership and vision. “If you want to use digitalisation as a disrupter, it has to come from the top,” he says. “It will never work unless the top leadership pushes the agenda.”

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