The Evolving Business Transformation in the Power Industry: It's All About the Data

Today's generating plants are undergoing a significant business transformation, as they operate in an increasingly complex world. The flood of distributed and intermittent renewable resources requires increased flexibility from conventional generating assets. Power markets are becoming more volatile, as well, so risk and uncertainty are increasing both from a physical and financial perspective.

Digital Risk Management Tools

Fortunately, there is a rapidly emerging set of digital tools that can help fleet operators mitigate risk and thrive in this evolving environment. Properly employed, big data and the Industrial Internet of Things (IIOT) can help the fleet operator manage physical and financial risk. This involves a proactive and deliberate approach to the issue. The cloud-based and strategic IT environment must be integrated with the operating technology (OT) ecosystem at the plant itself and across the entire fleet.

At the fleet supervisory level, the goal is to minimize financial risk while maximizing profit. This involves integrating macro information, such as weather and market prices, in order to determine both short-term and longer-term operating strategies across the generating fleet.

However, these macro-level decisions are ultimately affected by the actual physical conditions at the individual plants themselves, and that is where asset performance data is critical. The key to effective risk management increasingly lies in the ability to instrument these machines and to critically assess the mountains of resultant data that relay information on aspects ranging from ambient temperatures to vibration and heat at various locations within the machines. Properly monitored, sensors can capture subtle variances and early warning indicators that would not be observed by experienced plant operators. In some cases, these anomalies can worsen and eventually lead to failure and expensive downtime.

Translating Data Into Action

The critical challenge here is to separate the important signals from the noise. For example, a small increase in temperature over an extended time period or a slight delay in a switch may signal a real problem, or it might be trivial. However, without the proper application of analytics, this is simply data rather than actionable information. Proper instrumentation within a robust IT platform allows the fleet operator to move from a reactive to a holistic predictive maintenance approach, whereby multiple points are evaluated within a broader integrated systems-based framework. This approach creates a safer environment while reducing unexpected failures.

This digitization ultimately translates to a better understanding of the plant's limitations and capabilities. In a heat wave with high hourly prices, for instance, operators will know just how hard and how long they will be able to push their plant. And by paying close attention to the data coming from the facility, they will better understand how the plant is responding to any resulting stresses. Reducing these uncertainties, in turn, allows fleet operators to optimize plant interactions with the grid and the market. There is real value here. Power Engineering International estimates that just a one percent increase in certainty relating to the performance of a typical combined-cycle plant can result in half a million dollars of additional value per year.

Future Business Transformations

By the end of the decade, as sensors and connectivity become cheaper, and the business models are demonstrated, the power generation fleet will undergo a massive business transformation. Within just a few years, sensors will likely collect a million times as much information, and the integration between IT and OT will be extensive.

In other words, as these information management platforms are further built out, all different levels within the generating company will be able to see across all functions and better contextualize the different layers of information, from power markets to facilities. Asset lifecycle management will become more proactively integrated with other aspects of the business to optimize performance and profitability. This will take place not just within the context of a single machine, but across the operating capabilities and characteristics of an entire fleet. That will allow for the development of hypothetical scenarios and the optimization of fleet economics.

Of course, the evolving IIOT cannot operate without an extremely robust cybersecurity protocol. The Industrial Internet Consortium, which includes over 200 companies and organizations, including many industrial heavyweights, is devoting a great deal of attention to addressing these issues to ensure that the IIOT is secure from intrusion.

The economics of this nascent business transformation are so compelling that the evolution of the networked generation fleet will soon become the norm. For example, Business Wire reports that the first year estimated savings resulting from the digitzation of a 445 MW gas-fired plant in Ireland surpassed $1.3 million. Business Wire also estimates potential future savings of a simlar magnitude. Increasingly low-cost sensor technology will become nearly ubiquitous and embedded within critical equipment. Plants will be able to better detect impending failure and improve maintenance activities, and each unique facility's performance characteristics will be measurably improved.

Finally, these elements will be optimized within the context of the customer's overall requirements. This, in turn, will lead to increased profitability, improved performance, and better physical and financial risk management across the entire generating fleet.