This is the second part of our interview with Colin Beaney on the state of the energy industry in 2020, and what utility companies can do to improve value in the time of COVID. You can read part 1 here.
NC: If there was a scale of automation readiness, on average, what is the level of automation readiness that you see right now in the companies that you’ve worked with?
CB: Good question. I would suggest it’s high. Most companies, certainly in most of the geographies that we serve, have a high degree of automation readiness. There are often challenges around knowledge and resources, and the ability to hire people that can understand both the potential of technology and the internal processes and systems addressed so they can lead automation and innovation efforts, but I think the technology is there and most companies are at a high level of readiness for this type of investment.
However, in order to undertake automation efforts like this in asset-intensive industry, one deficit is a lack of equipment and asset information, maintenance and performance history—the cognitive understanding of asset data and availability of that data which is necessary to true enterprise-wide automation.
For example: if you’re a big energy company or big mining company and you’ve got hundreds of thousands of assets, do you genuinely know where they all are? Do you genuinely know the health of them? Do you genuinely know the condition? Do you genuinely know that the maintenance is being carried out on them or whether you can count on them to continue to deliver value without extensive additional investment?
For me, that’s the foundation. If you don’t have good asset data… what’s the point of being active and extremely ready for innovation when in reality, your assets may not be performing very well and could not support increased productivity even with additional automation?
And unfortunately here in the UK there have been examples in the water industry of water treatment facilities that have not actually been doing their job. For whatever reason, they’ve not addressed challenges around emissions and process quality. As a consequence of that, they’ve been allowing chemicals to leech out of the treatment plants into waterways and oceans, resulting in significant, multi-million-pound fines against these companies purely because they weren’t maintaining quite simple assets. Sewage treatment plants and water treatment rely on linear assets like water and sewer mains, remote assets like lift stations—software capable of providing visibility and control of these far-flung assets is absolutely essential. You could invest all you want into innovation and automation, artificial intelligence (AI) and the internet of things (IoT) , but without a solid approach to master data management for asset data, you’re still going to have some challenges.
Meanwhile in the United States, much of the electricity grid is quite old, which places even heavier demands on asset management software and technology. Like most grids in the developed world, their grid was put up in the 1950s, ‘60s, ‘70s. So now the grid is 40, 50, even 60 years old. That’s not necessarily a problem because these assets can last and are reliable: they’re meant to last 50, 60, 70 years. But there’s going to come a time when significant investment will be required to upgrade, renew, replace all of that infrastructure. I’m sure I read a piece a few years ago, people were saying “we’re talking trillions of dollars needed to upgrade the grid.” And they do, unfortunately, suffer from outages. There was an outage last year in California—a deliberate shutdown to prevent additional wildfires sparked by utility lines. This again helps make the case for that digital twin of the business to help executive teams spot risks to their ability to perform given various threat scenarios. It could be argued that PG&E was under-investing in the grid, and perhaps spending too much on stock buybacks in the meantime. If they had had a more forward-looking system, imagine how they could have saved a lot of trouble, expense and corporate image.
Returning to the question “are companies ready?” I think most companies are extremely ready and willing to embrace all of the capabilities that are coming through, however there’s this underlying challenge of “do they really know the state of their asset portfolio in the first place?”
NC: I read a quote somewhere that “automation amplifies all the problems.”
CB: Yeah, exactly, spot on. What’s the point of investing in automation just to learn you don’t know the health of the assets that you’ve got? That information maybe exists within your organization somewhere as tribal knowledge. By the time a utility or energy company is fined for health, safety and environment (HSE) violations, somebody—probably multiple people—knew that they weren’t maintaining the assets and facilities as they should have. I don’t want to say somebody deliberately made a decision, but therein lies another challenge: good asset management has to be a key foundation of many companies that are involved in these regulated industries.
There are consequences if you don’t meet your social responsibilities. Like in mining, for example, one of the major things that a lot of mining companies are trying to come to grips with is water usage. They’ve got huge responsibilities to manage that process in the best way efficiently, to minimize the use of water to blast out the minerals, using water to wash and clean – they have a huge responsibility to manage that process. They cannot ensure waste and byproducts in discharge water are at the level of control regulation requires if they cannot ensure their on-site treatment system is not performing. Just documenting that preventive maintenance is being performed is one step. The next step is connecting assets to the enterprise software environment to IoT to passively capture performance criteria.
NC: Do you have examples of any mining companies that are using technology to handle that?
CB: We did a lot of work with a mining company in Eastern Europe around hooking up their fleet assets to our platform and using that to receive condition monitoring-type information. That’s a fairly easy thing to do if you have modern assets.
Imagine a huge dump truck. They’ve typically got systems that identify operation, duty cycles, and usage. This will also capture physical performance data like temperature, vibration, oil levels, all the sort of obvious condition monitoring capabilities. However, that’s just one element of a complete approach. The other element is determining what do you do with all those results? What do you do if there’s an anomaly to the readings? Our software includes prescriptive maintenance systems, so certain symptoms can be matched with maintenance or repair steps based on maintenance and repair history, keeping assets more available while reducing wrench time. A next step is machine learning, artificial intelligence, etc. What does it mean that the results are coming this way?
To be fair, this level of disruptive asset management technology has come further in other industries. So what I would suggest is that we can all learn from other industries and other examples. Our customer Rolls Royce makes heavy use of our technology to inform maintenance and operation of engines, turbines that are generally sitting on aircraft. And obviously, historically, the airline industry has been very advanced in the well-being and health of the assets it has (for obvious reasons). But Rolls Royce has somewhere in the region of 200+ customers: major airlines, major freight carriers, low-cost airline operators around the globe. And they were looking to automate the collection of all of the data off of all of the engines that are sitting on aircraft. They’re looking at it from the perspective of ensuring that they are absolutely on top of managing things like remaining life, asset health, asset condition. They have come a long way to extending this into a “digital twin” of the asset so that they can almost replicate what’s happening anywhere, on any aircraft: how many hours it’s flying, how many starts, when it’s idling, when it’s in the air and whether operations are within specifications or suggest intervention is needed..
Rolls Royce has been on this course for about six months and we’ll likely see that if you can stay on top of all of this data through real-time collection you can extend the life and improve the health of your assets. So I think there’s a lot of examples from various other industries that we can learn from.
NC: Are there any sub-sectors of the energy sector that IFS is particularly focused on in their future roadmap?
CB: Traditionally, we’ve played more in the generation and transmission area of the business. But we’re actively moving into areas where customers are more engaged—and that’s generally the network distribution level, whether it’s telecoms or electricity distribution or water networks, because we’ve got an industry-leading service solution that can manage all of the aspects of meeting consumer expectations around the most impactful interactions like appointments, meeting service level agreements, managing and optimizing resources that customers see first-hand and are there for them in the most critical times. We have a commanding lead in this customer experience at the last mile to the house. It’s absolutely crucial that you delight and satisfy your consumers and customers when they require installation, troubleshooting, repair and service.
There are some countries and regions where the market for water or electricity is as open as it is in the UK for instance, so you don’t really have a choice as to where you buy your electricity. But it is inevitable that this will eventually change and consumers will have more choice. They’ll have the choice to potentially even generate and store their own power, small-scale local generation that might involve people trading with each other in a small village or small community or small city, and the big energy companies need to be mindful of this. They need to make sure that they’re in tune with what their consumers and customers are looking for as in these more centralized utility environments there are active stakeholder groups like citizens’ utility boards that will hold a utility’s feet to the fire.
In our first post when we talked about renewables, this too is an element of customer satisfaction because most consumers are demanding that the energy companies provide energy from more renewable sources than others. So energy, telco, water companies all have to be extremely mindful of what consumers see as important, and have to be able to document that those values are reflected in how the utility operates and how they serve the customer. That could be through additional services, but more likely will be just through providing visibility into where power for instance is coming from and managing the interaction with the consumers in the most positive and satisfying way.
Thank you to Colin Beaney for talking to us! If you have any questions about how Novacura Flow works for the energy, utility and mining industries, contact us to learn more.