To survive in the 21st century, power firms must re-invent their businesses and embrace a disruptive growth-focused model, says Dr Sanqi Li
The internet is transforming today’s power sector says Sanqi Li (below)
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Today’s ultra-fast-paced digital world is seeing disruptive innovation transform traditional industries.
The rate of advancements that we will witness over the next 10 years is happening at a pace that would previously have taken far longer. The energy industry is no exception to this age of rapid technological progress.
The internet is transforming today’s centralized and non-intelligent power grids into smart and responsive digital networks that carry the potential to enable new services. These digital networks are paving the way for what is known as the ‘Energy Internet’ – a fully connected grid able to deliver electricity anywhere and everywhere – much like the actual internet delivers data.
The development of the Energy Internet carries significant implications for the power industry. It will enable operators to move from traditional capital-intensive approaches to software-defined and asset light systems capable of predictive maintenance and better asset health – something very much in line with the needs of today’s utilities.
The key to achieving Energy Internet-like systems rests in the adoption of innovative information and communications technology (ICT) infrastructures and new business models, of which there are several – their applicability depending on the business nature and position of the operator.
Transforming core business models
The first key business model is the Incumbent Transformation Model. It’s a model derived from the understanding that incumbent organizations in the energy industry are traditionally monopolized, vertically integrated, highly regulated, capital intensive, and highly segmented in silos of energy generation, transmission, conversion, storage, and consumption.
In this rapidly evolving industry, intensifying competition and growing customer expectations are forcing these incumbent players to adapt and transform. To survive in the 21st century, incumbents must re-invent their businesses and embrace a disruptive growth-focused model as well as new ecosystems that enable choice and differentiation for customers.
The second key business model is the Green Energy Startup Model, which involves capturing green energy opportunities such as renewables to help foster a low-carbon society. Collaborations and partnerships between green-tech companies and incumbent energy companies are essential to achieving this long-term vision.
The third core business model is the Cloud-Overlay Light-Assets Model. It largely refers to innovative new market entrants such as pure over-the-top cloud players that already have strong connections with customers and are looking to take advantage of these relationships to deliver new energy services. To compete effectively with energy companies, these organizations need cloud-based business models to gain the speed and agility necessary to create new services and opportunities that engage customers.
To support these business models, energy companies need to build out their digital infrastructure and develop new technology capabilities that can help them achieve a more connected and integrated environment.
Powering new opportunities
A core area of development is the Internet of Things (IoT). The Energy Internet is part of the Industrial IoT (IIoT), which enables energy companies to use intelligent machines and network systems to automate tasks at lower costs whilst still achieving high-quality outcomes.
Sensors in industrial systems have been connected and integrated for decades. However, these have lacked the openness, programmability and agility required for the Energy Internet. With IIoT, operations technology and information technology will blend together and become more intelligent through the use of sensors, analytics and machine applications. This will also enable energy companies to create and share more data whilst gaining valuable insights from this data to drive operational savings and revenue opportunities.
In general, IIoT platforms are based on a three-layered Internet model comprising:
• Communication Internet: Connectivity spanning various carrier, wireless, field, enterprise, and home networks;
• Industrial Internet: This digitally transforms all devices, equipment, and facilities in the physical world and connects them through sensors via the communication internet;
• Digital Logistics Internet: This encompasses cloud data centers with advanced software analytics and data intelligence capabilities to empower new technologies and business innovation.
While IoT platforms are still in the early stages of maturity, energy companies will need to work closely with their ICT partners to manage their platforms, identify technical challenges, and address gaps in information sharing, interoperability and ensuring security.
The on-demand, scalable, fast and flexible characteristics of cloud computing offer energy companies an effective platform to drive innovation and growth as they transition to the Energy Internet.
The cloud will underpin data-intensive and geographically dispersed projects enabling energy companies to conduct real-time, advanced analytics to enhance production efficiency and deploy new services with greater speed without additional capital investment. The cloud will also provide the platform for operational technology and IIoT, enabling the integration of green energy technologies with traditional energy provisioning.
The energy industry can embrace the cloud in two ways: the private cloud and the public cloud. A private cloud is a cloud platform built and owned by companies themselves, whereas a public cloud utilizes cloud services rendered over a network that is open for public use.
A hybrid delivery model that combines traditional IT, private cloud and public cloud is the most likely option as energy enterprises move to the cloud. A hybrid cloud offers maximum asset utilization and cost-effectiveness, leverages IT security, and provides high IT availability and service flexibility. Energy companies also need an open cloud platform to reduce interoperability and network issues.
Energy Internet evolution
The Energy Internet has the potential to radically disrupt the relationships between energy providers and consumers. With the energy industry moving rapidly towards renewables, distributed generation is also empowering customers and they have increasing expectations of their energy providers.
For energy companies to thrive in today’s rapidly changing energy industry, they must partner with an experienced ICT vendor that can help them evolve from their traditional approach towards the Energy Internet.
Huawei has focused on developing breakthrough solutions across the three layers of the Internet – Communication, Industrial and Digital Logistics – to help organizations achieve this. For example, the company has developed intelligent terminals connected to IIoT systems capable of automating power distribution and metering to make the Energy Internet possible. Huawei has also developed intelligent systems based on Big Data platforms enabling energy generation, storage, transmission, and consumption gauges to collect real-time data streams that work in conjunction with Big Data analytics. Additionally, Huawei has also focused on developing open cloud platforms to power information and trading exchanges and interconnect between energy sectors.
Huawei is committed to accelerating the introduction of end-to-end Energy Internet solutions across the three Internet layers through technological innovation, partnerships and an open ecosystem to enable energy companies to reach the defining edge of the evolving Energy Internet. For those that embrace transformation ahead of the curve, vast opportunities can be gained from improved efficiency, an expanded customer base and revenue gains from new business areas.
Dr Sanqi Li is Chief Technology Officer of Products and Solutions at Huawei