Between extreme weather, the push towards electrification, failing equipment and the need to meet increased demand and greater reliability – it is a challenging time for the electricity industry. Especially those who are involved in the business planning process. Before you invest in your next planning cycle, here are some practical tips to help you decide where to spend your limited resources.
Borrow a lesson from the experts
Investment planning has been mastered where it matters most to businesses, in the financial sector. Yet, many utilities are still struggling with applying consistent, relatively straight forward statistics and indexing approaches.
The electricity industry needs to have another look at “the fundamentals.” Even within the financial sector, many portfolio managers are outperforming the market with strategies that focus on the fundamentals using financial ratios, and financial statement analysis. Most utilities still don’t have the fundamentals of age and basic condition managed in a consistent way, but they’re talking about artificial intelligence/machine learning. In short, “you have to learn to walk before you can run.”
There is brilliant modelling work done at utilities…some clever person took the time to apply their specialized knowledge to generate an insight. But it is so complicated that no one else may be able to apply or reproduce it. Utilities are better off with a simpler approach that gets 80% of the way with 20% of the effort.
Remember, the asset management problem is not just one issue. It’s a different problem for a massive, distributed machine like the grid, than for a power plant where everything is in a fence. Utility asset management is first and foremost a problem of scale. Focus your time on policy analysis not perfect prediction.
Utility buyer beware
There is no reason to continue to spend in the millions on asset management systems. We are in a place where every software/hardware system is spinning the asset management value proposition. Utilities now have two, three, or more asset management systems that are just inventory, mapping, and work management related systems. These massive footprint systems are now pushing their capabilities to do analysis, for a not so insignificant price.
A planning analysis software will not come from a major EAM, ERP, GIS or other vendor. It must come from a product built by experienced investment planners who have practiced asset management.
Distribution networks are the future
Distribution networks are going to take significant reliability burden off transmission networks because the grid is changing and becoming more localized. A distributed system is more likely to survive under extreme weather and a better reliability return on investment.
Distribution owners and operators should accelerate the development of a network business data model. You do not need to buy another software; you just need someone to translate the traditional technical load flow models that exist today into a business-focused data set. This can be simply done in excel/access, or if you have a good analytic software or a savvy system planner, they will already do it for you as part of the planning process.
Ted Zalucki is the CEO and co-founder of Engineered Intelligence Inc, an infrastructure analytics technology company. Ted has 10+ years of hands-on experience in the T&D sector working within several utilities and as a consultant across North America. His expertise includes advanced analytics, investment planning, asset management, risk modelling, productivity, process optimization, construction management, design supervision, operations, and regulatory filings and defense. Ted’s background is in Industrial Engineering and Financial Engineering, he holds an ELITE certificate from the University of Toronto and is a practicing Professional Engineer.