On the one hand, renewable sources like wind and sun provide more power than ever. They are also the fastest-growing sources of energy, accounting for 86 percent of all new generation capacity added to the European market in 2016.
On the other hand, traditional power generation (think coal, gas and nuclear) still plays a role. In 2016, more than two-thirds of power in Europe came from nonrenewable sources. Globally, renewables are expected to reach parity with coal and gas around 2040.
Nevertheless, the speed with which intermittent renewables — the sun doesn’t always shine and the wind doesn’t always blow — are coming on board is making it harder for European utilities to balance the grid. That’s because the grid, as large as it is, is also a delicate system where supply must match demand at all times or there’s a risk of blackouts. In France, for example, strong winds in the north mixed with a sunny week on the Riviera in the south can lead to a surfeit of electricity that puts the balance at risk.
The intermittency also makes profits hard to find, with European utilities on average struggling to increase profits 1 percent in 2016. Countries around the world are watching how Europe uses thermal generation to keep the grid balanced; prioritizes low-cost, clean and renewable energy; and keeps utilities profitable amid a rapidly changing energy network.
The good news is that the Industrial Internet of Things can help. GE, for example, just released Digital Utility, a new software suite that gives energy traders machine and operations data they can use to make more profitable trades.
The suite’s new Business Optimization app supplies real-time data to energy traders, who play a key role in ensuring that supply matches demand and utilities stay in the green. “Traders looking at the day ahead will be able to bid in the most optimal way,” says Scott Bolick, head of software strategy for GE Power. “They can not only make sure that the electricity is able to be dispatched, but also that the best-performing plants are dispatched first.”
Today, most trades are typically based on long-term outlooks — for example, anticipating a surge in demand in the winter when everyone turns on their heaters. But as wind and solar installations depend on fickle weather and make anticipating supply increasingly difficult, more sales are starting to happen on the spot market. This market, at least in theory, soaks up the electricity that needs to be bought and sold immediately.
The challenge is that the spot market requires a speed and accuracy that Wall Street is all too familiar with. Better trades, and profits, depend on better information. But Bolick says the power industry uses only about 2 percent of the energy industry’s data — including the real-time information about a plant’s ability to produce electricity, its efficiency, weather forecasts and consumer demand, as well as forecasting information about how much energy to expect from renewable sources and when to expect it. In some cases, traders rely on spreadsheets or separate information systems to inform market bids.
The Digital Utility software suite brings utility data together by stacking the Business Optimization app on top of GE’s Asset Performance Management, a machine reliability app, and GE’s Operations Optimization, an efficiency and productivity app. Used as a full suite, utilities get an end-to-end view of how the energy network is functioning in real time.
The apps rely on analytics from a catalog of more than 100,000 digital twins, or virtual representations based on actual data from energy assets like power plants. They can model future scenarios, predict potential outcomes, make trading more efficient and help keep the grid stable. “When something goes wrong, traders will know immediately,” says Anna Geevarghese, chief product manager at GE Power Digital. “So when a water pump breaks or a gas turbine needs to go down, they know that information.”
This transparency can also help plants better manage operations so that traditional fuel sources are used when both profitable and necessary. Shutting down and starting up coal-fired plants, for example, is an incredibly labor-intensive — and expensive — procedure. Without having good information about coming electricity demand and supply, plants have to keep burning fuel, running at low levels so that they're ready to ramp up when needed. With better information, utilities can make informed decisions about whether to shut down a plant or to keep that plant running and trade into the ancillary market, which helps grid stability. Cutting back on unnecessary plant idling will also help reduce emissions.
As the energy market becomes more transparent, Bolick says, it will ease the transition to renewables. “Essentially, we’re trying to provide safe, reliable, secure, affordable and sustainable electricity,” Bolick says. “At the end of the day, what we're doing here digitally is going to make sure that those five goals are met even as we go through a substantial fuel source change.”